# 1-23 Question from Modern Auditing Textbook ACC/491 March 20, 2013 1-23 Question from Modern Auditing Textbook 1-23 (Organizations associated with the public accounting profession) Several private and public sector organizations are associated with the profession. Listed below are activities pertaining to these organizations. Required Indicate the organization or organizations associated with each activity. 1. License individuals to practice as CPAs.
1-1) A.) According to our text, The AICPA, American Institute of Certified Public Accountants, is a professional accounting organization whose members are certified public accountants. AICPA were able to establish two committees to replace old ones, the Accounting Principle board and the Accounting Research Division. They were not very successful and in the end, were only able to recommend the Financial Accounting Standards Board (FASB). They did as a means to developing generally accepted accounting principles (GAAP).
Brief Description of Company, Industry, and Competitive Environment: American Bank Note Corporation (ABN) was founded in 1795 as a business that created official bank notes, stamps, checks, and other documents for the U.S. government, state governments, foreign governments, and businesses. ABN was the original printer of U.S. currency and was the largest printer of currency and secure documents in the world for many years. Eventually, the government began to print their own currency and did not need private printers anymore. Soon ABN began to create additional products such as: stock certificates, government documents, and American Express travelers’ checks. ABN used an independent auditor to keep its books.
Statements of Financial Accounting Standards (SFAS) 116 and 117 Executive Summary According to the University of Phoenix (2007), Statement No. 116 addresses Accounting for Contributions Received and Contributions Made and Statement No. 117 addresses Financial Statement of Not-for-Profit Organizations. These two statements show how non-profit organizations report their contributions and how their contributions are presented on financial statements. This summary will be assessing the requirements of Statement of Financial Accounting Standards (SFAS) 116 and 117 and how it impacts the financial statements.
The Sarbanes-Oxley Act is mandatory and all companies must comply, size does not matter. The main purpose of the legislation is to make financial records more accurate and reliable for investors. It addresses issues like the establishment of a public company, creation of an accounting oversight board, auditor independence, corporate responsibility, and enhanced financial disclosure (Parks, 2006). The Act requires new auditing for internal controls; auditors will check the internal controls of companies’ procedures and present its findings in an annual audit report. The audit report must show report that management has established and maintained internal controls for financial reporting.
Generally Accepted Accounting Principles or (GAAP) is a set of rules and practices. Having GAAP is a substantial authoritative support that the accounting profession recognizes as a general guide for financial reporting purposes (Kimmel, Weygandt, and Kieso). The purpose of GAAP is to measure assets, liabilities, revenues, and expenses. Securities and Exchange Commission or SEC is the agency of the U.S. government that overseas U.S. financial markets and accounting standard –setting bodies. International accounting standards board or (IASB) issues standards (IFRS) that have been adopted by many countries outside the U.S. Companies are required to follow these principles as long as those company’s reports conform to international accounting standards.
Chapter 2, pp. 41-44: Problems 2-7, 2-10, 2-16, 2-20 2-7 (Objectives 2-2, 2-4, 2-5) Who is responsible for establishing auditing standards for audits of public companies? Who is responsible for establishing auditing standards for private companies? Explain. The PCAOB which was established by the Sarbanes-Oxley Act is responsible for providing oversight for auditors of public companies, establishes auditing and quality control standards for public company audits, and performs inspections of quality controls at audit firms performing those audits.
Comcast Corporation, Fiscal Year 2011 Kenya Newton Professor Kentaya Beeler 12/2/2012 The Comcast Corporation’s annual report holds a wealth of information not only about the company finances but company history and current assets. The report opens with the company’s name and logo, state of incorporation, address of principal executive offices, and the I.R.S. Employer identification number. The opening or introduction page also includes the most up to date stock information including the title of each class; which has the stock types (Common, Special Common, or Exchangeable subordinated debentures), and the values and dates due. The name of each exchange that the stock has been registered (NASDAQ Global Select Market or
GASB and FASB Similarities GASB and FASB accounting are sets of objectives that proprietorship, government, and not-for-profit organizations follow in preparing financial statements. According to Weygandt (2008, p. 17) “both the GASB and the FASB have established objectives that circumscribe the functions of financial reports.” GASB and FASB objectives show whether a company is making enough profit to pay for expenses throughout the year, allows investors information to decide whether to invest or not, and how well the company budget complied throughout the year. Also, the two accounting standard boards show whether management is complying with all aspects of the objectives. GASB and FASB accounting have differences that individuals need knowledge about to prepare financial statements for government and not-for-profit organizations. GASB and FASB Differences Accountants and individuals, who work in accounting fields, need to know the differences between GASB and FASB.
Or Financial statements (balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity) are the primary means accountants use to communicate financial information to investors, creditors, regulatory agencies, and others. Choose one of these financial statements and provide an example of the statement from your current organization, if possible. Provide a brief analysis of what is contained on the statement. The text identified three common legal forms of business organizations: sole proprietorships, partnerships, and corporations. IF you were to start or your business (or if you already have started your own business) what type of legal form would you use?