GAAP stands for Generally Accepted Accounting Principles. The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information. GAAP are imposed on companies so that investors have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes. GAAP cover such things as revenue recognition, balance sheet item classification and outstanding share measurements.
The existence assertion is to make sure that the client and accounts exist, the completeness is to make sure that all of the balances are recorded, and the valuation is to make sure that the balances are recorded at the correct amount. It is important that the auditor obtains a confirmation from a third party for the information in accounts receivables. After communicating and obtaining the information, the auditor is to evaluate the information (SAS No. 67, AU Section 330.11). The audit objectives auditors use to perform year-end sales cutoff tests are to determine if the information they obtained by the confirmation reduces the audit risk level.
– Front Office (5), and collaboration with Compliance Department (3), Back Office (5), Finance Department (7) Why: A bank should ensure a strong compliance culture throughout its organization, where the board of directors and senior management set the right tone. The board of directors and senior management (including Head of the business and Supervisors) should set a clear risk appetite and ensure a compliance culture where financial crime is not acceptable. The 2LOD ensures that the risks are actively and appropriately managed, and provide an independent effective challenge to the first line of defense. How & Who: Propose the policy framework and sound risk management process and internal control, while also supporting, assisting, and providing recommendations related to ORM approaches to the first line of defense. – All 2LOD
Under SOX, all publicly traded U.S corporations are required to maintain an adequate system of internal control by means of developing principles of control over financial reporting as well as continually verifying that these controls are working. LJB needs to ensure that it corporate executives and boards of directors’ controls are reliable and effective. Additionally, independent outside auditors must attest
WHAT ARE INTERNAL CONTROLS AND WHY THEY ARE IMPORTANT? Tabitha Walton Jones AC 201 Accounting Principles I Professor Eddy September 7, 2011 Abstract Every business should be concerned with internal controls. This system is designated to help protect the company’s assets so that it does not suffer any unusual losses. Internal controls are key to any business’s financial and business policies. According to the Internal Audit from Kansas State University, internal controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization.
The board of directors is responsible for overseeing and exercising corporate powers and certifying the company’s business affairs while managing the goals and objectives for long-term interests of the shareholders. Organizational Annual Report and SEC Filing The SEC requires publically traded companies to file annual financial reports, and these reports are open to the public. Investors are interested in these reports because it helps in determining the financial health of a company. As a means for providing guidelines, principles, and objectives for the financial markets in the United States, the Sarbanes-Oxley Act of 2002 enhances the SEC’s roles for reforming corporate accountability. This also includes establishing a private-sector regulator to oversee the auditing profession to combat accounting fraud, and enhancing financial disclosures.
The reality is that accountants have a legal and ethical duty to follow the rules and regulations as outlined by GAAP. They “have the responsibility to maintain objectivity in rendering professional services … and must be scrupulous in their application of generally accepted accounting principles” (American Institute of Certified Public Accountants, 2013). Although these rules may cause some disagreement, an accountant must adhere to GAAP regardless of what the client desires. Accounting is a profession which demands strong moral character from those who wish to practice. An efficient, effective, and successful accountant must be prepared to adhere to a steadfast code of ethics.
Consider the following: • What kinds of accounting, audit, and tax services does the firm provide? • Who is their target market(s) by industry and company? • Why would prospective clients give serious consideration to have KSM handle their accounting, audit and tax services? 3. Working in an ever changing accounting, audit and tax environment that is driven by change and strict regulatory adherence, how does the managing partner (David Resnick): • Ensure strict employee compliance to federal and state regulation and the company’s high ethical standards?
The Board is completing an update to the Conceptual Framework for Financial Reporting in order to give it a more complete, concise and updated set of concepts to use when the Board develops or revises IFRS Standards. The Conceptual Framework for Financial Reporting describes the basic concepts and objectives of general purpose financial reporting. It underlies the preparation and presentation of financial statements for external parties. It is an empirical tool that helps the International Accounting Standards Board (IASB) develop requirements in IFRS Standards which is based on clear and regular principles (ifrs, 2018). These principles, on the other hand, must bring about the Board developing IFRS Standards that makes it necessary for entities to present more important, comparable and clear information in financial statements.
It would need to be reviewed and signed off on by all responsible officers. A step that should be included is periodic internal audits of the financial data. An audit of that nature would review the accounting records and supporting documentation to verify accuracy of the financial records. You could do this by employing an Internal Auditor or my having McGladrey, LLC. complete an audit of all the financial data on a yearly basis.