Once a company identifies the economic events, it records those events in order to provide a history of its financial activities. It is important to note here that recording consists of keeping a systematic, chronological summary of events measured in the accepted currency. Finally, the company communicates the collected information to interested users by means of accounting reports. The most common of these reports are called financial statements. To make their reports meaningful, a company reports the recorded data in a standardized way according to generally accepted accounting principles (GAAP).
This is important to financial statements and documents because third parties often rely on this information and it is imperative that they are assured that the data is free from bias and inconsistency, deliberate or otherwise. Double Entry Accounting is a concept that requires all accounting transactions be recognized in two accounts as ether a credit or debit. With this method, all entries have two actions, one account is increased while the other is decreased. Double Entry Accounting is important to financial statements and documents because it allows the user to quickly check the accuracy of transactions because the total of accounts with credit balances should equal the total of accounts with credit balances (Elmblad, n.d.). This system is important to financial statement and
Auditors are accounting experts who have sufficient professional accounting know-how to handle with complicated accounting issues for business activities. Auditors must comply with professional and ethical standard in accounting practice. c. Internal control practiced by management where as aims to ensure the entity’s business conduct in the well operation. It is management’s responsibility to establish and maintain the internal control so that the business operates in orderly way with reliable financial report, compliance with law and regulations, effectiveness and efficiency. Management responsibilities should be much wider than that of internal control by auditors.
The purpose of the financial statement audit is to ensure the entity being audited is preparing the financial statements in conformance with General Accepted Accounting Principles (GAAP). The information is important to investors, managers, banks,
The AICPA is recognized as an authoritative source used to clarify accounting principles by offering guidance on official standards, new developments, and specific advice for accountants. According to our text, the Principles of the AICPA Code are responsibilities; the public interest; integrity; objectivity and independence;
The audit for the financial statements will include evidence supporting amounts and disclosures in statements, examining, accounting principles used assessment, estimates made by management, evaluating all of the financial statements overall. The internal control over financial reporting audit will be acquiring an understanding of internal control over financial reporting, evaluating and testing the design and operation of the effectiveness of internal control and conducting procedures as necessary. The internal control over financial reporting within a company is meant to provide a reasonable assurance as to the reliability of financial reporting and for the preparation of the financial statements for external purposes in accordance to the generally accepted accounting principles
This determines whether requirements for specific agreements are maintained to be in compliance with specific needs. This can minimize a costly error if not items are not followed to agreed upon measures. An example can me requirements established when a note was developed with a national bank. Lastly, the most widely known type of audit is of the financial statements, these are reviewed and compared to the Generally Accepted Account Procedures (GAAP). This allows outside investors and shareholders to maintain confidence in your company.
Internal Controls XACC/280 October 7, 2012 Vaunda Davis Internal Controls Internal control is the process designed to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Internal Controls are needed to ensure the proper account of revenue under the guidelines of GAAP .These controls are aimed at ensuring compliance with revenue recognition guidelines and safeguarding assets against theft and unauthorized use, acquisition, or disposal is also part of internal control. There are six principles of internal controls. These control principles establish responsibility, using physical, mechanical, and electronic controls; segregate duties, and perform independent internal
a) Citibank is correct in shifting from a strictly financial based evaluation system to one that includes non-financial measures. Although the new performance scorecard includes a customer satisfaction section, the current method of evaluating customer service poorly designed and is inconsistent with a properly balanced scorecard. As it currently stands, measuring customer satisfaction across all clientele is too broad. The needs of the patrons vary substantially and generic questions in the telephone interviews will not suffice. Instead there should be questions geared towards business customers and a different set of questions for individual customers.
Executive summary The performance of a firm is most frequently measured by their accounting earnings. What the performance statistics show are of major interest to management, employees, suppliers, investors, customers, the public, and regulators. (Prior, Surroca, & Tribó, 2008) To better distinguish themselves from poor performers, better-performing firms look to financial reporting to facilitate stakeholders to make financial decisions. In an attempt to control fluctuations in reported earnings, firms often use a type of management accounting behavior called income smoothing to steer earnings to levels they consider desirable. In addition, an inherent conflict of interest exists when management, which has the responsibility for preparing financial reports, cannot impartially report on its own achievements.