Study "Accounting / Auditing" Essays 56-110

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Roles of Forensic Accountants Term Paper

… 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.


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 forensic accountant must possess to deliver the forensic accounting services effectively.


Bressler, L. (2012). The role of forensic accountants in fraud investigations: Importance of attorney and judge's perceptions. Journal Of Finance & Accountancy, 91-9.

Cali, J. (2012). The Forensic Accountant & Fraud Examiner Tool Kit (3rd Edition). St. Louis, Missouri.

Digabriele, J.A. (2008). The Investigation of the Relevant Skills of Forensic Accountants. Journal of Education For Business, 83(6), 331-338.

Haggerty, J. Karran, A.J. Lamb, D.J. et (2011). A Framework for the Forensic Investigation of Unstructured Email Relationship Data. International Journal of Digital Crime and Forensics, 3(3): 1-18.

The Institute… [read more]

Alternative Accounting Methods Essay

… Question # 3:

Assuming that a technology company decides to become a public listed company on NASDAQ, and they have to shift to the IRFS Standards, it will have a great impact on the balance sheet because of the difference between the two accounting standards. A few of the major differences in the balance sheet will include a change in the goodwill, fixed assets, and inventory.

Inventory will be recorded in IRFS on the basis of FIFO Method; if the technology company was using LIFO method then they will have to change the inventory recording method to FIFO because LIFO is not acceptable in IRFS. Fixed assets can be allowed to be subtracted with the accumulated depreciation in IRFS which is not allowed in GAAP. In the same way Goodwill is treated in IRFS which allows the firm to subtract accumulated depreciation.

The stock market will respond to the change in the accounting method and the decision to become public listed company on NASDAQ can go both the ways. Therefore it is important for the technology company to take strategic decisions accordingly. The financial ratios can be changed due to the shift in the accounting system. The stock market can react in a positive way if the technology company is able to comply with the new accounting standards and the financial performance is able to attract the investors to ensure them that their investment will be safe, the firm can attain long-term sustainability and there are growth opportunities in the technology company.

Question # 4:

There are a number of implications for the accountants if the private companies choose to shift their accounting system to U.S. GAAP and on the contrary the public listed companies are to be shifted to IRFS. In this case the accountants hired by the firms on their expertise of one kind of accounting system will have to face a major setback. Most of the accounting certificates are provided to the students on the basis of examination on the pattern of a single accounting system but if there is a need in the market for dual accounting system knowledge then the educational practices will also be required to change.

The accountants of the next generation must be well versed with both the accounting principles if they want to secure their jobs and have a stable career with a single firm. The companies are increasingly switching their accounting methods due to a number of reasons therefore the profession of accountancy now demands high level of flexibility and adaptability. This also means that the rate of job switching will be high as the accountants will prefer to master only one accounting method and will easily switch to other companies employing the accounting method that they prefer however the companies themselves would not like to have their employees with access to such confidential information of the company to switch to any other company.


Ball R. (2006). International Financial Reporting Standards (IFRS): pros and cons for investors. Accounting and… [read more]

Transaction-Related Audit Objectives Auditing Internal Case Study

… The daily cash collected on receivables is pre-listed by the right office. The supervisor then deposits the money collected in a locked box.

The business' supervisor recaps all cash sales and compares the totals to the cash receipts. In addition, monthly bank reconciliations are prepared by the firm. Besides, the accounts receivables clerk compares duplicate deposit slips from bank to cash sales and cash receipts journal. The firm further sends monthly statements to its customers.

There is also no classification of Cash Receipts just like the sales. Additionally, the firm's cash is deposited daily. The computers are used to update records and monthly records are sent to the clients. Furthermore, the organization compares the aged trial balance to the general ledger each subsequent month.

Deficiencies in Internal Control

There are several factors that influence internal controls. These include inadequate segregation of duties within the accounting process (Biggs & Mock, 1983). In addition, the deficiencies may arise due to poor training of employees to fulfill their assigned duties and inadequate documentation of internal control components among other factors.

First, the supervisor enters all sales in the cash register, recaps sales and cash, and compares the totals to the sales as well. In addition, she also receives all invoices from sales clerks. This deficiency is offset by the daily summary form prepared by sales clerks and used to calculate sales clerks' commissions.

The second deficiency is the lack of accounting for a numerical sequence of sales invoices. This deficiency is partially offset by control totals used by comparing sales clerks' and supervisor's control totals.

The next is lack of internal verification of key entry for customer name, date, and sales classifications on either cash receipts or sales.

Besides the company has no internal verification of general totals, posting to accounts receivable master file, or posting to the general ledger.

Finally, Lady's Fashion Fair lacks internal verification of all of the accounting work done by the accounts receivable clerk.


Institution of efficient internal controls is necessary since they help organizations generate reliable financial reporting and remains compliant to laws and necessary regulations. Nevertheless, the achievement of strategic objectives is dependent on factors such as competition, technological innovation among others and as such, internal control cannot guarantee their achievement. In addition, effective internal control plays an important role in the prevention and detection of fraud. Moreover, according to the Sarbanes-Oxley Act, companies are required to perform a fraud risk assessment and assess related controls.


Biggs, S.F., & Mock, T.J. (1983). An Investigation of Auditor Decision Processes in the Evaluation of Internal Controls and Audit Scope Decisions. Journal of Accounting Research Vol. 21 No. 1, 234-255.

Caplan, D. (1999). Internal Controls and the Detection of Management Fraud. Journal of Accounting Research Vol. 37, No.1, 101-117.

Krishnani, J. (2005). Audit Committee Quality and Internal Control: An Empirical Analysis. The Accounting Review, 649-675.

Rezaee, Z. (2002). Financial Statement Fraud: Prevention and Detection. New York: Wiley.

The Institute of Internal Auditors. (2004, January). What is Internal… [read more]

Independence Between Auditor and Client Essay

… 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 engagement. Similar to individual clients, these clients are also required to have independence through which they can freely express opinions in…… [read more]

Professionalism Accounting Essay

… The idea of being objective may be so sublime that it is often misunderstood. Totally removing subjective ideas within the accounting profession will help further characterize this grouping. Being objective requires the accountant to remove him or herself from the emotional and subjective nature of the intense and sometimes stressful tasks of directing financial energies. Management and other influences will no doubt have certain subjective pressures to perhaps tilt a decision one way or the other. Being objective is sometimes very difficult due to personal influences and the temptation to increase one's own value through subjective manipulation. This is what separates the professionals from nonprofessionals. This status is earned due to the ability to remain objective and remember fairness as a priority. Therefore it is very important for all accounting professionals to remain objective is much as possible.

Although integrity, objectiveness and selfless service are worthy attributes, they are useless without some form of competence within the accounting profession. Competence is the ability to use information in a purposeful manner. Understanding and grasping the situation at hand is a hallmark sign of competence. Competence requires dedication to learning and adopting new and more effective ways of completing tasks. Education almost always accompanies competence and those wishing to maintain professional standing within this profession must be prepared to continually educate themselves about whatever is necessary to complete the task.

Professionalism within the accounting profession requires leadership most of all. Not being afraid to do the right thing in times of trouble will characterize the professionalism of accounting and financial management. Pleasing everybody within an organization is unrealistic. It is therefore most important to adhere to some standards and some rules that are useful and beneficial to the overall mission. Professionals are paid to give their opinion, so it should be well thought out and conveying a true understanding of their experience.

"The sheer number of accounting abuses is prima facie evidence that something more is needed in terms of accounting ethics. What else needs to be done is less clear " (Armstrong et al., 2). This message conveys understanding to me that it is the individual's responsibility to determine what is ethical in the particular situation the accountant is found. Objectivity, while importan, t needs to be understood so that each object is subjectively interpreted and different situations will call upon different solutions to become successful. This gap of consistency can only be filled by leadership and the courage to do what is right.

Professionalism and it's tenants are worthwhile points of examination for the aforementioned reasons. Professionalism, in theory, is not much use until the students of its lessons practice what they have learned. This is the defining point of whether professionalism within accounting has utility. Keeping in mind the characteristics of professionalism, however is a simple map to help align oneself to the standards set out to ensure success and evolution toward something better.

Works Cited

Armstrong, Mary Beth. "Ethics education in accounting, moving towards an ethical motivation and… [read more]

Auditing in the Public Sector Term Paper

… 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… [read more]

Accounting Policy Setting Using Ex-Ante Term Paper

… The team likes this form of efficiency, especially if they are from a small market, because it gives them some cost control with players who may cost too much to retain if they wait too long to sign a contract.… [read more]

State of Accounting Convergence Among Large Public Companies Introduction

… Convergence

Since 2002, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been working towards the convergence of international financial reporting standards and U.S. reporting standard under the generally-accepted accounting principles. The state of this… [read more]

Accounting System Accounting Information Business Plan

… This will also increase the flexibility and the degree of tailoring that can be provided to the homeowner's association, and the accounting firm will be more easily able to adapt the system to future clients, as well. All of this provides an ultimate cost savings and performance enhancement to the homeowner's association, and will better utilize the knowledge, expertise, and development of accounting firm staff (Turner & Weickgenannt 2009).

Challenges to Automation

Though automation is relatively simple to employ in this case and is well-founded based on current literature and investigations, there are certain challenges inherent to its use (Kruck 2011; Turner & Weickgenannt 2009; Romney & Steinbart 2011). Changes to processes or the environment in which processes occur must be continually incorporated into all segments of the automation process, and it would potentially be easy to overlook a seemingly minor detail that could disrupt the accuracy of output requirement. Regular manual auditing of all automated processes to ensure accuracy and reliability is necessary to meet these challenges.


AICPA. (20110. AICPA Publishes New Attest Guidance for Reporting on Controls at a Service Organization. Accessed 30 October 2011.

COSO. (2009). Guidance on Monitoring Internal Control Systems. Durham, NC: COSO.

Kruck, S. (2011). The emergence of accounting information systems programs. Accessed 30 October 2011.

Romney, M. & Steinbart, P. (2011). Accounting Information Systems. New York:…… [read more]

Sarbanes-Oxley Act on Auditing Changes Research Paper

… 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.


Has Sarbanes-Oxley made a dent in corporate America's armor? (2004).

Knowledge @ Wharton. Retrieved August 26, 2011 at

Pandit, Ganesh M. Vijaya Subrahmanyam, & Grace M. Conway. (2005). Audit committee reports before and…… [read more]

Fraud Audit and Investigation Essay

… Fraud Audit and Investigation

Define the Scope of the Audit and the Desired Outcomes

The scope of the Torpus audit is to examine the entire balance sheet and net worth of the company. Where, you will look at every aspect of the financials and physical operation. The idea is to identify any kind of issues that could have an impact upon the company receiving the loan. This is important, because it will help to show the bank that Torpus has: an economically viable business plan and that they are a good credit risk. When you put these different elements together, it will provide the loan officer with enough information to objectively analyze the business. (Siegle, 2008) (Beasley, 2008)

The desired outcomes of the Torpus audit are: to address any kind of transparency issues and identify areas that could have an impact upon the profitability of the company. Once this takes place, it will provide executives at the bank with a total overall big picture view of the underlying financial strength of the organization. (Siegle, 2008) (Beasley, 2008)

Identify and explain at Least Three Types of Information to be audited

The three different types of information that will be audited include: the accounts payable, the accounts receivable and the balance sheet. The accounts payable is the total amount that the company owes to: suppliers, employees and creditors. The accounts receivable is the total amount of that Torpus is receiving from its customers. These different pieces of information are complied and reported to: officers, directors as well as shareholders of the company in the form of the balance sheet. This is a consolidated summary of the total expenses and profits that were received over a period of time. All these various types of information are important, because they will tell auditors and the bank the underlying financial strength of the company. At which point, they can make an accurate assessment, as to if loaning Torpus the funds they require is financially prudent. (Siegle, 2008) (Beasley, 2008)

Discuss how the Interviews will be…… [read more]

PCAOB Recently Released Staff Audit Practice Alert No 5 On 4 7 2010 Essay


Staff Audit Practice Alert No.5 is titled "Auditor Considerations Regarding Significant Unusual Transactions." The alert reminds auditors that when determining the fitness of a set of financial statements they must consider significant unusual transactions and the disclosure thereof. If significant unusual transactions are not well-disclosed, the auditor has the duty to withhold his or her approval until the situation is rectified, typically by adequately disclosing the transactions in question.

In order to do this, the auditor must be sufficiently familiar with the company's business as to understand the business rationale for such transactions. If that rationale does not exist, this may suggest "that the transactions may have been entered into to engage in fraudulent financial reporting." If the auditor does not have sufficient knowledge of the company's business to make such a determination, the auditor should seek out such an individual to assist with the determination. Doing so would remove the possibility that an auditor could be fooled into signing off on fraudulent statements simply because he or she did not understand the complexity of the transactions that went into the statements.

The purpose of the alert issued by the PCAOB was to compile the different rules regarding significant unusual transactions, which appear in different sections of the accounting standards. The standard also categorizes existing requirements for unusual transactions into five different categories. What the alert does not do is introduce new standards for auditors; it merely serves as a means to bring the existing standards together in a single document.

At the heart of the issue is the amount of knowledge that an auditor has about the company's business. The…… [read more]

Accounting for Income Taxes Term Paper

… 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… [read more]

Managerial Accounting Sue Davis Term Paper

… Managerial Accounting

Sue Davis is faced with an ethical dilemma with regards to the allocation of $2 million in research and development funding. According to company policy, she is obligated to allocate the funds to Project K3. Doing so will result in the project taking a loss. This will impact corporate profitability and result in Davis forgoing her bonus. If she allocates the funding to two new projects, she may be able to retain the profitability and the bonus. Although this practice is expressly prohibited, the risk of detection is low (Cohen, Pant & Sharp, 2000).

It is proposed that Sue allocate the funds to K3 as policy requires. Sue's decision-making process does consider her personal gain in that she is subject to an incentive system whereby she has the potential to benefit personally from her allocation decision, to the detriment of other stakeholders. There are three factors that influence this decision. The first is her reputation, which would be damaged if K3 comes in at a loss. The second is the direct reward to Davis, which would be her $20,000 bonus. The third is the profitability of the company, which will take a hit if the project comes in at a loss. However, Davis risks doing considerably more damage to her career if she improperly allocates these costs and is discovered. Such an act would violate the agency relationship with the company and its shareholders and this type of violation is considered to be very serious by the company.

As the VP of Research & Development, I recommend the following steps to ensure proper allocation of costs. The first is that cost allocations be subjected to periodic audit. This increases the likelihood of improper allocations being discovered. The second recommendation is to improve our cost tracking systems. This will make the audit process easier. The…… [read more]

External Auditing Essay

… External Auditing UK

Modern corporations are run by directors and managers, who are essentially investing the funds of investors. These managers owe a fiduciary duty to the investors, but as far back as Adam Smith it was recognized that managers… [read more]

Sarbanes-Oxley Impact on Auditing Thesis

… 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… [read more]

Role of Accounting in Economy Essay

… 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)


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)


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)


The role of accounting in the decision-making process is one that is central. "Financial accounting information focuses on actual events." (Hoggett, Edwards and Medlin, nd) the accountant is able to significantly assist in the areas of:

1) budgeting;

2) investigating;

3) interpreting; and 4) communicating results used by both external and internal decision makers.

Stated as the difference between management and financial accounting is the reference to:

1) the main users of the reports;

2) the types of reports produced;

3) the frequency of reports;

4) the content and format of reports; and 5) External verification. (Hoggett, Edwards and Medlin, nd)


In a speech given by Rene Ricol, President of the International Federation of… [read more]

Auditing Standards in Australia Term Paper

… Auditing Standards in Australia

The objective of this work is to examine Auditing Standards in Australia.

This case study conducts an examination of the Auditing Standard in Australia and specifically the 'Auditing Standard ASA 200' published in April 2006. The… [read more]

Accounting Ethics Dilemmas Term Paper

… Accounting Ethics Dilemmas

A problem in terms of conflict of interest and a lack of objectivity could arise in this case. While there is no particular problem in performing the audit itself, the CPA could be tempted to hire only persons from his or her own firm, or acquaintances, rather than objectively engaging in the recruitment and hiring process. The problem could be resolved by honestly discussing the issue and possible problems with the client. The CPA and the client together can then discuss the best course of action, and possibly engage in the recruitment and hiring process together. This will ensure not only objectivity on the part of the CPA, but also that the client is happy with the result. This relates to Rule 102-2.03 of the AICPA Code of Ethics, which concerns conflicts of interest and objectivity. The rule states that client consent needs to be obtained in performing a duty that might involve a lack of the necessary objectivity.

NO. 2 There are certain steps to follow as specified in Section 191.52.103 of the AICPA Code of Ethics, as concerns unpaid fees. Unqualified statements can only be provided once a year has expired more than a year prior to the new report. The CPA is therefore within his or her rights to issue the opinion, as the audit has further been conducted within the auditing standards.

NO. 3 Since the CPA is only starting a new practice, he or she cannot make any claims to be either a "specialist" or an "expert" in anything. However, the necessity for attractive advertising is recognized. Rather than making claims that are untrue, therefore, it is recommended that the advertiser takes a more general approach, such as stating his or her "experience" for a number of years. This relates to Rule 502.03 of the AICPA Code of Ethics, which concerns "false, misleading or deceptive acts in advertising or solicitation. The Rule states that placing deceptive advertisements is not in the public interest, and is therefore prohibited.

NO. 4 in this case again there is a conflict of interest. The temptation could be to provide very favorable evaluations for the commercial service bureau in which the firm's partners have a material interest. Once again, in accordance with Rule 102-2.03 of the AICPA Code of Ethics, it is recommended that the CPA honestly discuss the issue with the client. The client could then for example retain the CPA in this regard, but in concomitance with other professionals in order to ensure the necessary objectivity.

NO. 5 According to Section 92.06, Rule 101-4 of the AICPA Code of Ethics, a CPA is within his or her rights to provide services or lend his or her name to not-for-profit organizations without compromising his or her independence. It is therefore not incorrect to include this in a CV, as long as the exact nature of the service and organization is stipulated.

NO 6. Identifying only himself as CPA could be misleading to persons making use of… [read more]

Contemporary Issues in Accounting Term Paper

… Accounting practices has dramatically changed within the past few years because of the calamitous undertakings of some of the world's most prestigious companies. Loopholes within accounting regulations and the general greed of American corporations have led to significant issues in accounting practice. Most prominent among these issues has arisen the case of Enron, the biggest financial and accounting blunder of the past mellenium. Perhaps the most shocking aspect of the Enron scandal is the depth of deception and the complex methods used to exploit accounting weaknesses. Therefore this detailed analysis will look into how Enron's failure attributed to the exploitation of accounting practices and how accounting has changed because of the specific policies applied to Enron.

It took only months for the collapse of one of the world's greatest corporations. Enron was highly regarded, a mere two months before its collapse as one of the world's greatest innovators, with its focus on developing cutting edge technology and increase growth in every sector. With its collapse, an entire nation was devastated by its financial implications especially on numerous 401K accounts. Yet no one was able to raise an alarm until it was too late, the reason for the lack of anticipation is a massive failure within the accounting system to keep reliable records of the firm's actual condition.

The accounting techniques used within the Enron scandal were very complex and hard to catch, they involved two very hard to detect relationships, unconsolidated partnerships and the formation of "special purpose entities." Using these two methodology, they were able to prevent significant revenue loss from appearing in their financial records as well as conceal the existence of any debt the company procured. It was when these results actually came to the forefront that the world soon realized that most of the earnings that the company claimed in the past two years were completely falsified.

The first major accounting blunder comes from the ineffectiveness of the current U.S. auditing methodology. The SEC regulations state that public corporations need to have their finances certified by an independent auditor. However, since there are little to no regulation on the auditing process nor any control mechanisms to prevent collusion, Enron was able to employ an individual like Arthur Anderson who willingly lied and cheated with his co-conspirators. Previously, oversight of all auditing practices and auditors have lied with the American Institute of Certified Public Accountants which is a non-government trade group as well as independent state boards. However, this is clearly not stringent enough as Enron was not an isolated incident (both World Com and Tyco had similar problems), therefore the SEC and the current administration have used several different methodologies to prevent future exploitation. The creation of a new auditor oversight authority linked to the SEC is the latest trend, and this is especially necessary in light of the decentralized regulation within this sector. However, all of these was trumped by the passage of the Sarbanes-Oxley bill, which will forever change the face of auditing practices.… [read more]

Accounting Ethics Term Paper

… ¶ … Accounting Code of Conduct. The writer explores the Code of Conduct and discusses its value and merit with regards to the accounting profession. There were three sources used to complete this paper.

At first glance the average laymen would be hard pressed to explain why accountants need a code of conduct in the profession. People are aware of the doctor and attorney professional vows or promises to follow certain ethical rules because of the severe damage they can do if they become unethical. Once one begins to explore the accounting profession, however, one will quickly discover that accountants have the ability to do great harm as well (Demski, 2000). Accountants have the financial survival, future, and life of their clients in their hands. If an accountant decides to become unethical he or she could easily destroy an individual, a family, a corporation or a government entity. Every year society hears about someone being financially destroyed because of the unethical dealings by their accountant. While the majority of accountants in the world are honest and fair and provide a valuable service the code of conduct is in place to provide a blueprint tangible standard of measurement to guide accountants in their practice.

For more than a century, the accounting profession in the United States has provided these valuable services to public and private organizations. The best CPAs ensure they are performing their responsibilities with technical competence and the highest ethical standards by adhering to a strict code of conduct Actually, there are several codes, each comprised of numerous technical and ethical guidelines (Badawi, 2002)."

The first measure of responsibility for an accountant, (CPA) is to be sure he or she is complying with the standards set out in the Generally Accepted Accounting Principles. This standard provides a foundation for practice across the board. In addition they are expected to conform with the Generally Accepted Auditing Standards which is set out to protect the client in the event of an audit (Badawi, 2002).

They are also expected to follow tax rules promulgated by private and government standard-setting and regulatory bodies, such as the Financial Accounting Standards Board (FASB), American Institute of Certified Public Accountants (AICPA), Securities and Exchange Commission (SEC) and Internal Revenue Service (IRS). And, they are counted on to conduct themselves according to the ethical rules prescribed in the bylaws or codes of any accounting groups they have joined (Badawi, 2002)."

While this may initially appear to narrowly define the profession and remove any freedom or creative aspect of it, it really only provides a professional guideline for setting up a professional practice.


The code of conduct was originally designed for the purpose of influencing the practice and judgment of professional accountants. The code has been amended and altered by various accounting organizations in the quest to better the ethical responsibility and to fit it to the tailored needs of that organization or outfit.

The most recent adaptation of the code was done in 1988. Prior to… [read more]

California's Accounting Code of Ethics Term Paper

… California's Accounting Code Of Ethics

Ethics has always been an important part of business transactions. Freedoms of information, stricter government regulations and electronic media have made ethics even more essential to business practices. California's code of business ethics expects the accountants and accounting related professionals to be ethical with their clients as well as the accounting system.

In order to perform their work independently and deal with client-accountant relationship Californian system protects accountant-client privilege similar to that of a lawyer-client relationship with a few exceptions.

The accountants have to carryout their work in a professional manner. Code violations such as fraud, misrepresentation, and negligence could make the client liable to civil or criminal liabilities.


Ethics for accounting professionals can be described as practice of the profession with integrity and objectivity, honesty, and according to the best accounting practices. The client satisfaction is only one part of the equation, but if this satisfaction is built by conceding to all legal and illegal wishes of the client, then this lack of ethic will not create a healthy respect for the accounting professional either in the public eye or that of the client.

The recent financial scandals like ENRON, WorldCom, Global Crossing and others brought a considerable drop in general public esteem for the accounting profession. [Schreiber, 2003] shows his concern regarding the abuses of ethics, writing for California Society of Certified Public Accountants (CPA) he insists that the enforcement and education be used till the few professionals involved in unethical practices learn to maintain the standards of the profession.

All professional accounting bodies have made ethics as an essential part of the accountants training. California Board of Accountancy requires all professionals to take a course in 'Professional Conduct & Ethics'. It is necessary to know the importance of retention of records, significance of confidentiality of client information, ethics of commissions and referral fees and of course the importance of protecting oneself against the violation of ethics and its penalties.

The reality is that most accountants, even those involved in unethical practices know what counts as unethical. It is his judgment regarding whether to please the client by unscrupulous practices or follow the acceptable practices to meet ethical, legal and regulatory bodies' requirements. [Schreiber, 2003] quotes an accounting Professor Mary Beth as saying "The regulatory bodies expect the accounting professionals to 'act in good faith', the tax practitioner must use integrity and objectivity to assess the probability that the IRS (or tax court) would agree with the tax treatment being contemplated if they knew all the facts and circumstances." The accountant has reasonable degree of freedom to satisfy his client as well as the regulatory bodies while marinating his integrity and professional interests.

Accountant-Client Privilege

An important aspect of handling accounting requirements is to have complete trust of the client regarding the information given to the accountant. If the client knows that the information he provides to the accountant is protected and will not be used against him, he/she is more likely… [read more]

Accounting Scandals Term Paper

… Accounting Scandals: With the accounting scandals in 2002 and 2003, many have called for increased government regulations. Will increased regulations help to reduce the kinds of scandals seen in recent years? Why or why not?

The accounting scandals at Enron and WorldCom that implicated such trusted accounting firms as Arthur Anderson did result in more stringent government regulation of the accounting process. Google the phrase 'accounting scandals of 2002' and in virtually every web search engine one types this phrase, the words 'Sarbanes-Oxley Act' appears, including software is designed to comply with the accounting procedures required by this recent, landmark act. But what does the Sarbanes-Oxley Act mean, a sixty-six page act designed, according to the stated purpose of the law, to ensure full and fair disclosure of corporate financial records, with the aim of protecting investors?

The act is considered the single most important piece of legislation affecting corporate governance, financial disclosure and the practice of public accounting since the U.S. securities laws of the early 1930s, after…… [read more]

Ethics in Business: Accounting Standards Term Paper

… Timing of testing.

Using the work of others.

Evaluating the results of testing.

Identifying significant deficiencies.

Forming an opinion and reporting.

No disclosure of significant deficiencies.

Material weaknesses that result in adverse opinion on the financial statements.

Testing controls intended to prevent or detect fraud.

One thing that is commonly agreed upon is that the rules have become far too complicated in accounting. One such statement is that of Walter P. Scheueze, Charter member of PSAOB who states: "The rules for financial accounting and reporting in the U.S.A. have become vastly too voluminous, too detailed, too complex and too abstruse. . . . The volume and complexity of those pronouncements have become overwhelming"(Pollock, 2005) Further stated is: "The existence of an organization -- the FASB -- whose sole reason for being is to generate accounting rules naturally guarantees that there will be a continuous production of more rules, and that these rules and their interpretations will grow in complexity because of an inevitable internal dynamic. ... The phrase "generally accepted accounting principles" (GAAP) has come in time to mean the opposite of its original and apparent meaning. When introduced in the 1930s, the term actually meant what it seems to mean: those principles which are subscribed to and used by the majority of knowledgeable, reputable practitioners. It was bottom-up and descriptive in the common law mold. Now GAAP means those rules that are mandated by the FASB, whether or not they are generally accepted and even if they are generally opposed. This is top-down and prescriptive in the manner of statute law. The original meaning has disappeared, as the rules-based approach has become dominant." (Pollock, 2005)

Not only are accountants responsible in their professional judgments they also are under a requirement to follow "ever more prescriptive and detailed rules." (Pollock, 2005)

Summary & Conclusion

The new and differentiated types of technological applications that may be utilized in the accounting process leaves multiple methods open for use in accounting standards and practices. It is held by many experts reviewed in the process of reviewing the literature related to this work in writing that the many applications available have led to an entire new world in accounting. It appears that it is time to lay aside the hard-line regulations and rules and utilize that which is most effect, most expedient, most efficient…… [read more]

Accounting, by Its Nature Term Paper

… Put more simply, the needs of financial reporting in government are markedly different than those in corporate reporting, since governments must demonstrate "compliance with budgets" (ibid1:40). These compliance techniques "sometimes conflict with GAAP" (ibid 1:41) or at least "are not consistent with GAAP" (ibid 1:45)..

What are governments to do about financial reporting, then? To be in compliance with their budgets and other legislative restrictions might mean differing from GAAP/GAAS -- but reporting in complete compliance with GAAP/GAAS might neglect vital information that applies in government but is not a regular part of commercial accounting, for example, income expected from the sale of bonds.

This dilemma is resolved by allowing a few special rules in the GAAP/GAAS for governmental reporting; a specific example of one of these rules is the provision for encumbrances in government accounting. "Encumbrances are treated as expenditures for budgetary accounting, but not for GAAP" (ibid 2:116). Encumbrances, while not reflected in GAAP, do have a significant effect on a governmental budget and need to be disclosed -- this is done by requiring that a government submit a "basic financial conformity with GAAP" while allowing "supplemental reports or schedules" to be submitted regarding special governmental issues such as long-term assets and liabilities that are not easily encapsulated into an annual report.

The special treatment of encumbrances is only one of many ways that government accounting differs from GAAP/GAAS. However, the need for a uniform financial reporting system mandates some compromises -- the government must submit, at the least, a basic statement that is in compliance with GAAP/GAAS. If more detailed reporting is required, for example, in a long-term asset situation like a bond, then a supplemental report may also accompany the comprehensive report. Although governmental accounting is inarguable different from standard commercial accounting, baseline standards of conformity must be maintained in order to provide a reliable report.… [read more]

Information System Holds in Accounting Term Paper

… 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… [read more]

Auditing Standards Must, Out Term Paper

… Not only will the decision making process with respect to earning be changed, but so will the belief and trust in the company be drastically affected, and the employees of the company would also suffer as a direct result. This means that employees would be faced with either living with the corruption and unethical practices, or look for another job. Therefore, it is very obvious that ethics is very important in the accounting profession, and unethical behavior would eventually bring the company down. (Ethics and Professionalism: The CPA in Industry)

2) With the several new trends in business that have developed lately, and the soaring of the corporate profits, companies are increasingly being faced with the debatable question of what exactly to do with all that cash. This is indeed a very big issue today, and several companies like Microsoft, and Lehman Bros are actually grappling with a cash surge, incredible though it may sound. When the pockets are filled, remarks Francois Mallette of LEK Consulting, whatever is inside will start to spill out, and one can inadvertently do something that would destroy its value completely. (Companies cope with too much cash) On the other hand, poor cash flow can mean the demise of the company, and not managing the cash flow efficiently is one of the major reasons why this may happen, that is, if for any reason the business takes in a lesser amount of money than it spends for the production and the sale of goods, then it is suffering from poor cash flow, and the result can be devastating.

There are many methods with… [read more]

Value of Accounting Standards Term Paper

… The balance sheet is the primary financial statement that helps determine an enterprise's financial position, and provides crucial information for potential lenders. Information about financial structure, relative amounts of capital provided by investors and lenders, is useful in predicting future… [read more]

Financial Statements. Generally Accepted Accounting Principles Term Paper

… ¶ … financial statements.

Generally Accepted Accounting Principles: As accountants go about their daily tasks of record-keeping, monitoring business transactions, preparing tax reports, and other financial work, they are obliged, of course, to follow the specific fiscal and accounting guidelines… [read more]

International Accounting - Evaluate Research Term Paper

… "

Regarding the cooperation between the two major accounting standard setters in the world, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have issued, on the 29th of October 2002, a memorandum of understanding which… [read more]

Accounting Information the Revolution Term Paper

… A major reason for this periodic reporting was that in a manual accounting environment the compilation of financial statements took a significant amount of time. It was not possible for users to generate an income statement on demand. In contrast, an automated accounting system facilitates the generation of financial statements "on the fly."

Internal users are no longer be restricted to periodic reports of financial performance. Thus, a manager could execute a program that would display the current status of revenues and/or expenses updated to that very minute. In effect, the accounting system can provide perpetual rather than periodic reports. Of course, a number of accounting mechanisms such as depreciation, amortization, and allowances would have to be considered in generating real-time financial reports.

Even the smallest of "mom and pop" operations can afford to invest in some level of computer-based accounting. A business can acquire a basic personal computer with software such as QuickBooks, tax-filling, or Microsoft Money software (low-end accounting software packages). In the early days of computer-based accounting (the '60s and early '70s), the typical approach was to develop custom transaction processing applications using COBOL. Although COBOL is quite a powerful language, it requires considerable programming skill to handle all the transaction processing needs in an organization. Modifications to these programs are typically not easy to perform. In the late '70s, a popular alternative emerged -- to use an off-the-shelf accounting software package, such as Microsoft Excel and Access that can be used to record the accounting data. An accounting software package has a pre-defined user interface, chart of accounts system, transaction-processing options, and report generators.

These new approaches made it possible to use (ERP) software from vendors such as SAP, Baan, and PeopleSoft. ERP systems like SAP's R/3 system provide the benefits of an off-the-shelf package in that little (if any) custom programming is required, and they also store the data in a relational database, thereby facilitating enterprise-wide access to the organization's mission critical data, including the accounting information. Of course, security mechanisms will have to be instituted to ensure that only authorized users view sensitive data.

In all, it is becoming clear that off-the-self software can easily be purchased for recording all of the business accounting transactions that can provide a better picture of the financial health of the firm, since these software can capture relevant transactions in real-time.… [read more]

Auditing and Sarbanes-Oxley Act Term Paper

… The Sarbanes-Oxley Act was passed on the 30th of July 2002 with the declared goal of "deterring and punishing corporate and accounting fraud and corruption." As we have seen in the lines here above, continuous accounting aims exactly at providing a more secure platform in order to avoid fraud and a real-time process that is aimed at ensuring high-level financial control.

In order to explain the benefits from continuous auditing with regards to Sarbanes-Oxley Act, we can use one of the examples given on one of the articles from www.cfo.comwhich uses Crown Media for the case study.

Section 404 of the Sarbanes-Oxley Act best relates to continuous auditing and the concept of real-time auditing. According to this section, Crown Media "must demonstrate sound financial controls governing that business process and then test those controls quarterly." The problem with such controls and reporting is that doing them manually would mean a real cumbersome activity and a real waste of time. As Mark Thompson, vice president of finance and information technology at Crown media has put the matters, "the reporting deadlines and 404 are leading us down the path of automation."

Hence connections between the Sarbanes-Oxley Act and continuous auditing can be easily made. Continuous auditing refers to real- time reporting, directed at compatibility with real-time business and at avoiding fraud. As such, several of the sections form the Act, notably Sections 404 and 302 refer to continuous quarterly controls, controls which in the current conditions can only be automated because of the large amount of work involved. As such, continuous auditing provides the goals and suggests the means as well. Most of the companies have already adopted continuous auditing in its software form.


1. Leibs, Scott; Krass, Peter. The Never-Ending Audit. October 2002. On the Internet at,5309,7776,00.html

2. Rezaee, Zabihollah Continuous auditing: Building automated auditing capability. 2002. On the Internet at

3. Goff, John. Sarboxing. February 2004. On the Internet at,5309,11920||BS|12|241,00.html / found the definition on the Internet at In a paper called Continuous auditing: Building automated auditing capability by Zabihollah Rezaee from 2002.

Leibs, Scott; Krass, Peter. The Never-Ending Audit. October 2002. On the Internet at,5309,7776,00.html

Goff, John. Sarboxing. February 2004. On the Internet at,5309,11920||BS|12|241,00.html… [read more]

Harmonization of Accounting and Disclosure Term Paper

… K.). There are, of course, several other issues that will also pose as an obstacle to the goal of harmonization, but for the purposes of this discussion, the stated three suffice to assess the desirability or otherwise of the goal.

On the whole, the benefits from harmonization far outweigh the cost and effort involved in removing the obstacles to the same, as efficient function of global capital markets will surely lead to more stability of the global economy. And this is exactly how the IASB is approaching the issue. For example, the IASB advocates an emphasis on the general principles, while recognizing the need for detailed standards to avoid unintentionally giving choices. The IASB has, thus, based its approach on convergence of national and international standards or harmonization rather than standardization. Such an approach, which also takes into account that harmonization will be an evolutionary process, will go a long way in removing anticipated obstacles. In conclusion, it must also be remembered that there are costs attached to the current diverge set of global standards such as the financial costs of complying with different accounting rules in different countries and most important, the consequences of not achieving harmonization will ultimately impact the ability of less developed countries to build investor confidence.

The Board of the International Accounting Standards Committee, December 2000, available at;Internet; accessed 19 September 2003.

Portsmouth Business School, 2002, available from;Internet; Accessed September 20, 2003.

The Board of the International Accounting Standards Committee, December 2000, available at;Internet; accessed 19 September 2003.… [read more]

Accounting of Enron Term Paper

… When a company fails to "fully disclose" information they have failed to comply with the regulations set forth by the SEC. The Journal of Accountancy writes,

Methods the company used to disclose (or creatively obscure) its complicated financial dealings were… [read more]

Community Power Structures Assessment

… 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…… [read more]

Accounting Profession Is a Necessary Professional Writing

… The authors argue that a draft is important because it appreciates the possible changes that will occur during the study. An individual can alter significant amount of information, adopt new ones, and drop the redundant ones. This can be facilitated by the request and scholarly advice from colleagues. A good accounting journal should have proper references supported with the use of graphics and previous researches. Professionally oriented documents must be informative: appropriate usage of language, formatting, and data orientation techniques are critical. Additionally, the document should also satisfy all the English grammar needs, be consistent, and devoid of colloquial speeches.

Submitting the Article

Once the acceptable levels of the research have achieved, it is advisable to submit the article to the relevant authorities for reviewing. A justification letter as to why the research must be published should accompany the article. In analysis, the chapter also specifies that a good article have greater chances of being published. An article that deserves a publication must be appealing to the reader, general practitioners, and other stakeholders in this field.

Publication assessment (Other)

This summary supports the concept publication assessment because of the underlying advantages associated with it. Primarily, the publication assessment suggested in this study will appreciate the importance of follow-up mechanisms when making editions of the publication. The publication assessment program will seek the cooperation of investors, accountants, and scholars. In any case, the researcher is expected to filter relevant information from irrelevant ones. The publication initially developed sought on to clarify on the efficiency of conducting concurrent auditing system.


Journals are important sources of verified and scholarly reviewed information. They are journals are collectively developed by individuals who are well equipped with the accounting discipline. This document identifies the proper procedures and methods of developing a potential publication. The document suggests that the researcher must focus on a contemporary topic that resolves an accounting problem.


May, C, & May, S. (2012). Effective Writing: A Handbook for Accountants. New York: Pearson…… [read more]

Accounting Report Generation, Tackling Exercises Essay

… The handler is expected to orient clear, concise, distinctive and reports, which are free of grammatical errors. Proper time management skills are essential in any professional environment. The reports should have concise thesis statements written to address the board of executives. Other considerations include the body and the conclusion.


The chapter has also specified potential exercises to be tackled in full filling essay exam and professional exam requirements. Exercises are short case studies in which the handler is expected to respond in a scholarly manner. The chapter has further specified auditing and tax systems as categorical subsections that the handler must consider. In each subsection, the handler is expected to provide a decisive essay examining the background, definition, history, effects and a consequential recommendation. The responsive essays should have a concise thesis statement.

Five or more ideas or concepts that will help the author become a better communicator

In general, the author has presented three learning methodologies based on the learning approach of teaching. Nonetheless, the nature of how ideas are being conveyed is questionable. Firstly, the author has failed to consider the usefulness of an introduction on each category. In any case, the introduction presiding in the first section, essay exams, fails to orient a realistic definition on essay exams. Secondly, the presentation techniques are not professional. For instance, italicizing subheading is not validated. Professionally, there is no need of putting flashing neon lights in a document (May & Gordon, 2012, p. 216). Thirdly, some sentences are not readable. The author could have considered using the bulleted points when passing across such important techniques. Besides, circling chapter is not professional. This applies to number five (estimated time- 15-25). The author could have considered sub-headed that piece of information differently.


This analysis has focused on the importance of exams (technical or essay) in an accounting environment. In particular, the analysis has presented the accounting exam approaches, including essays, professional, and exercises. While essay exams and exercises are academic, professional exams are industrial and technical in nature. Therefore, the configuration of each learning methodology is largely related to the quality of output from the learner (accountant). However, all of them are important in one way or the other in one's professional development.


May, C, & May, S. (2012). Effective Writing: A Handbook for…… [read more]

Professional Accounting Services Are Paramount Professional Writing

… It is evident that the introduction provided herewith is longer than the previous transmittal letter and may be longer than a page. The subject and the purpose of the report are identified in this section. The purpose of the report must be clearly identified to its fullness. All the areas addressed in the report are identified in this section and the background of the topic is provided succinctly. The body of the report is comprehensive in nature. It may contain many sections, subsections, topics, and subtopics. Illustrations used to foster the understanding of the identified topics are also found in this section. A conclusion offers a summary of the main ideas (May & May, 2012).

Parts of a Report: Optional Appendices, Notes & Bibliography, and Graphic Illustrations

Any report may contain optional sections like appendices. Notes, bibliography, and graphical illustrations are essential. The appendices may contain technical statistical information, which may not be useful to the entire audience. However, an appendix must be referred in the main body of the report. It is also important to appreciate outside sources used in preparing the report. This is achieved via the listed bibliography at the near-end of the report. Other illustrations not used in the main body are found in this section as graphic illustrations. The list of illustration falls under this part of the report as it also appreciates the outside information used (May & May, 2012).

Appearance, Style, and Tone

The appearance, style, and tone of any report will influence the way it will be received and adopted by the audience. The authors have emphasized on the importance of ensuring that the report is neat and presentable by using the appropriate font and style. The best quality paper must also be used in the case of printing. A formal report should always remain formal; it should be readable and interesting. Whereas the transmittal document can be written with the use of personal pronouns, the main report should not (May & May, 2012).


Accounting reports are essential documents, which must be presented appropriately in the most formal ways possible. This study has identified the most critical section of such reports; they include the introduction, the body, and conclusion. The study has also identified that other important sections included transmittal document, title page, table of contents, list of illustrations, and summary sections.


May, C. & May S. (2012). Effective Writing: A…… [read more]

SEC Ictv the Securities Case Study

… 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."


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.


The United States Securities and Exchange Commission. Administrative Proceeding 3-997, 20 Jan 2007. Retrieved from… [read more]

Accounting Ethics a Sad Tale Essay

… There is little doubt that Arthur Andersen become too close to Enron, leading to the compromising of the auditing services. Enron were a major consulting client, they produced $56 million in revenues for Arthur Andersen, 50% of these were from consulting. The issue was not only the level of involvement, but the proximity of the Arthur Andersen staff; all 100 staff, and their team leader, all worked out of Enron's Huston office. In addition to this many former Anderson employees now worked at Enron; approximately 300 in number. This created an almost incestuous relationship, where there was a skewing of the culture, reflecting the closeness that had developed in a relationship where there was meant to be independence.

There was the opportunity for Andersen to prevent this situation arising. It may be argued that the first opportunity was in the way that the consulting services were set up. It may be naive to argue the company should not have re-established consulting services due to potential conflicts of interest, as there was a desire to increase profits. However, it maybe argued that the way in which the consulting services were pursued, with the expectation of the accounting partners to effectively act as salespeople, which started to create a foundation for compromised ethics (Jickling, 2002). As even before there was a conflict of interests, partners were being asked to compromise their own ethics; this ongoing issue demonstrated that the senior partners were not listening to those who worked for them.

Leadership should have separated two functions, in order to ensure independence. The decisions to create such close relationships with Enron, including housing staff in a prize office, and pursuing such a great level of consulting work with an audit client may also be seen as problematic. However, these were the result of the cultural values which had already been established, which is known can create desensitization to the ethical requirements and/or breaches (Chyssides and Kaler, 1998).

Leadership failed to create a professional culture, where it was expected high ethics would be maintained, and the different services separated. If the ethics of those at the top of the organization are not maintained, and openly displayed, it is highly likely culture of the organization will reflect the failings of the leaders. Strategies, such as the codes of conduct, maintenance of ethics and internal whistle blowing schemes, as well as ongoing ethical monitoring and training may have helped to create an ethical culture. Therefore, the real issues in terms of leadership were the failure to manage the culture, facilitating a conflict of interests which could have been avoided.


Chyssides GD, Kaler JH, (1998), An Introduction to Business Ethics, London, Thompson Business Press

Elliott B, Elliott J, (2011), Financial Accounting and Reporting, London, Prentice Hall

Jickling, M, (2002, March 19), The Enron Collapse: An Overview of Financial Issues, CRS Report for Congress, Congressional Research Service, The Library…… [read more]

Ethics and Regulatory Essay

… Since many states of the U.S. require different reporting units to be adopted, it is the legal obligation of firms to comply with this condition. Auditor has a central role in making the firm adopt such multiple metric of reporting financial results (Public Oversight Board, 2000).

The auditor has to ensure that the firm of accounting meets all the stipulated responsibilities as require in GAAP. Further, the firm is obliged to protect public interest by accurately reporting financial results and reflecting actual financial position of the company (International Federation of Accountants, 2009).

Integrity of the process along with objectivity and independence should also be ensured.

Due care of the audit process is also part to of external auditor's responsibility while conducting an external audit (Ramos, 2003).

Proposed rules or laws to prevent similar occurrences

The regulators and other law enforcing agencies, whether federal or at state level, following provision regarding accounting standards and financial reporting should be adopted.

To effectively raise the standards of financial reporting and reduce the risk of potential frauds, the governments in cooperation with firms should adopt and devise internationally accepted accounting principles (Carcello & Nagy, 2004). These principles should incorporate minimum common set of rules, regulations, laws, and ethical consideration. Changes can be made but deviance from the basic structure of this 'International Accepted Accounting Laws and Practices (IAALP)' should not be encouraged.

The capital providing institutions should also be made part of the regulatory requirements and the external auditors of capital providers, such as commercial and investment bank should also be required to opine on the financial report of large enterprises.


Benston, G.J. (2003). Following the money: The Enron failure and the state of corporate disclosure. Brookings Inst Press.

Carcello, J.V., & Nagy, A.L. (2004). Client size, auditor specialization and fraudulent financial reporting. Managerial Auditing Journal, 19(5), 651-668.

International Federation of Accountants. (2009). Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. International Standard on Auditing 200. New York, NY: IFAC.

Powers, W.C., Troubh, R.S., & Winokur, H.S. (2002). Report of investigation by the special investigative committee of the board of directors of Enron Corp.

Public…… [read more]

Understanding Accounting and Financial Statements Term Paper

… ¶ … Accounting and Financial Statements

Non-profit making organizations are those organizations, which are not allowed to make any profit on their day-to-day activities. They are required to offer their activities to the clients without any intention of making a profit. The kinds of financial statements prepared by the accountant include; budget, balance sheet, and income statement (Feldman & Libman, 2011, p. 26). Budget is a written plan that predicts income and expenditure in a given time, which is usually one year. The budget is based on the realistic planning of the programs and goals of the organization. Members of the organization use the budget to coordinate and control programs and finances. Balance sheet is the summary showing the financial status of a business in a given time. It also shows the assets, liabilities, and capital of the organization. Income statement is also known as a statement of operations. It shows how much money was received by the organization as revenue and how much money was spent as expenses in a given time. The revenue and expenses budgeted are compared with the actual revenue and expenses at the end of the year. The difference of the two indicates variance between the amount budgeted and the actual amount spent or received (Epstein, 2012, p. 24).

Better quality financial statements help to reassure donors because they should be presented to prove the financial position of the organization. For example, the budget should show a small difference between the actual and budgeted figures or even being the same. The balance sheet shows what assets the business owns and what is being owed, and what it owes other organizations. In addition, the balance sheet shows if the organization can pay its debts. The income statement shows how frequent the organization's transactions are performed. This will help the donors to estimate how the organization will utilize the funds.

BDO enjoys a long-term relationship with its clients when it belongs to a large international group. This is because the clients will learn to endure the challenges of the economy due to the long-term relationship. In addition, the clients will gain competence from the organization's team as they bring important matters like tax and other consultations on the table to be dealt with by the senior team members. BDO received industry honors like Alfred P. Sloan Award, which was worn by 39 of its U.S. offices for business excellence in the workplace (Epstein, 2012, p. 71). Some of the…… [read more]

Wendy Wanderer Essay

… Given that it was known that the audit was done under the bank's request, the bank could sue the accounting firm, although Sauce Supply could not, given that the accountants did not know that it would be privy to the accounting statement.

d. In a state that has adopted the reasonably foreseeable user rule?

However, in a state that adopted the reasonably foreseeable user rule both the bank and Sauce Supply could sue, given that it was reasonably foreseeable that other entities would make business decisions based upon the audit about doing business with the BBQ.

3. Rules as they apply to this case

a. Does Able & Henderson face any negligence liability to First State Bank or Sauce Supply in a state that has adopted the Ultramares rule?

No, given that Able & Henderson did not owe duty of care to either entity.

b. In a state that has adopted the restatement rule?

Yes, because the audit had been ordered on behalf of the bank and for the known purpose of evaluating Bad BBQ's financial solvency. Sauce Supply could not as it merely used the audit to make its independent business decisions and had no role in contracting the audit.

c. In a state that has adopted the reasonably foreseeable user rule?

Both the bank and Sauce Supply could sue, given that it was reasonably foreseeable that other entities would make decisions about doing business with Bad BBQ based upon the audit.


Accountant's duty of care. (2013). Retrieved:

Eckner, Shannon. (2013). The attractive nuisance doctrine: Safeguard trespassing children and preserve property rights. Retrieved:

How proximate cause affects your Ohio car accident claim. (2013). Jack's Law Office.


Types of damages. (2013). Van DerGinst Law. Retrieved:

Proximate cause in Texas: Read v. Scott Fetzer Co., 990 S.W.2d 732 (Tex. 1998). Retrieved:

Zamczyk, Bradley M. & Delinks, Marissa I. (2007). AICPA Standards and the duty of care:

The ceiling or the floor? The Professional Line, 7.2. Retrieved:… [read more]

Mark to Market Accounting and Its Relation to the Enron Scandal Term Paper

… Mark to Market Accounting and Its Relation to the Enron Scandal

One of the most fascinating (if not revolting) aspects of the so-called Enron scandal is the degree of complicity that surrounded the actual Texas-based company and which extended into… [read more]

Integration With an Accounting Pathway, I Studied Essay

… ¶ … Integration

With an accounting pathway, I studied business computing, global and cultural environment of business and business ethics. These are all interconnected. In business, different aspects of business cannot be segregated, so one must integrate all of the different skills one has acquired, all the time. So for me, I will be an accountant, but the modern accountant can build a long-term career that incorporates all of the different things that I have learned. The business computing course gives me specific functional skills. These skills will form the basis of what I do, day in and day out.

The global and cultural environment is business frames the setting for what I will be doing. It is where I will perform the skills I learned in the business computing. In a globalized world, working with people from a number of cultures, I will be in a position to put this knowledge to the test while in the performance of my role as an accountant.

Business ethics covers the issue of how I will perform my duties. Ethics is inherently important in accounting, because the career is governed by fairly strict legal requirements, and moving beyond these requirements is not only unethical but illegal and could severely harm my company. It is important, then, to consider the different things that I have learned in the Accounting Pathway as answering the questions of what I do, where I do it, and how I do it. So each course contributes to the totality of my role in the workforce. By mastering all of these disciplines and acquiring the knowledge from these courses, I will be in a better position to excel at all dimensions of my role.

2. All problems have multiple dimensions, so it is not going to be difficult to use the different knowledge and skills that I have acquired in my studies to solve problems. One of the hot issues in accounting right now is the issue of convergence between U.S. GAAP and the International Financial Reporting Standards (IFRS). There are certainly different dimensions to this. The global and cultural dimension is obvious, since there are significant underlying philosophical differences between the two systems and I will need to know what those differences are. Those differences will be apparent also any time when dealing with people from different cultures.

With respect to the hard skills, those reflect the tools I will use to manage the issue.…… [read more]

Itemized Deductions the Federal Tax Essay

… What are itemized deductions?

The IRS offers several different ways to exclude income from your taxable income. Although it is impossible to briefly list all of these deductions, some are more important and have a larger effect than other less applied instances. The Internal Revenue Code offers tax deductions to provide an incentive for taxpayers to engage in certain socially beneficial activities including certain business activity and home ownership are two examples.

Personal exemptions play a key role in this process. One may claim a dependent exemption for yourself and for any relative or family member for whom you provide more than 50% financial support. For 2012, the standard deduction is $3,700 per person. If you don't itemize your deductions, you can also take the standard deduction. The value of the standard deduction varies according to your filing status; single, for example, or married and filing jointly. As of 2012, the value of the standard deduction ranges from $7,250 to $16,200.

The IRS may sometimes allow you to deduct expenses from your taxable income even if you don't itemize your deductions. This means that you can claim them together with the standard deduction. These expenses may include certain health care expenses, school tuition, moving expenses, alimony and student loan interest. Most business expenses are classified as itemized deductions. To deduct these expenses, they must be "ordinary and necessary" and not reimbursed to you by anyone. They must arise from an activity with a primary business purpose.

Works Cited

The Internal Revenue Service Tax Code. Viewed 19 Feb, 2013, Retrieved from

Viard, A. (2013). The myth of the limits on itemized deductions. The American, January 9, 2013. Retrieved from of-the-limits-on-itemized-deductions/

Wood, R. (2013). Shh, Home Office and other IRS Audit Trigger Secrets. Forbes, 25 Jan 2013. Retrieved from and-other-irs-audit-trigger-secrets/… [read more]

Skillset for Forensic Accounting Term Paper

… 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… [read more]

Mf Global Research Paper

… Further complicating matters, the company also utilized U.S. treasuries and bets on complicated European debts. When faced with large fines, MF Global proceeded to clandestinely borrow from customer's accounts without permission in complex investments. This fraudulent, unsanctioned, leveraged borrowing was carried out under the CEO's direction, despite internal warnings from the company board, who ultimately signed off on it. According to Lee, "He pushed through a $6.3 billion bet on European debt; a wager big enough to wipe out the firm five times over if it went bad; despite concerns from other executives and board members. And it is now clear that he personally lobbied regulators and auditors about the strategy." (2012).

The instruments didn't pay off in time ultimately leading to financial failure and the declaration of bankruptcy. The Trustee for the liquidation of MF Global Inc. determined that the company executed securities transactions totaling more than $100 billion during its final week of operations, including the liquidation of customer securities. The securities included complex instruments, such as off-balance sheet repurchase transactions involving sovereign debt securities and derivative structures.

Discuss what measures can and should be taken to make it easier for corporate employees to blow the whistle on a fraudulent scheme within an organization.

Whistleblowing has to be a deliberate and carefully planned part of an organization's business strategy to be effective (Weingberg, 2003). Employees must be educated about the appropriate steps to take to voice ethical concerns. Anonymity should be allowed, but beyond that employees must feel that their report of fraudulent activity will be taken seriously and will be investigated. If the organization is unresponsive or fails to follow-up, many employees opt to take their concerns public. Perhaps most importantly, employees must feel confident that they will not suffer personal reprisals for using internal channels to report perceived wrongdoing. Fear of retaliation by management keeps many employees silent or sends them outside of the organization to expose what they know.

Many organizations now offer ethical training sessions to educate employees about ethical dilemmas unique to the organization. When these trainings also include examples of the types of activities that should be disclosed through internal whistleblowing channels, proper procedures for doing so, how management will respond, and how job security will be protected in the event of a report, it goes a long way in improving the ethical climate of an organization (Dyck, Morse & Zingales, 2010). It also allows ethical issues to be handled internally first before being made public.

Evaluate whether businesses, accounting firms, and other organizations should explicitly reward ethical behavior by their employees and executives.

Organizations punish bad behavior and reward various forms of good behavior such as exceeding goals and quotas, creativity and providing superior service. Ethical behavior is really driven by how it is encouraged and rewarded. It is important for companies to outline ethical behavior is and reward it accordingly. Reward structures need not be blatant incentives. Many organizations have found success in embedding ethical rewards into performance reviews. For… [read more]

Accountant Mentor Term Paper

… Accounting

Adjusting entries are required in order to ensure that the company's internal accounting records match up with accrual accounting standards (No author, 2012). These entries are typically made "just prior to issuing a company's financial statements" (Ibid.). The need for adjusting entries arises, often in small companies, when the company does not use accrual accounting in its daily business. If the company is using a cash accounting system, it must then make the adjusting entries to reflect how its statement should look if it used accrual accounting methods the entire time.

There are a number of examples of different adjusting entries that one can commonly see in a small manufacturing setting. One type of adjusting entry is for accruals. Companies accrue costs that have not yet been paid. For example, at our small manufacturing company we have a lease on the building that is paid on January 31 every year. When we produce the financial statement, we need to have an adjusting entry that shows the accrued lease expense, which is what we will have accrued from Feb 1 until Dec 13. This debt has been accrued, but has not been paid.

Another example of an adjusting entry is for prepaid items. A good example comes with our fire insurance. We pay that ahead every year so that we are covered. This costs us $2,000 and we pay it every December. We need to have an adjusting entry at year's end to reflect what happened to that money. It did not disappear into thin air, it was used to cover an expense for the entire next year.

A third type of adjusting entry is with inventory. Inventory levels change constantly and we always need to account for the latest inventory. There is almost always going to be a gap between the raw materials that we have purchased, what is in our raw materials inventory, what is in our goods in process inventory and what is in our finished goods inventory. We always need to make a series of adjusting entries at the end of each period to accurately reflect what our inventory levels are of each type.

A final type is with respect to depreciation and other non-cash items. We have cash accounting all year, but when we are putting our…… [read more]

Accounting the Accrual Basis Essay

… This is why few SMEs will use accrual accounting, unless there is a reason that they need to, such as for their lender. Cash accounting not only is easier, but it fits more closely with how they do business.

Double-entry bookkeeping is useful under both accounting systems, however. The essential principle of double-entry bookkeeping is that the accounting identity must remain true, that assets = liabilities + owner's equity. Thus, each transaction must fall on one side of that ledger and on the other side as well. One of the notable differences between accrual and cash accounting is that a typical transaction under cash accounting might only be recorded once, but under accrual accounting will be recorded in a series of balancing entries. This means that under accrual accounting, a sale might be recorded first as an account receivable, and then when the cash is received a second entry is created to debit accounts receivable and credit cash. Under cash accounting, only one transaction is required, when the account is settled and the cash is received.

There are additional complexities to accrual accounting, such as with non-cash transactions like depreciation. Under cash accounting, buying a new factory is recorded just once, when the cash is paid. Under accrual accounting, the entire factory is added to the balance sheet under assets, but there are also transactions created to record the depreciation of that factory. These additional complicating factors, especially for non-cash transactions, are often not very useful for SMEs, so they prefer to utilize the cash accounting system for the sake of simplicity and to more accurately reflect their business.

Works Cited:

QuickMBA. (2010). Double entry bookkeeping. Retrieved October 12, 2012 from…… [read more]

Themido, I., A. Arantes Term Paper

… 2000: 1149). This enables even a relatively unfamiliar reader in the logistics industry to not only understand the article, but also to gain a grounding in ABC literature that can enable him or her potentially change the methodology of cost accounting within his or her organization.

It explains the terms of ABC and shows how to create an ABC logistics cross for an organization.

It illustrates the value of ABC to someone who is unfamiliar with the process by demonstrating how ABC is different from previous approaches, as well as ABC terminology and utility. It also shows how ABC can enable organizations to save money by auditing processes, rather than merely tracking expenses.


Themido, I., A. Arantes, C. Fernandes & A.P. Guedes. (2000). Logistic costs case study: An

ABC approach. The Journal of the Operational Research Society, 51 (10):…… [read more]

Ethics in Forensic Accounting Essay

… ¶ … 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… [read more]

Deontology and Utilitarianism in Accounting Article Review

… Deontology and Utilitarianism in Accounting

Accounting ethics are important to ensure that the accountant performs their task in the highest ethical standard according to the code set by the American Institute of Certified Public Accountants (AICPA). As mentioned in the article, it is possible to have different arguments as a result of looking at the code of professional conduct from either a deontological or utilitarian point-of-view. In order to prevent these different schools of thought which could have dire ethical implications, it is important for the accounting principles to be made more stringent to eliminate any doubt or shortcoming in the interpretation of the rules. This is what is envisioned in the Sarbanes-Oxley Act.

The Sarbanes-Oxley Act was passed in the year 2002 to protect investors from falling prey of possible fraudulent activities conducted by corporations in collaboration with accountants. These strict rules have prevented the reoccurrence of accounting scandals such as those that took down Enron and Worldcom leading to widespread fear by investors. Therefore, the act aims to regain the confidence of the investors in the accounting procedures and that their investment is safe. It also prevents accountants from colluding to defraud investors by working through the loopholes in the code of professional conduct of accountants Hess, 2007()

Streamlining of the ethical view of the practice of accountants is important since it will help the accountants perform their duties in a moral fashion that transcends the mere gain that they may receive from unethical acts or maximization of profits by companies. This will provide a long-term solution for the business world since it will increase investor confidence in the regulation of accountants as well as prevent billion-dollar scams from being engineered through accounting procedures.

Article 2

Professional ethics are founded on a deontological perspective since…… [read more]

IFRS and GAAP Convergence Research Paper

… Errors that occur during translation of financial records reduce using IFRS.

5. Make recommendations as to whether Walmart should use IFRS or GAAP as its reporting standard. Explain your rationale.

The size of the multinational and it goal to dominate the global market will require the organization to use IFRS. The use of this accounting standard will enable the organization reduce the operating cost due to the audit and accounting charges incurred. As the organization expands its operations, it will need to unify its accounting standards and adopt IFRS, acceptable in other nations. IFRS is the future of accounting standards due to globalization. The use of U.S. GAAP isolates the business in the American market thus limiting the growth. Adaptation of IFRS enables the business to operate in new market thus increasing revenue.

Adopting IFRS will enable the organization to have a competent workforce when IFRS implementation in America becomes a reality. The company does not need to send its staff to study the new standards as it can gradually train part of its accounting staff. Adaptation of IFRS enables the firm to compete in new market. Competing in new markets enables the organization to expand its operations through innovation and marketing. The company is able to formulate ways of reducing costs to increase the revenue generated. Walmart can design new product or serve customers differently to ensure that market share increases (Tyson, 2011).

To fund its expansion in to the global market, Walmart needs to convince investors that their money will earn interest. IFRS provides simple performance measures useful to an investor when making investment decisions. IFRS standards are clear and productive enabling an investor to make informed investment decisions. The standard protects investors among other stakeholders in the business. Walmart should use IFRS to enable the company to attract foreign investors. IFRS enables the accountants to make their professional evaluation of transactions in the business. IFRS prevents atomization of the accounting process, which may yield errors in the organization (Bandyopadhyay & McGee, 2012).

US GAAP is a rule based accounting standard, which is time consuming. Accountants trying to abide to rules in U.S. GAAP spend less time formulating reports than when using IFRS. The final report made using IFRS is easy to understand and clear. The use of IFRS gives Walmart an accurate economic indicator and enables the company to compare productivity of its branches. The management can make investment decisions by evaluating worth of the international branches. IFRS gives accurate information thus Walmart management can make correct decisions. The titles of the financial statements allow investors who lack training in the field of accounting to understand the purpose of the statement.


Bandyopadhyay, J., & McGee, P.F. (2012). A PROGRESS REPORT: IFRS-U.S. GAAP CONVERGENCE AND ITS CURRICULUM IMPACT. Advances In Competitiveness Research, 20(1/2), 78-89.

Tyson, T. (2011). The Convergence of IFRS and U.S. GAAP. CPA Journal, 81(6), 26-31.

Bohusova, H., & Nerudova, D. (2009). U.S. GAAP AND IFRS CONVERGENCE IN THE AREA OF REVENUE RECOGNITION. Economics &… [read more]

Accounting Earnings and Profits Essay

… Accounting Earnings and Profits:

Earnings and profits can be regarded as financial aspects that represent the upper limit of dividend income that a company's shareholder must identify on corporate distributions. They can also be defined as the organization's or a company's financial income, which is its fiscal ability to pay dividends. They are the maximum value of cash realized by a company's returns and is paid to the shareholders of the same company. Accounting earnings and profits help the firm to identify whatever earnings it has realized at the end of each financial year without impairing its capital and it enables one to know the position of the company. While earnings and profits are not defined in the tax code, they are usually computed on a yearly basis at the conclusion of the tax year. Despite of the importance of accounting earnings and profits in determine the firm's real financial performance; this process can sometimes be confusing.

Process of Accounting E&P:

The process of accounting earnings and profits is a representation or reflection of the actual financial performance of a company within a specified period of time ("What are Accounting Earnings?" n.d.). In most cases, a firm's management team and financial analysts usually provide projections regarding the quarterly or annually profits as well as the expected sales. During this process estimates for expected earnings periods are also provided in combination with the current accounting earnings or before the filing of an income statement. This procedure is critical in examining the actual earnings since it develops a platform for the kind of profits that shareholders and investors can anticipate. Moreover, the rise and fall of the firm's stock is dependent on the earnings estimates and usually reacts after the accounting earnings are reported.

When preparing financial statements and at the conclusion of accounting time periods, accountants adjust entries in order ensure an accurate recognition of revenue. Accounting earnings and profits is not conducted on…… [read more]

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