Financial statements for each individual prior period presented shall be adjusted to reflect correction of the period-specific effects of the error. Zumiez’s ability to determine the materiality of the error also falls in line with the rules and regulations set forth. In FASB 250-10-45-27, determining materiality for the purpose of reporting the correction of an error, amounts shall be related to the estimated income for the full fiscal year and also to the effect on the trend of earnings. Changes that are material with respect to an interim period but not material with respect to the estimated income for the full fiscal year or to the trend of earnings shall be separately disclosed in the interim
Grant Thornton should have cross-referenced these forms and looked for any discrepancies. The decision for Grant Thornton to rely heavily on the delivery receipts was reckless on their part. An “auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding financial statements under audit.” (Prelecture Slide 14) The appropriateness of the evidence defines the validity or reliability and in order for this to be true it needs to be objective and free from bias. (Prelecture Slide 14) The delivery receipts failed to provide this validity and reliability because they were
The company should have been able to follow up with all venders and customers to attest to the validity of the financial statements and they were not able to do this and not able to gather the “appropriate and sufficient evidence” needed. When a client will not allow the auditor to gather evidence needed to perform a correct auditor then the opinion can be affected. The auditor cannot attest to the fairness of the financial statements if the evidence is lacking or
Robbin Industries is jeopardizing itself by not properly reporting the advertising costs. As an operating company, they must understand the generally accepted accounting principles and adhere to them (Weygandt, Kieso, & Kimmel, 2010). (c) What would you do if you were Wayne Terrago? Wayne Terrago should try to report the financial condition and results of operations fairly and in accordance with the generally accepted accounting principles. As controller, Wayne should inform management and understand what is acceptable according to the GAAP.
We could bring up the case as a sample to demonstrate what we are discussing about. However, adding a question to prove our point is not recommended in academic writing. The subject line information to identify the situation has to be included on the head of the memo. In addition, clarity, correctness, and courtesy are very important and they represent for our efforts. The memo should be clearly written and organized in direct order, beginning with the objective and then systematically and covering the vital bits of information (Rentz, 2008).
In the stated policy there is no mention of inspection of the process for receiving the delivery. When there is no system in place to ensure that the items ordered are the items received there is no control over the overall costs of materials. To gain this control there should be an inspection done of the materials against the bill of lading provided by the shipper. Once the bill of lading is signed off on, the goods receipt should be given to the accounting department with a copy of the purchase order. This will insure that when the invoice is received by the accounting department they will be able to match the items on the invoice to the items received.
The final account that is on the balance sheet under the net assets and fund balances of the balance sheet would be the unrestricted net assets account. This account can be a target for the organization for an intentional misstatement because they could show that they have more assets that are unrestricted when realistically they could be restricted. Being able to show the difference would involve a detailed inspection. The auditor should do analytical procedures and substantive tests in order to detect these
It does not really interest me in the least. Inventory systems can be impacted in many ways like Distribution Network Configuration, Trade-Offs in Logistical Activities, Cash-Flow problems. Having understood the difference between records and documents, the next important point to keep in mind is the importance of the procedure and its relationship to the ISO 9001 certification process. To understand the relationship and the need for a document control procedure, it is important to remember that the last step in the ISO 9001 certification process is the certification body audit. So, what is audited?
Full disclosure requires that publicly traded businesses use accrual based accounting and revenues are recognized as sales are earned. Full disclosure also requires that footnotes describe accounting procedures and provide details for unusual transactions. With companies such as Enron and WorldCom, the accounting field has an increased need for businesses to tell the truth in its financial statements. Full disclosure acts as the obligation for businesses to be truthful in its statements in order to protect the parties
Unit 3 assignment: DISCUSSION QUESTIONS 4. What is the FASB conceptual frame work project? Explain the benefit of this project to the practitioner. The FASB conceptual frame work project is a joint venture between the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) to develop a common conceptual framework that both Boards can use in developing new and revised accounting standards (fasb.org). The objective of this joint project of the Boards is to develop a common conceptual framework that is both complete and internally consistent.