Accountants have ethical responsibilities to many different parties, both internal and external to the company. The AICPA is used as a foundation because it covers professional conduct, integrity and general standards accounting principles. The code provides an ethical outline that all CPA members must adhere to. Accounting rules, regulations, and codes exist to ensure that the information presented is accurate and faithful to the financial circumstances. The AICPA is recognized as an authoritative source used to clarify accounting principles by offering guidance on official standards, new developments, and specific advice for accountants.
The Sarbanes-Oxley Act is mandatory and all companies must comply, size does not matter. The main purpose of the legislation is to make financial records more accurate and reliable for investors. It addresses issues like the establishment of a public company, creation of an accounting oversight board, auditor independence, corporate responsibility, and enhanced financial disclosure (Parks, 2006). The Act requires new auditing for internal controls; auditors will check the internal controls of companies’ procedures and present its findings in an annual audit report. The audit report must show report that management has established and maintained internal controls for financial reporting.
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).
To make their reports meaningful, a company reports the recorded data in a standardized way according to generally accepted accounting principles (GAAP). The remainder of this paper will illustrate examples of the income statement and balance sheet. In addition, this paper will discuss a few basic accounting principles along with a brief discussion of the difference in how equity is reported for an owner invested firm versus a not-for-profit entity. Construct Brandywine’s 2007 Income Statement In order to construct Brandywine’s 2007 income statement, one must first collect the data required for reporting. The income statement reports the success or profitability of a company’s operations over a specific period of time (The Income Statement, 2011).
This Act plays a role in organizations to regulate financial practices, and corporate growth. SOA includes the requirements of periodic financial reports that are certified by an authorized officer. Financial statements consists companies’ liabilities, obligations, and transactions. If there are any changes beyond any means, a report must be announced to the public as soon as possible. The implementation of this Act has risks and benefits individuals who are involved.
Lastly, we will summarize the information presented with a synopsis of what internal control measures are recommended. Ultimately, LBJ wants to go public in the future and to do so the company must have strong internal accounting controls in place and utilized. LJB Company: Internal Controls Report. Per LBJ’s request, this report has been created to provide your organization with the tools necessary to implement a solid internal control accounting procedure system. Internal controls are extremely important accounting practices that help ensure the safety of your business from fraud and clerical errors.
This is important to financial statements and documents because third parties often rely on this information and it is imperative that they are assured that the data is free from bias and inconsistency, deliberate or otherwise. Double Entry Accounting is a concept that requires all accounting transactions be recognized in two accounts as ether a credit or debit. With this method, all entries have two actions, one account is increased while the other is decreased. Double Entry Accounting is important to financial statements and documents because it allows the user to quickly check the accuracy of transactions because the total of accounts with credit balances should equal the total of accounts with credit balances (Elmblad, n.d.). This system is important to financial statement and
The audit plan and program aims to achieve the audit risk objectives of the audit team and to provide reasonable assurance and basis for the audit report and opinion. The members of the Audit team, the audit manager Pete and two audit staffers Ben and Maureen, have to understand the client’s business and industry. Perform preliminary analytical procedures. Keller CPAs needs to compare the performance of Smackey’s with the industry to further support its initial assessment of business risk. These analytical procedures help the audit team indentify areas where the risks of misstatement are very high.
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
SDM Audit’s responsibility is to express an opinion on the financial statements based on the information found in our audit. The audit will be conducted in accordance with generally accepted accounting standards in the United States of America. Under these standards we are required to obtain reasonable assurance that the statements provided are free from material misstatements whether by fraud or error. We are also required to obtain reasonable assurance that the financial statements are not misleading. Please be advised that this audit will not necessarily find all errors or fraud especially if the error or fraud is immaterial.