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,
Reporting Practices and Ethics Paper Sharon Tucker HCS/405 May 13, 2013 Elizabeth Caissie Abstract The implementation of financial reporting and ethical standards are crucial for the growth and progression of an organization. Reporting fairly and accurate data will help control measurements that may address theft and/or fraud within the structure. Ethical standards are vital for the development in an organization’s set rules and policies in having quality in the services provided including integrity, values, and delivering effective outcomes in honesty. Generally accepted accounting principles (GAAP) are set guidelines which indicate rules, regulations, and procedures that are implemented for the maintenance and/or monitoring records. An organization that provides a financial statement to the public, investors or government funding entities must follow the set standards developed by Financial Accounting standards Board (FASB).
As an auditor, understanding and testing internal control over financial requires knowledge of standards applicable to the corporation established by GAAP or IFRS. Section 404 of the Sarbanes-Oxley Act requires mandatory reporting on internal controls by management and independent auditors. To obtain a system of internal control as mandated by Section 404 of the Sarbanes-Oxley, policies and procedures designed to provide reasonable assurance of the companies’ effort in achieving its objectives and goals. Committee of Sponsoring Organizations of the Treadway
However, an implicit assumption is that users need reasonable knowledge of business and financial accounting matters to understand the information contained in financial statements. This point is important. It means that financial statement pre- parers assume a level of competence
Ethicality of Accounting Activities Learning Team E - Ashley Horne, Brochelle Shirley, Erika Schmidt, and Mareta Guerrero ETH/376 September 30, 2013 Tammie Holland Ethicality of Accounting Activities To evaluate the ethicality of accounting activities, Learning Team E will review the Cynthia Cooper and WorldCom case using the following criteria. This review will identify the key accounting activity involved in this case and evaluate the accounting activity in terms of the AICPA Code of Professional Conduct. Additionally, determine how the accounting activity was or was not equitable to internal and external stakeholders and which aspects were ethical or unethical. Finally, through the identification of key team members in this case, this review will explain his or her ethical or unethical actions and how those actions influenced the events that occurred. Key Accounting Activity Involved The key accounting activity involved in the case of Cynthia Cooper and WorldCom was capital expenditures, which is defined as “…the funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment” (Capital Expenditure - Capex, 2013, para.
Conclusion The recommendation for Future Policy Makers should continue to improve the policies, and procedures that are associated with Sarbanes-Oxley Act of 2002. Lawmakers should address high costs, associated fees and should allow flexibility on time commitment of firms with production and creativities. An organization goal is to make profit. SOX intrude on potential gaining in organizations. No companies should suffer because high auditing fees.
Developing a strategic business plan to manage capital and human resources is quintessential to escaping some of the potential pitfalls. In addition, creating pro forma financial statements to determine the assets necessary for business operations, and to
Why not use the Trial Balance to report financial information internally and externally? What limitations does it have over formal financial statements? What is a fiscal year? What are the steps in completing the accounting cycle? Discuss the relationship between the amounts on the Adjusted Trial Balance for an account and its ledger?
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
Full Disclosure ACC/421 August 3, 2015 Full Disclosure The full disclosure principle was created to protect users of financial statements by requiring publicly held organizations to disclose pertinent information regarding transactions and details surrounding business operations. Full disclosure is increasing because of the need for more information in a timely manner. The necessity for full disclosure in financial statements brings consequences punishable by laws and fines and pushes organizations to act in honest and ethical manners when compiling their financial statements to the public. The Full Disclosure Principle in Accounting The full disclosure principle in accounting was created to protect investors who may be misled by businesses withholding crucial financial information. Without the full disclosure principle important negative financial information on company standings would likely be withheld from investors.