E2-1 (a) Accounting rule-making that relies on a body of concepts will result in useful and consistent pronouncements. TRUE (b) General-purpose financial reports are most useful to company insiders in making strategic business decisions. FALSE. General-purpose financial reporting helps users who lack the ability to demand all the financial information they need from an entity and therefore must rely, at least partly, on the information provided in financial reports. However, an implicit assumption is that users need reasonable knowledge of business and financial accounting matters to understand the information contained in financial statements.
* “a statement of management's responsibility for establishing and maintaining adequate internal control over financial reporting for the company; * a statement identifying the framework used by management to evaluate the effectiveness of this internal control; * management's assessment of the effectiveness of this internal control as of the end of the company's most recent fiscal year; and a statement that its auditor has issued an attestation report on management's assessment.” (sec.gov) This is stating management has to take responsibility that they made sure the financial reporting of the company being handed in is correct. They have to explain how and what they have done to assure the financial reports are correct. Management has to get a seal of approval from its auditor agreeing that the financial reports are done properly and there are no mistakes and the necessary steps were taken to attest that the financial statements are correct. This makes management of a company personally responsible things are being done
The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in conformity with an identified financial reporting framework of Generally Accepted Accounting Principles. In essence, materiality should function as a cut-off threshold to determine the nature of the audit testing. Auditors should not reveal its materiality level to clients because clients might take advantage of it to deceive the auditors and make its financial statement better. When the Deloitte auditors are suspicious of certain accounts, they not only can’t reveal it but also make more substantive investigation into these accounts. Question 4: Existence: the
ZZZZ Best Case 1. An audit is performed by an independent company and is designed to provide a company with a positive assurance based upon the fairness of their financial statements. A review, however, is a service to gain moderate, or negative, assurance that there are no material modifications to be made for the financial statements to be in accordance with acceptable financial reporting framework. There is less evidence involved in a review and has a smaller scope than in an audit. 4.
Internal auditors guarantee that the internal controls are sufficient and calculate the company’s financial and information systems for accurateness. A series of audits such as financial statements, fraud, compliance, and operational can be made with the hiring of an internal auditor. The most beneficial audit for Whitfields Company would be an operational audit. Operational Audits can be done if upper-level management thinks that there is a need for operational improvements. It is a review of management and how operating procedures work.
This would be important for accounts receivable - money that is owed by a customer for products/services. Representing a company in small claims court requires one to be familiar with the law and how it relates to accounting practices. In the Mack v. Edenwold Fertilizer Services Ltd. case, if Mack had a knowledgeable accountant that was familiar with the law, he may have been advised not to sue as the illegality of the situation would have resulted in a loss. In turn, this advise would have saved Mack both time and
This evidence supports what has happened thus far in the client's business. A business model is a prediction of what is expected for the business by optimistic, biased management, not what has happened in the past. An auditor's role does not include predicting the start-up future of a business, nor to rule out fraud. 2. Identify and briefly describe the specific fraud risk factors present during the 2000 NextCard audit.
The operational audit studies the specific parts of an organization with the purpose of measuring its performance. Performances are measured in terms of effectiveness and efficiency such as auditing shipping and receiving or the sales departments. The benefit of these types of audits can positively affect the profitability of the organization. The financial audits, which we are doing, consist of auditing financial statements. 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).
This is when an auditor does an actual review of the processes and the security of these processes and makes “professional recommendations” on the implementation of systems, the security of the systems and software, and even recommendations on better implementation of the database management. SAS 70 is important for all processes, electronic and manual, that may be outsourced to third party companies or may be maintained by third party software. This report provides the company as well as the third parties with a report that provides information on the internal controls that are in place and their effectiveness within both businesses. This allows the organizations to determine whether or not they need to make changes to their processes to ensure the security of the data that is being shared between parties (Hunton, 2004, p. 217). Finally, SAS 94 addresses the need for the auditor, and its firm, to fully understand the programming and technology that is being used for any given company.
Depending on the results of the evaluation, __ Auditing should guarantee that Apollo Shoes, Incorporated has adequate internal control over financial statements. __ Auditing Firm’s has observed financial statements by anglicizing the validity of the supporting documents. The disclosures notes attached to the financial statements have given __ Auditing a comprehensive assessment of the manager’s decision making process. The important assessment of the financial statement was to evaluate Apollo Shoes, Inc. financial strength and whether the organization badly stated any financial reports to the shareholders or consumers. The evaluation of the organization usefulness of the internal control, and provides very important information of the organizations achievement habits in the economy.