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Cardsmax the Accounting and Auditing

Disclosure of this information during the audit stage would have made things easier; however there is no quick fix for the issues that are brought about. Now the validity of the company is in question with little data to support the existence of this business at a specific time period. This could also bring about other legal issues regarding fees and specification that were not met dealing with the actual date that the business was started and legally doing business in its state. The issues were clear and it became an issue as to how these problems could in fact be rectified. The Omni Revenue was bogus, and there was no information available to support the validity of Omni Data's existence. Again, the fact that the Omni contract was signed months before the business had been incorporated also give way to issues with if the business itself was operating legally when it acquired the Omni Data account. The inability to find a verifiable president of Omni Data too leads for a need to further investigate the validity of any transactions that took place under this client name. The Locate Plus' Audit Committee Chairman had a conflict of interest because he had pledged assets to secure a loan to Latorella; in addition Latorella had been buying off Locate Plus' Audit Committee Chairman through extending him high interest loans (at 30% to 40%). Lastly, a revolving line of credit with Locate Plus, was not Identified as a related party, and was owned and controlled by Fields and Latorella. During the 2005-year-end audit, L&H failed to competently evaluate the reliability of the audit evidence obtained by the confirmation process. First, L&H initially sent its confirmation to the President of Omni Data -- a person alleged by the informant to be a "stooge" of Latorella -- at the address Locate Plus had provided. Moreover, the confirmation was initially returned to L&H by the U.S. Postal Service as "undeliverable." Ultimately, a confirmation was received, signed by a person purporting to be President of Omni Data. During the 2006-year-end audit, the confirmation sent to the Omni Data address that Locate Plus had provided was again returned as "undeliverable" (Securities Exchange Act of 1913). Here is a conclusive list of the areas of violation. Failure to adequately test the Omni Data Revenue and Receivables, Failure to adequately plan the 2005 and 2006-Year-End Audits, Failure to Competently Evaluate…

Pages: 3  |  Essay  |  Style: n/a  |  Sources: 0


Accounting International Accounting and Auditing

Global financial reporting is quickly becoming an actuality. As home to the biggest capital market in the world, the U.S. has a vital role to play in international economic reporting. Due to the U.S.'s position in global capital markets, U.S. firms and academics can no longer worry about the expansion, application, and implications of U.S. Generally Accepted Accounting Principles (GAAP). The point has come to center on the expansion, appliance, and propositions of International Financial Reporting Standards (IFRS) (Barth, 20085). There is no arguing that global standards are the wave of the future. It is very imperative that the U.S. play a considerable role in the expansion and achievement of international accounting and auditing standards so that these are developed with their best interests in mind. Works Cited Barth, Mary E. "Global Financial Reporting: Implications for U.S. Academics." Accounting Review 83.5 (2008): 1159-1179. Business Source Premier. EBSCO. Web. 6 July 2011. Hail, Luzi, Christian Leuz, and Peter Wysocki. "Global Accounting Convergence and the Potential Adoption of IFRS by the U.S. (Part II): Political Factors and Future Scenarios for U.S. Accounting Standards." Accounting Horizons 24.4 (2010): 567-588. Business Source Premier. EBSCO. Web. 6 July 2011. "How we develop IFRSs." 2011. IFRS. Web. 6 July 2011. < http://www.ifrs.org/How+we+develop+standards/How+we+develop+standards.htm> "International Accounting and Auditing Standards." 2011. The World Bank. Web. 6 July 2011. Murphy-Smith, L., Sagafi-Nejad, T. & Wang, K. 2006. "Going Global: Accounting and Auditing Standards." Web. 6 July 2011. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1263002 Pomeranz, Felix. "Prospects for International Accounting and Auditing Standards -- The Transnationals in Governmental Regulations." International Journal of Accounting 17.1 (1981): 7-20. Business Source Premier. EBSCO. Web. 6 July 2011. Richardson, Alan, and Burkard Eberlein. "Legitimating Transnational Standard-Setting: The Case of the International Accounting Standards Board." Journal of Business Ethics 98.2 (2011): 217-245. Business Source Premier. EBSCO. Web. 6 July 2011. "SEC Concept Release: International Accounting Standards." 2000. Securities and Exchange Commission. Web. 6 July 2011. < http://www.sec.gov/rules/concept/34-42430.htm>…

Pages: 6  |  Research Paper  |  Style: n/a  |  Sources: 7


Accounting Profession in 2014

Accounting Profession in 2014 In the midst of scandal, the accounting profession finds itself under scrutiny; perhaps more than it ever has in the past. Accounting and auditing scandals have become les frequent since WorldCom and Enron, but that still does not mean that we are now immune. High profile cases continue to haunt the media. As Bernard Madoff is…

Pages: 15  |  Essay  |  Style: n/a  |  Sources: 2


Finance Comparing Nike vs. Adidas

Adidas -- Adidas's financial data includes current assets, non-current assets, current liabilities, non-current liabilities, accounts receivable, inventories, goodwill, borrowing and credit lines, pensions and similar obligations, shareholders' equity, operating expenses, and income taxes (Adidas, Balance Sheet). l. What were the dividends over the last three years? Nike -- The dividends were 0.95 per share in 2005, 0.74 per share in 2004, and 0.54 per share in 2003 (Nike, Ten-Year Financial History). Adidas -- The dividends were 1.30 per share in 2004, 1.00 per share in 2003, and 1.00 per share in 2002 (Adidas, Financial Highlights: Five-Year Overview). m. does the company have more than one type of stock (common, preferred, treasury)? Nike -- Nike has Class A common stocks and Class B common stocks (Nike, Annual Report 2005). Adidas -- Adidas only has common stocks. n. How many common stock shares are outstanding? Nike -- 98.1 Class A common stocks and 168.0 Class B common stocks were outstanding as of June 30, 2005 (Nike, Annual Report 2005). Adidas -- 46,023,655 common stock shares were outstanding as of June 30, 2005 (Adidas, Basic Data). o. Does the company have any outstanding bonds? Nike -- Nike does not have any outstanding bonds. Adidas -- Adidas does not have any outstanding bonds. References Adidas. "Basic Data." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/investor/share/default.asp Adidas. "Financial Highlights: Five-Year Overview." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/investor/key_financial_data/default.asp Adidas. "History." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/overview/general_information/default.asp Adidas. "Share Price." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/investor/share/share_price/default.asp Adidas. "Financial Analysis." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/investor/reports/annually/2004/en/f_fs_ar.html Adidas. "What We Do." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/overview/history/default.asp Nike. "Annual Report 2005." 2005. Retrieved October 1, 2005. URL: http://www.nike.com/nikebiz/investors/annual_report/ar_05/docs/2005_10k.pdf Nike. "Stock Quote." 2005. Retrieved October 1, 2005. URL: http://invest.nike.com/quote.cfm Nike. "Ten-Year Financial History." 2005. Retrieved October 1, 2005. URL: http://www.nike.com/nikebiz/investors/financial/docs/10-yr_financial_history2005.xls Nike. "Timeline." 2005. Retrieved October 1, 2005. URL: http://www.nike.com/nikebiz/media/nike_timeline/nike_timeline.pdf…

Pages: 3  |  Term Paper  |  Style: n/a  |  Sources: 0


Developments in U.S. Auditing Standards and IFRS

While ASB led the redrafting efforts to clarify the standards, it also incorporated the standards with the ISAs, from the IAASB (Huault & Richard, 2012). Although the objective of redrafting the standards was clarity and unity and not to create extra requirements, auditors must adjust their practices as required by this project. Conclusion A shift to the clarified auditing standards has provided to be an inevitable move for at least all organizations worldwide. As organizations embrace this significant move, more will be pushed to embrace the same move for compatibility. Therefore, auditors must be ready to contend with the far-reaching consequences of such crucial regulatory change is likely to have on organizations. Auditors need to be proactive concerning the convergence of IFRS. They must continually monitor the current developments in the field, staying abreast as this international topic is subject to develop globally. References Huault, I., & Richard, C. (2012). Finance: The discrete regulator: how finance shapes the world. Basingstoke: Palgrave Macmillan. Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2011). Financial accounting: Tools for business decision making. Hoboken, N.J: John Wiley. Narayan, F.B. (2012). Diagnostic study of accounting and auditing practices in the Marshall Islands. Manila: ADB. Tapscott, D., Eccles, R.G., & Krzus, M.P. (2013). One report: Integrated reporting for a sustainable strategy. Hoboken, N.J: Wiley.…

Pages: 5  |  Research Paper  |  Style: n/a  |  Sources: 4


Accounting Careers

Public Accounting, Corporate Accounting and Governmental Accounting Careers Career options that are available to entry-level accounting graduates include those of public accounting, corporate accounting and governmental accounting. Each of these vocational options are divided into more specialized areas of practice. The purpose of this study is to examine and in-depth research study into the areas of accounting represented by the…

Pages: 14  |  Term Paper  |  Style: n/a  |  Sources: 9


Accounting in Crisis

Accounting in Crisis Between December 2001 and July 2002, four major U.S. corporations -- Enron, Global Crossing, Adelphia and WorldCom filed for bankruptcy, constituting the most serious outbreak of corporate bankruptcies in U.S. history. These companies had hidden their true financial health from creditors and shareholders until an inability to meet financial commitments forced them to restate earnings that revealed massive losses, ultimately leading to a financial meltdown. Since most of the financial irregularities were committed by the management of the companies with the tacit or even active collusion of accountants and auditors, the prestige and public image of the accounting and profession plummeted to an all-time low. Egged on by government legislation such as the Sarbanes-Oakley Act of 2002 and stung by its own falling reputation, the auditing and accounting profession was forced to adapt to the changing environment. In this paper, I shall review the conditions which caused the role of accounting and auditing profession to change and what major changes occurred as a result of the accounting scandals. Conditions that Caused the Changes Even before the highly publicized financial scandals in the early 2000s, the accounting profession had seen a significant fall in its attractiveness among students, which was reflected in a 25% drop in award of accounting degrees in just 4 years from 1996 to 2001 in the United States (Inman qtd. By Colson, 2002, p. 21). Accounting education was slow to respond to the rapidly changing business environment and was perceived to be overly narrow in scope. As a result, most recruiting firms started to prefer hiring MBAs and professionals with general degrees for positions previously reserved for professional accountants. Even as the educators and accounting organizations were struggling to make the education of accountants and auditors more broad based and rigorous, the profession was hit by the double whammy of a downturn in the U.S. economy (exacerbated by the 9/11 terror attacks) and the high profile business scandals at Enron, WorldCom, and Global Crossing. Since almost all of the scandals involved filing of inaccurate and misleading financial statements prepared with the collusion of accounting firms and auditors, it was only natural that the prestige……

Pages: 2  |  Term Paper  |  Style: APA  |  Sources: 2


Auditing the Role of Databases in the

Auditing The role of databases in the auditing function is to analyze a much larger volume of information more quickly and accurately than what has been done in the past (Cascarino, 2012). That role is important because manual systems were far less reliable than systems that utilize computers, and those old systems could cause auditors to easily make mistakes that…

Pages: 16  |  Essay  |  Style: n/a  |  Sources: 0


Influence of the French Accounting System on a Former French Colony

¶ … French Accounting System on Cambodia Cambodia stands out from its Southeast Asian neighbors by virtue of its unique history as a French colony and the fact that its accounting profession was virtually destroyed during the turbulent years following its independence at the hands of Pol Pot and the bloodthirsty Khmer Rouge regime. Consequently, the modern accounting profession in…

Pages: 8  |  Research Paper  |  Style: Harvard  |  Sources: 12


SOX the Sarbanes-Oxley Act (SOX)

In that way, the accounting profession has been forced to take greater responsibility for its role in the economic system and has been given the tools to do this. 3. I believe that the accounting profession is better off being government-regulated, for two reasons. The first is that the objective of accounting and auditing for public companies is to ensure that trustworthiness of the country's investment system. This objective is greater than any one accounting firm or corporate client. When confidence in the investment system is compromised, firms find it more difficult to raise the capital they need. This in turn harms growth, innovation and the economy as a whole. That confidence in the accounting system has an effect on the GDP makes it a matter of national economic policy, not simply a matter for one industry. The other reason why the accounting profession is better off being government-regulated is that the mechanics of how the industry performs its tasks will not change. Whether the enforcement mechanism comes from within the industry or from government, accounting firms will still need to do their jobs the same way, performing due diligence and implementing controls on the accounting and auditing processes. Because functionally the accounting firms will do the same jobs the same way, and the only difference between the two alternatives is who runs the enforcement mechanism, then we need to look back to the first reason for guidance. If government regulation caused dramatic changes to the way that the accountants to their business, then there might be a downside, but with no functional downside, the ability of government to ensure that accountants are performing their duties to investors is the deciding factor. 4. I believe that fraud will be reduced somewhat as the result of SOX. Many of the frauds that led up to the passage of SOX were outright criminal, and SOX does not directly address criminality. There will always be people who try to perpetrate such frauds. SOX removes some of the perverse incentives within the accounting system to ignore such frauds, thereby increasing the likelihood that the fraud will not only be detected but will also be dealt with. In addition, SOX builds in extra oversight and a higher number of interconnected responsibilities. CEOs and CFOs must approve the internal controls, and so too must the auditors. For a fraud to be perpetuated, the auditors and the…

Pages: 4  |  Term Paper  |  Style: n/a  |  Sources: 4


Forensic Accounting in Practice

Forensic accountant must possess accounting skills, auditing skills, business skills, know investigative techniques, and have a clear understanding of human behavior. Each skill is applied to business operations and is used in the courtroom environment. These skills are vital in obtaining evidence needed by business and court cases in identifying fraud and prosecuting it. The forensic accountant must know how…

Pages: 5  |  Research Paper  |  Style: n/a  |  Sources: 5


Accounting for Income Taxes

Accounting for Income Taxes The role of the tax professional has changed substantially in the past decade. Previously, the focus was on tax planning and the marketing of tax products. The focus today is more on the corporation's tax provision and compliance work. This shift has occurred as the result of changes in the regulatory environment. In particular, the enactment…

Pages: 10  |  Term Paper  |  Style: n/a  |  Sources: 5


External Auditing

External Auditing The role of external auditing on corporate governance corporations has increased dramatically over the past ten years. At the outset of the 21st century, auditing was still a somewhat minor consideration, something that was required but did not add significant value to the firm. The role of the auditor in corporate governance was never direct, but rather the…

Pages: 8  |  Essay  |  Style: n/a  |  Sources: 10


Sarbanes-Oxley Impact on Auditing the Impact of

Sarbanes-Oxley Impact on Auditing The Impact of the Sarbanes-Oxley Act on the Auditing Profession The accumulated effects of government-defined compliance legislation on the auditing profession has created significantly greater opportunities for providing services, yet has also introduced an entirely new and higher level of complexity as a result. The intent of this paper is to evaluate how the Sarbanes-Oxley Act…

Pages: 5  |  Thesis  |  Style: MLA  |  Sources: 4


Role of Accounting in Economy

Role of Accounting in Economy The objective of this work is to discuss the basic theories of accounting focusing on capital and money as well as the role of accounting in the economy. Accounting's role is central to decision making in the economy. The work of Hoggett, Edwards and Medlin (nd) states that accounting "is a service activity" which uses "words and symbols to communicate financial information useful for decision making." It is related that the terminology and symbols used in accounting "have developed from the earliest known accounting records." (Hoggett, Edwards and Medlin, nd) the accounting profession has "evolved in response to society's need for economic information to help people make economic decisions." (Hoggett, Edwards and Medlin, nd) DEFINITION Accounting is stated to have been referred to as the "language of business." (Hoggett, Edwards and Medlin, nd) Accounting has been further defined "as the process of identifying, measuring, recording and communicating economic information to permit informed judgments and economic decisions." (Hoggett, Edwards and Medlin, nd) Accounting's primary purpose of accounting is stated to be assisting individuals in making economic decisions. Accounting information "provides the basis for making decisions about resource allocation. To be useful, data must be identified, measured, recorded, classified, summarized and communicated to potential users." (Hoggett, Edwards and Medlin, nd) II. POTENTIAL USERS of ACCOUNTING INFORMATION Hoggett, Edwards and Medlin state that the primary objective of accounting is the provision of information in the form of reports "which can be used by internal and external decision makers." (Hoggett, Edwards and Medlin, nd) Reports which are prepared for the benefit of decision makers external to the entity are referred to as 'financial accounting'. These users include "investors, or creditors of the entity." (Hoggett, Edwards and Medlin, nd) Inside users includes members of management who use the "same financial statements as outside decision makers, plus internal reports and summaries prepared specifically for it." (Hoggett, Edwards and Medlin, nd) Accounting reports may be in one of two forms: 1) special-purpose reports; and 2) general-purpose reports. (Hoggett, Edwards and Medlin, nd) Special purpose reports are designed to meet the "needs of a specific users group" while general-purpose reports are designed for the "general use of external users." (Hoggett, Edwards and Medlin, nd) III. ROLE of ACCOUNTING in the DECISION-MAKING PROCESS The role of accounting in the decision-making process is one that is central. "Financial accounting information focuses on actual events." (Hoggett,…

Pages: 5  |  Essay  |  Style: MLA  |  Sources: 4


Sarbanes-Oxley Act on Auditing Changes

This particular reform significantly improved the transparency and independence of the reporting process. A study of the contents of the audit committee reports from the 2003 and 2004 proxy statements of 100 randomly selected companies listed on the NYSE found significant improvements in terms of the "clear identification of the financial experts on the committee; a definitive conclusion about the independence of the auditor; and a disclosure about the policy regarding the preapproval of nonaudit services" (Pandit, Subrahmanyam, & Conway 2005). Critics of Sarbanes-Oxley said that the Act's main beneficiaries were audit firms, which experienced a boom in business as companies had to comply with its more complicated reporting requirements. Additionally, some critics said that the change in the mentality of many firms and the corporate culture of the U.S. was the primary reason for apparent improvements in accounting compliance and ethical standards. However, the above-cited study seems to suggest otherwise: concrete changes were manifest in audit reports. Sarbanes-Oxley mandated the empowerment of figures within the auditing process that were disempowered before. Today, "Sarbanes-Oxley has made it okay for directors to speak up in board meetings. There were directors previously who weren't sure what they were doing or that their opinion mattered, who now have become emboldened because it's clear that independent directors can have a voice in the operation of the board" (Has Sarbanes-Oxley made a dent in corporate America's armor, 2004, Knowledge @Wharton). While Sarbanes-Oxley did not provide a remedy for every single potential loophole or abuse, it injected more independent voices into the auditing process through the creation of audit committees without a stake in the final outcome of the review. References Has Sarbanes-Oxley made a dent in corporate America's armor? (2004). Knowledge @ Wharton. Retrieved August 26, 2011 at http://knowledge.wharton.upenn.edu/article.cfm?articleid=823 Pandit, Ganesh M. Vijaya Subrahmanyam, & Grace M. Conway. (2005). Audit committee reports before and……

Pages: 2  |  Research Paper  |  Style: n/a  |  Sources: 2


Auditing in the Public Sector

Auditing in the Public Sector Good governance demand accountability and transparency in the management of public resources. The diverse nature and size of government expenditure make public sector auditing necessary and indispensable. Auditing is the examination of the financial statements of an organization in order to express independent and objective opinion on whether the statements give a true and fair…

Pages: 8  |  Term Paper  |  Style: MLA  |  Sources: 9


Independence Between Auditor and Client

Independence Between Auditor and Client: Auditor independence is largely regarded as the cornerstone of the auditing profession because it's the basis for public trust in the proof function. The independence of an auditor is guaranteed if he/she is has the capability of making free audit decisions. In this case, these auditors have the ability to make such decisions despite of perceived lack of autonomy and if they are in a potentially compromising situation. On the other hand, there is need for independence of clients during the financial statement audit engagements. The clients should be free to evaluate information on the financial statement objectively without influence from the auditor. Generally, auditor independence is used to promote and support reliance on the financial reporting process. Auditor Independence: As the cornerstone of the auditing profession, the independence of an auditor is vital in ensuring that these professionals present unbiased audit decisions. Independence is a word commonly used in accounting in conjunction with services offered by auditors and certified accountants to their clients. The most common services provided by external auditors that need independence include auditing internal control over financial reporting, financial statements, and confirming the management affirmations of internal control over financial reporting. The independence of an auditor can be classified into two categories as explained below & #8230; Independence of Mind: This kind of independence enables the professional to perform his/her services without any influence that compromise his/her professional judgment. As a result, the independence of mind allows auditors exercise objectivity, professional skepticism, and to act with integrity (Greene, 2008). Independence in Appearance: This category of independence basically entails avoidance of situations that could make a reasonable and informed third party with relevant information to logically conclude that the objectivity, integrity, or professional skepticism of the auditor has been compromised. Client Independence: The independence of the audit client is needed not only during the engagement period but also the period of the entire financial statements. This financial statement audit engagements normally begin when the audit team starts to conduct the auditing services and ends when the audit report has been presented. In cases with financial engagements of a recurring nature, the period ends through a later notification by either party of the termination of the relationship or the submission of a final audit report. It's important to note that the audit client can be a firm involved in the financial statement audit…

Pages: 3  |  Essay  |  Style: n/a  |  Sources: 2


Information System Holds in Accounting

Digital technology has made it easier to collect the data and move it all over the world, but at the same time, this has led to the production of an enormous amount of data which is difficult to handle. The challenge is now in filtering, sorting out, analyzing and compiling this data in a manner that will ultimately add value…

Pages: 20  |  Term Paper  |  Style: n/a  |  Sources: 0


Roles of Forensic Accountants in

In reality, the company was doing badly and recording a net loss during the period. When the truth eventually leaked out, the company stock prices fell and the company executives were issuing the false financial statement with the hope to increase the stock prices. In a federal trial, two executives of Enron Corporations were convicted of conspiracy of securities fraud and wired frauds. Haggerty, et al. (2011) argues that the email communication tracking was one of the strategies that a forensic accountant used in uncovering the Enron Corporation fraud. Email communication has become vital evidence during a forensic investigation. The author argues that the forensic accountant was able to uncover the strategies the company executives perpetuated the fraud through the email communication. Typically, the forensic accounting investigators were able to extract data from approximately 5000,000 emails of Enron Corporation, and the accounts were owned by predominately-senior managers. All the datasets extracted from the email communication revealed the evidence of large-scale fraud. The final report of the investigation of the forensic accountant presented at the courtroom revealed that the fraud occurred because there was a lack of transparency in the Enron Corporation. Thus, the company executive used series of techniques to perpetuate frauds, which include accounting loopholes, and poor accounting practices to hide billion of dollar debts that the company accrued over the years. WorldCom fraud was another case that was uncovered by a forensic accountant. WorldCom was a U.S. based telecommunication company and one-time second largest in the long distance phone company. However, the company was generally known for its massive accounting scandals in 2000s. The outcome of a forensic accountant investigation revealed that the company's executives inflated the company assets to approximately $12 Billion. Typically, the company manipulated its financial statements by classifying payments or costs and using other company assets as capital expenditures. The findings of the investigation indicted several former executives of the WorldCom and many of them faced the criminal charges for their involvement in the frauds. Notably, Former CEO of the company was sentenced to 25 years and the former CFO was sentenced to 5-year imprisonment. Conclusion In the contemporary business environment, forensic accountants play an important role in uncovering the financial frauds. This report explores the different strategies that forensic accountants used in uncovering the financial frauds. The paper also discusses the roles and responsibilities of a forensic accountant and the skills that a…

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Agree With Accountant B's Philosophy

primarily because system controls provide a means of preventing errors from occurring in the first place. It allows both the accounting firm and the business to more proactive rather than reactive to inventory concerns and considerations. The proactive nature allows investors and other stakeholders to remain confident in the overall business operations of the firm. It also allows management to stay in touch with inventory levels and adjust business operation accordingly. To avoid these occurrences from happening again, tight inventory controls should be implemented. In addition top level management must be held accountable for these inventory levels, with incentives directly linked to behaviors. In this way, management will act in the best interests of the company (Goodyear, 1913). Agency Theory, contracting costs, and firm value are all relevant issue pertaining to the case. Agency theory, contracting costs, and firm value are all predicated on aligning incentives with benefits. This alignment creates an atmosphere where all stakeholder groups have a vested interest in the company. Contracting theory for example pertains to issue of executive compensation and aligning incentives to maximize the WHK shareholder wealth. Agency theory pertains the relationship (or lack thereof) between an individual and those that represent the individual. This occurs when management does not act in the best interests of shareholders, as is the case with WHK. Both concepts relate to firm value as misplaced incentives can lower the value of the firm relative to other companies with correct incentives in place. As such both the accounting firm and the business overall must create inventory incentives that minimize agency costs and align management goals with those of other stakeholders (Lo, 2013). References: 1. Lo and Fisher: Intermediate Accounting, 2nd edition, Pearson, Toronto 2013, ISBN 978-0-13-296588-0, p. 2-102, 2. Goodyear, Lloyd Earnest: Principles of Accountancy, Goodyear-Marshall Publishing Co., Cedar Rapids, Iowa, 1913, p.7-76 3. Singh Wahla, Ramnik. AICPA committee on Terminology. 1999 Accounting Terminology Bulletin No. 1 Review and Resume. 4. Friedlob, G. Thomas & Plewa, Franklin James, Understanding balance sheets, John……

Pages: 2  |  Case Study  |  Style: n/a  |  Sources: 4


Legislation and Standards Affecting

Issues of legal protection, like the degree of recourse given to creditors of investors who have been hurt as a major aspect of the nation's regulatory and legal framework might affect the audit. In the business world where investors have limited authority of the resource, it might expedite the creation of a dominant position for management to impact or miss-use…

Pages: 12  |  Term Paper  |  Style: n/a  |  Sources: 10


Personal vs. Professional Judgement

Accounting - Ethics PERSONAL and PROFESSIONAL ETHICS in ACCOUNTING Accounting is a field rife with potential for ethical dilemmas addressed in great detail, both in the private sector and in public (government) sector by the American Institute of Certified Public Accountants (AICPA) Code of Professional Responsibility and the generally accepted government auditing standards (GAGAS) defined by the U.S. Comptroller General in the U.S. Government Auditing Standards (GAS), AKA "the Yellow Book," published annually by the U.S. General Accounting Office (GAO). According to the AICPA, the fundamental ethical obligation of the Certified Public Accountant (CPA) is expressed in the AIPCA Code of Responsibility, Section 55 - Article IV -- Objectivity and Independence, as follows: member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services" (AICPA 2008). [Emphasis supplied.] According to the GAO, the fundamental GAGAS of professional ethics is expressed in GAS Section 3.03, pursuant to which, "The general standard related to independence is: In all matters relating to the audit work, the audit organization and the individual auditor, whether government or public, should be free both in fact and appearance from personal, external, and organizational impairments to independence." (GAO 2008). [Emphasis supplied.] Further, the GAO GAGAS recognizes the AIPCA ethical standards and specifies, in GAS Section 1.09, that GAGAS may be used in conjunction with the "professional standards used by other governing bodies" including the AIPCA. To the extent there is any discrepancy between the GAGAS provisions and those of any other applicable standards, GAS Section 1.10 specifies that government auditors rely on GAGAS when multiple standards are used. The Logic of Applying Professional Judgment Instead of Personal Judgment to Resolving Ethical Dilemmas in Matters of Professional Accounting: In private personal judgments, we are free to assign value to human behavior and motivation, as well as to the worth or worthlessness of vocational choices; we may also give credit for certain choices of conduct or behavior. If professional accounting standards allowed for personal judgments, our natural predisposition might be to reward benevolence or charitably-motivated actions, for one example, even if strict technical application of tax codes or auditing standards disallowed a deduction. Likewise, we might allow more latitude to institutions affiliated with causes close to……

Pages: 3  |  Term Paper  |  Style: APA  |  Sources: 2


Public Trust

Accounting Credibility The accountability failures the United States, as well as other nations worldwide, that led to bankruptcies and restatements of financial statements and harmed scores of stakeholders, including employees and pensioners, had a significant impact on the credibility of the accounting profession. These destructive incidents also resulted in a loss of investor confidence and stock markets to lose billions…

Pages: 5  |  Term Paper  |  Style: APA  |  Sources: 4


Auditing the Main Problem Related to Many

Auditing The main problem related to many companies leaving Andersen, despite the fact that its Houston office had no part in servicing the engagements, is perception. Primarily, Andersen had a significant business relationship with Enron, which was its largest client. With Enron's demise, this relationship was seen as universally damaging, regardless of the areas of the company that had nothing to do with the scandal. Secondly, Andersen's reputation even before its relationship with Enron was not crystal clear to begin with. Indeed, its reputation had already been damaged by several investigation into its other accounting and auditing practices. The Enron scandal appears to just have been the final nail into the coffin. It appears then that, regardless of any true wrongdoing, its mere association with the scandal brought about irreversible damage. If I had an accounting career, my reputation could be damaged by turning a blind eye when I see discrepancies in the accounting practices of my clients. Even if I knew nothing about these concealments, any……

Pages: 1  |  Term Paper  |  Style: MLA  |  Sources: 3


New PCAOB Reporting Requirements a

" (U.S. Department of Interior 2003 P1). "The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud."( Apostolou & Crumbley 2008 P. 1). Responsibility of an auditing firm is to assess whether the financial statement presented by a publicly traded company fairly reflects the company performances. SEC requires a publicly traded company to use independent auditor to assess whether the financial statements presented by the company reflects their financial positions. Auditing involves evaluation of a company financial position and present auditing note in accordance with the general accepted accounting principles. Following are the responsibilities of an auditing firm to detect fraud: First, an auditing firm should perform the test of the financial statement of a company to determine whether the company financial data comply with the law and regulations. In addition, an auditing firm should implement internal control testing to assess the effectiveness of internal system within a company. When an auditing firm sees that internal control is strong, an auditing firm should implement substantial analytical procedure by comparing financial information with non-financial information to ascertain whether data collected make sense. If the company internal control is weak, an auditing firm should implement a substantial test for detail by selecting major account balance and find hard evidence such as invoices or bank statement in order to detect any fraud Giving challenges in detecting fraud, one of the effective methods that an auditing firm could employ to detect fraud is to subject a company to forensic auditing. Forensic auditing is the most aggressive method to detect fraud. Typically, forensic method to detect fraud is much more detail and involve evaluation of complete company record which includes all the company financial data. Forensic method to detect fraud also includes questioning of all company employees. Thus, a public company needs to undergo forensic auditing methodology on a regular basis. While forensic method to detect fraud is very effective, the procedure is significantly more expensive to implement and the method is time consuming than regular auditing system. While financial auditing system does not cover every transaction, a forensic auditor performs detailed analysis of the company to detect fraud. (Apostolou & Crumbley 2008). Recommendation for alternatives to the PCAOB. Alternative recommendation to PCAOB is to allow SEC, PCAOB and FASB to work together. Changes…

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International ACCT Standards

International Accounting Standards There is now an international movement towards common accounting standards for all countries, and as a major economic power, United States has an important role to play in the matter. There are various points-of-view regarding the action that should be taken by United States in this regard. The position regarding this in the current month is that…

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Ethics in Forensic Accounting

¶ … forensic accountants and their role in detecting / preventing fraud. This will be accomplished by focusing on the most common types of frauds and the way they are impacting stakeholders. Once this occurs, is when we can provide specific insights that will highlight how these challenges can be mitigated over the long-term. Over the last several years, the…

Pages: 8  |  Essay  |  Style: n/a  |  Sources: 8


Skillset for Forensic Accounting

Forensic Accounting Skill Set for Forensic Accounting Forensic accounting is the search of evidence and financial facts of legal problems for a civil or criminal court. This is a method for investigating business situations and financial transactions to gain the truth and opinion on fraudulent activities (Kushniroff, 2012). The field of forensic accounting has two main areas of expertise, these…

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SEC Ictv the Securities and

Respondents' conduct, as further described below, constituted improper professional conduct within the meaning of Rule 102(e)(1)(ii) and (iv) and Section 4C of the Exchange Act." Analysis The SEC is correct in going after the auditors in this situation for two good reasons. The first reason is that the accounting standards were wrong and ICTV had an intent to deceive and cheat their way to the top. The competitive atmosphere that capitalistic endeavors must compete within makes the SEC's job of regulation very difficult. Oftentimes, accountants are rewarded with bonuses and raises when they find new ways of exploiting loopholes within policies and laws. This environment is sure to breed cheaters. The second reason the SEC should go after the auditors in this situation is to help raise the levels of standards for accounting professionals. Certified Public Accountants. Have a professional and civic duty to represent the public's best interests, when this fails to happen, a necessary correction in the system should most definitely be applied. Since leadership is usually given credit for successes, the same should be applied in cases such as these were disastrous failures have occurred. The responsibility of the performance of the accounting firm begins at the top and should point downwards from there. All leaders within this organization, including the CFO and CEO, should be held responsible for their actions. References The United States Securities and Exchange Commission. Administrative Proceeding 3-997, 20 Jan 2007. Retrieved from http://www.sec.gov/litigation/admin/2011/34-63740.pdf…

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Community Power Structures

There is also an outline of the specific issues that a number of different types of not-for-profit organizations will face in their accounting, and how to handle each of these in turn. Issues like different types of accounting such as cash basis are covered here. Accounting for churches, museums, performing arts foundations, clubs and private foundations is all provided. Chapter 20 highlights budgeting, and the issues that surround that process for not-for-profit organizations. The budget is basically a plan of action and the financial pathway for getting to the objective. There are different ways to prepare a budget, and these are outlined in the reading. Cash flow is a major issue, so critical concepts with respect to revenues, strategic reserves and monthly/quarterly budgets are all covered. The issue of responsibility is also discussed -- senior management may make strategic decisions but somebody familiar with accounting needs to be in charge of the budget. Budgets are also used as a control mechanism, which is important to remember, because that highlights the need for a superior budget. Chapter 24 highlights the role of audits in not-for-profit accounting. Independent audits are an important form of control, because third parties examine the financials and ensure that they are accurate and reflect the organization's financial condition. The chapter explains the auditor's opinion, which is a formal statement with specific meaning. The benefits of audits are outlined, mainly relating to control, and the process of selecting an accounting for the audit is also covered in this chapter. Audit committees are usually charged with oversight of the auditing practice. Some of the audit tools are also explained, but the chapter is mostly an introduction to the concept of auditing and does not provide in-depth explanation of the……

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Unwise to Make This Investment for a

¶ … unwise to make this investment for a wide variety of reasons. The promised return indicates the high level of risk inherent in this investment and this risk is born out in the inadequacy of the financial statements. The statements are simply inadequate in so many ways that they are barely worth considering; yet there is little else beyond the statements upon which for me to make an investment decision. The first major problem with the financial statements is that they are unaudited. Auditing is a critical procedure in the production of financial statements because it acts as verification of the authenticity of the information (Vitez, 2010). Unaudited statements, especially from new, private companies, are not worth the paper they are printed on. Such statements may or may not contain any factual information. Without auditing, there is simply no way for an investor to know for certain that the statements are even remotely accurate. Even if the statements were audited, there are a number of problems that would negate any hope of a rational investor purchasing these debentures. The first is that the financial statements are a year old. While it may be fascinating from a historical perspective to study these statements, from an investment perspective a reasonable investor would need more timely and accurate information (Richardson, 2002). This is especially true of younger companies, whose fortunes can change swiftly. But even for established companies, it would be unwise to make an investment decision based on year-old statements. The third major issue with these statements is that they do not have any comparables. Comparables are one of the keys to understanding financial statements (Robinson, 1975). The firm's bottom line number on its own is relatively meaningless. Context is vital, since the bottom line number may actually indicate that the there has been a significant decline in the firm's fortunes. Without such context, however, it is difficult to make an informed evaluation of the statements presented. The fourth major issue with these statements is that they contain no disclosures. These disclosures are absolutely critical for the interpretation of financial statements (AICPA, 2010). As with the comparables, the disclosures are a means for putting context to the statements. It is imperative for the proper evaluation of financial statements to understand the nature of the inventory valuation, depreciation methods and loan agreements. The condition of the financial statements is poor. The time…

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GAAS Standards vs. GAGAS Standards

GAAS standards vs. GAGAS standards Historically, accounting is concerned with the recording of financial transactions of an organization in the books of accounts. The process of accounting usually ends in a financial statement or a report. Moreover, non-financial reporting methods are becoming more usual. Akin to audit, accounting methods vary among the public as well as private sectors. The methods of accounting are being adopted to be used in both the public as well as private sectors. These different methods establish the manner in which income and expenditure is recorded, and the juncture that particular information is recorded. They also supply different type of information on capital, assets and liabilities, and also budget. (White; Hollingsworth, 26) Generally Accepted Auditing Standards -- GAAS is a collection of organized guiding principles that is used by Auditors while undertaking audits on companies, finances, guaranteeing the correctness, reliability and verifiability of auditors' actions and reports. It is through the reliance of GAAS, that the auditors are able to minimize the probability of missing material information. The GAAS is segmented into principal sections which are (i) general standards (ii) standards of fieldwork (iii) standards of reporting. (Generally Accepted Auditing Standards) The GAO issues the Generally Accepted Government Auditing Standards -- GAGAS having the standards with regard to audits with regard to the governmental institutions, activities, programs, as well as roles, and also of government support obtained by non-profit establishments, contractors, and other non-governmental institutions. These standards relate with regard to the professional qualification of the auditors, the audit activity quality, and the features of useful professional audit reports. (Accounting an Auditing Standards) It is observed that Accountants visualize themselves discharging tasks as a routine manner in an environment that is regulated by an intricate set of rules, principles, and practices. While performing their tasks they are given to assume a certain role. While performing their roles, accountants encounter official or legal rules of behavior as also moral elements created by specific circumstances. It is through acceptance of roles that accountants accept concurrently the consequential obligations. The rules assumes the presence of moral standards which impact the welfare of human being are not established or changed by decisions of authoritative bodies and are proposed to prevail over self-interest and are founded on impartial considerations. (Riahi-Belkaoui, 72) On deciding upon the appropriate auditing standards, it is a fact that while GAAS are normally used for private as…

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Hair Emporium There Are a

Another benefit of having a standardized accounting system is that the franchisees can learn from each other how to handle given situations. The combined body of knowledge will improve performance throughout the organization. Lastly, a standardized, computerized accounting system allows the owners to spend more time working on improving their business, rather than accounting. Many manual accounting methods are not only inconsistent, but very time consuming as well. With a standardized system, the bulk of the work is in the beginning when the owner is learning how to use the system. Once the system is learned, the accounting function takes significantly less time and is much less frustrating. 4. The academic literature covers many issues that can lead to recommendations for Rolando and Rosa. One such recommendation is to develop a system for accounting for the fair market value of franchise rights (Kohlbeck, Cohen & Holder-Webb, 2009). Since they plan to give franchises to people with hardly any money and no experience, they will probably have to buy back some of these franchises at some point. The accounting of fair value for these buybacks is a current issue in accounting and auditing, and it would behoove Rolando and Rosa to have a system for measuring fair value as the standards regarding this issue evolve. Calegari (2010) raises another good point about accounting for franchises -- joint ventures. The case of Krispy Kreme Donuts highlights the need for adequate accounting of joint venture profits (or losses). Rolando and Rosa may structure some of their franchise deals as JVs with existing hair salons looking for the boost that a franchise might give. This is especially possible if financing is not easy to find for hairdressers with just 25% of the up-front cost saved. A joint venture would allow R&D to act as de facto financier of the franchise, but this arrangement requires proper accounting. If not, as the Krispy Kreme case notes, the expectations that external stakeholders have for revenues and net income from these ventures may be overly optimistic. Worse, R&R could over-report their income if the system they devise is too complex for them to truly understand. I also recommend that they implement GAAP in their accounting procedures. In addition, they should familiarize themselves with the other recommendations in the FTC Franchise Rule Compliance Guide (Gilbert & Loonam, 2008-2009). For example, there is guidance of ensuring that the previous business…

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Certified Public Accountants (Cpas) Are Found in

Certified Public Accountants (CPAs) are found in many walks of life. They are the well-paid and often highly publicized (albeit sometimes for the wrong reasons) Chief Financial Officers (CFOs) of major corporations and advisors to smaller neighborhood businesses (CPA.net., 2004). They work for both large and small public accounting firms, and are typically well-respected strategic business advisors and decision-makers. CPAs…

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Investigation of the Significant Factors in Creative Accounting in Hong Kong Companies

¶ … BARRIERS and CHALLENGES to INSTITUTION of IASB'S INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) The focus of this research is the IASB's International Financial Reporting Standards (IFRS) and the barriers and challenges that exist to adoption and implementation of these standards. This research works conducts an extensive review of relevant academic and professional literature in the intuitive to identify these…

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Auditor's Responsibility for Detection of Fraud the

AUDITOR'S RESPONSIBILITY FOR DETECTION OF FRAUD The objective of this work is to describe the various types of fraud that the auditor may encounter and provide examples of actual fraud and to describe the auditor's responsibility under GAAS. This work will incorporate a discussion of SAS 99 and summarize key points. The auditor's responsibility for detection of fraud prior to…

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Sarbanes Oxley and Taxation

Sarbanes-Oxley & Taxation Sarbanes-Oxley Scope Accountability Corporate Taxation Open Audits Public Accounting Public Taxation Individual Taxation Loss of Tax Free Benefits Stock Packages Split benefits On a Positive Note Sarbanes-Oxley (SOX) requires at least an minimum of introduction, as it is a complex set of regulations that were designed and enacted by the federal government in 2002, in response to…

Pages: 10  |  Term Paper  |  Style: APA  |  Sources: 10


Enron Sham and Shame the Impact of

Enron SHAM and SHAME The Impact of the Enron Scandal The Story of Enron Enron began as an intestate pipeline company from a merger of Houston Natural Gas and InterNorth of Omaha (Canadian Broadcasting Company 2006). The former chief executive officer of Houston Natural Gas, Kenneth Lay, became the merger's CEO and later its chairman of the board. From a…

Pages: 11  |  Term Paper  |  Style: APA  |  Sources: 9


Switch to IAS IFRS the Challenge Presented by Goodwill

Switch to IAS/IFRS: The Challenge presented by Goodwill As the months go by, European listed companies are discovering the upheavals involved in implementing IAS/IFRS from the FY 2005. The controversy surrounding IAS 39 (recognising and measuring financial instruments) has been a case of missing the forest for the trees; although there is no doubt that this standard is likely to…

Pages: 38  |  Term Paper  |  Style: n/a  |  Sources: 30

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