How can an employer prevent an impending strike? (Points : 10) Question 8. 8. (TCO 5) Explain the circumstances under which a company triggers public reporting requirements to the Securities and Exchange Commission (SEC). (Points : 10) Question 9.
What additional alternative audit procedures do you believe the Hanauer auditors should have applied to those accounts that the client did not want confirmed? 4. Define a material audit scope limitation in general terms. Do you agree with the SEC that Hanauer’s management imposed a material scope limitation on its annual audits? 5.
2. Companies in some countries obtaining unfair commercial advantages from the use of particular national accounting standards. 3. The complications in negotiating commercial arrangements for international joint ventures caused by different accounting requirements. 4.
2. Companies in some countries obtaining unfair commercial advantages from the use of particular national accounting standards. 3. The complications in negotiating commercial arrangements for international joint ventures caused by different accounting requirements. 4.
Likewise, in the case of bad or doubtful debts, an estimate for provision is usually done to know as to how much of the trade receivables the company might not be receiving. This provision is created to safeguard the company from the losses from debts. Given these points, estimation appears to be beneficial. However, “estimates are inherently subjective and therefore lack precision as they involve the use of management's foresight in determining values included in the financial statements” (Accounting-simplified.com, 2013). They can sometimes downsize the dependability on the
(1) Earning Management According to Ronsner (2003), earning management is defined as a management technique that can let managers achieve their outcomes by influencing the financial statements. These actions will mislead some stakeholders’ opinion about the company’s underlying economic performance; Also, earning management can influence the contractual outcomes which come from accounting numbers (Healy and Whalen, 1999). In Worldcom case, CFO Sullivan use accounting entries to reach targeted performance, this improper earning management tried to conceal the real economic value and performance of Woldcom from the stakeholders who will use the financial statements. (2) Motivations of earning management The reason of earning management is to affect financial statements’ users’ understanding about the company’s economic performance or influence the outcomes which depend on the reported accounting numbers (Lin, Radhakrishnan & Su, 2006) Firstly, one of the most important motivations of earning management is Managers’ career concerns. Because earning management allows managers to reach their desired outcomes by influencing firm’s financial statements.
1. From your understanding of the Sarbanes-Oxley Act, explain how you feel it may negatively affect America’s stock exchanges. The higher than expected costs for many public companies caused some companies to abandon their public status. The costs of SOX compliance negatively affect companies, markets, investors, and economic growth. Fewer companies are willing to enter the market because of the SOX requirements that make going public too costly.
The paper discusses the options of responses to being asked to modify client work papers by the engagement partner. It goes on to also discuss if auditors have a responsibility to assess the quality of the key strategic decisions made by client executives. Keywords: Deloitte Touche Ross, Securities and Exchange Commission, audit work papers, Generally Accepted Auditing Standards, Generally Accepted Accounting Practices. Audit work paper manipulation by Richard Fiedelman of Deloitte Touche Ross in the audit of North Face Inc. When the newly appointed audit partner at DTR, Will Borden, upon reviewing the audit of North Face Inc.’s 1997 financial statements, questioned why the adjustment shown and required by the work papers had not been adjusted in the financial statements, Fiedelman realized his error.
The first is adverse selection. Adverse selection occurs because some persons, such as managers and other insiders know more about the current condition and future prospects of the firm than outside investors. Financial reporting is one of the mechanisms that are used to control the problem of adverse selection by credibly converting inside information into outside information. The second one is moral hazard. This problem occurs because of the separation of ownership and control that characterizes most medium and large
The exit of New Victor could take more time than expected if the company does not meet the conditions in a favorably way. Bob Fisher’s Assumptions for the third Strategy: 1. Due to the impact of economic crisis on the company’s cash flow, lenders will be more reluctant to refinance the company’s existing debt. 2. How would the other claimholders (Tiger, the Management Team and the Lenders) evaluate each of the 3 strategies?