Accounting Judgements Essay

6357 WordsMar 2, 201326 Pages
Audit Committee Institute Sponsored by KPMG Accounting judgements, estimates, and restatements Implications for audit committee oversight Audit Committee Institute Sponsored by KPMG Contents Page Introduction 1 Key findings and insights 2 Recent financial restatement trends 3 Earnings management: ‘The numbers game’ 5 Financial reporting integrity and the role of the audit committee 8 The Directors’ report: the growing importance of transparency 13 Audit committee oversight of investigations 16 Conclusion 19 © 2007 KPMG LLP a UK limited liability partnership and a member firm of the KPMG network of independent , member firms affiliated with KPMG International, a Swiss cooperative. All rights reser ved. Audit Committee Institute Sponsored by KPMG As guardians of shareholder interests, audit committees play a pivotal role in helping to ensure ... [that] management present a fair and accurate picture of the company’s financials © 2007 KPMG LLP a UK limited liability partnership and a member firm of the KPMG network of independent , member firms affiliated with KPMG International, a Swiss cooperative. All rights reser ved. Audit Committee Institute Sponsored by KPMG 1 Introduction There are powerful, and often competing, pressures affecting financial reporting today: the increasing complexity of accounting standards, management’s drive to ‘make its numbers,’ and the demand by investors and regulators for integrity and transparency in financial statements. Financial transactions and accounting issues appear to have reached an unprecedented level of complexity, with continuing questions about ‘materiality’ and interpretations and areas of grey as prevalent as black-and-white rules and calculations. Such complexities notwithstanding, a growing intolerance

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