"Accounting / Auditing" Essays

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Information System Holds in Accounting Term Paper

Term Paper  |  20 pages (7,679 words)
Bibliography Sources: 1+

SAMPLE TEXT:

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


Auditing Standards Must, Out Term Paper

Term Paper  |  2 pages (580 words)
Bibliography Sources: 0

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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

Term Paper  |  9 pages (3,077 words)
Bibliography Sources: 1+

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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 borrowing needs and how future profits and cash flows will be distributed among those interested in the enterprise. "Global consistency… [read more]


Financial Statements. Generally Accepted Accounting Principles Term Paper

Term Paper  |  5 pages (1,696 words)
Bibliography Sources: 1+

SAMPLE TEXT:

¶ … 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 of the company or client they are working for. But beyond those company guidelines, accountants often base their decisions on… [read more]


International Accounting - Evaluate Research Term Paper

Term Paper  |  8 pages (3,122 words)
Bibliography Sources: 1+

SAMPLE TEXT:

"

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 represents an important step toward formalizing their commitment to the convergence of United States and international accounting standards. The agreement… [read more]


Accounting Information the Revolution Term Paper

Term Paper  |  3 pages (825 words)
Bibliography Sources: 0

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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

Term Paper  |  3 pages (843 words)
Bibliography Sources: 1+

SAMPLE TEXT:

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.

Bibliography

1. Leibs, Scott; Krass, Peter. The Never-Ending Audit. October 2002. On the Internet at http://www.cfo.com/article/1,5309,7776,00.html

2. Rezaee, Zabihollah Continuous auditing: Building automated auditing capability. 2002. On the Internet at http://www.cwu.edu/~atkinsom/continuous_auditing.htm

3. Goff, John. Sarboxing. February 2004. On the Internet at http://www.cfo.com/article/1,5309,11920||BS|12|241,00.html

http://www.sarbanes-oxley-forum.com / found the definition on the Internet at http://www.cwu.edu/~atkinsom/continuous_auditing.htm. 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 http://www.cfo.com/article/1,5309,7776,00.html

Goff, John. Sarboxing. February 2004. On the Internet at http://www.cfo.com/article/1,5309,11920||BS|12|241,00.html… [read more]


Harmonization of Accounting and Disclosure Term Paper

Term Paper  |  2 pages (631 words)
Bibliography Sources: 0

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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 http://www.iasplus.com/resource/iascstmt.pdf;Internet; accessed 19 September 2003.

Portsmouth Business School, 2002, available from https://www.business.uiuc.edu/ciera/conferences/gottingen/Papers/Fearnley.pdf;Internet; Accessed September 20, 2003.

The Board of the International Accounting Standards Committee, December 2000, available at http://www.iasplus.com/resource/iascstmt.pdf;Internet; accessed 19 September 2003.… [read more]


Accounting of Enron Term Paper

Term Paper  |  5 pages (1,496 words)
Bibliography Sources: 1+

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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 erroneous and, in the view of some, downright deceptive. The company's lack of transparency in reporting its financial affairs, followed… [read more]


Community Power Structures Assessment

Assessment  |  2 pages (582 words)
Bibliography Sources: 2

SAMPLE TEXT:

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 Research Paper

Research Paper  |  2 pages (671 words)
Bibliography Sources: 2

SAMPLE TEXT:

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.

Conclusion

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.

References

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


Accounting Report Generation, Tackling Exercises Essay

Essay  |  2 pages (823 words)
Bibliography Sources: 1

SAMPLE TEXT:

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.

Exercises

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.

Conclusion

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.

References

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


Professional Accounting Services Are Paramount Research Paper

Research Paper  |  2 pages (839 words)
Bibliography Sources: 1

SAMPLE TEXT:

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).

Conclusion

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.

Reference

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


SEC Ictv the Securities Case Study

Case Study  |  2 pages (511 words)
Bibliography Sources: 1

SAMPLE TEXT:

Respondents' conduct, as further described below, constituted improper professional conduct within the meaning of Rule 102(e)(1)(ii) and (iv) and Section 4C

of the Exchange Act."

Analysis

The SEC is correct in going after the auditors in this situation for two good reasons. The first reason is that the accounting standards were wrong and ICTV had an intent to deceive and cheat their way to the top. The competitive atmosphere that capitalistic endeavors must compete within makes the SEC's job of regulation very difficult. Oftentimes, accountants are rewarded with bonuses and raises when they find new ways of exploiting loopholes within policies and laws. This environment is sure to breed cheaters.

The second reason the SEC should go after the auditors in this situation is to help raise the levels of standards for accounting professionals. Certified Public Accountants. Have a professional and civic duty to represent the public's best interests, when this fails to happen, a necessary correction in the system should most definitely be applied.

Since leadership is usually given credit for successes, the same should be applied in cases such as these were disastrous failures have occurred. The responsibility of the performance of the accounting firm begins at the top and should point downwards from there. All leaders within this organization, including the CFO and CEO, should be held responsible for their actions.

References

The United States Securities and Exchange Commission. Administrative Proceeding 3-997, 20 Jan 2007. Retrieved from http://www.sec.gov/litigation/admin/2011/34-63740.pdf… [read more]


Accounting Ethics a Sad Tale Essay

Essay  |  2 pages (989 words)
Bibliography Sources: 2

SAMPLE TEXT:

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.

References

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

Essay  |  7 pages (1,867 words)
Bibliography Sources: 4

SAMPLE TEXT:

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.

References

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

Term Paper  |  2 pages (824 words)
Bibliography Sources: 2

SAMPLE TEXT:

¶ … 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

Essay  |  2 pages (870 words)
Bibliography Sources: 1+

SAMPLE TEXT:

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.

References

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

http://www.shsu.edu/~klett/ACCOUNTANT%20ISSUES.htm

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

http://grammar.ucsd.edu/courses/lign105/student-powerpoint/Attractive%20Nuisance%20Doctrine.pdf

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

Retrieved:

http://ohiocarcrashattorney.com/393/how-proximate-cause-affects-your-ohio-car-accident-claim-2/

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

http://www.vlaw.com/Damages%2FTypesofDamages-content.html

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

http://www.stcl.edu/faculty_pages/faculty_folders/steiner/causationreview/tsld013.htm

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:

http://www.hinshawlaw.com/files/Publication/d3155ac7-895b-45e0-b208-92af0142a45b/Presentation/PublicationAttachment/9dc9dfeb-ecfe-4418-a16a-93dfc5a52045/0607TheProfLine.pdf… [read more]


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

Term Paper  |  10 pages (3,061 words)
Bibliography Sources: 3

SAMPLE TEXT:

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 the realm of United States account practices, federal regulations, and even politics in general. Aside from the involvement of what… [read more]


Integration With an Accounting Pathway, I Studied Essay

Essay  |  3 pages (814 words)
Bibliography Sources: 3

SAMPLE TEXT:

¶ … 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

Essay  |  2 pages (627 words)
Bibliography Sources: 3

SAMPLE TEXT:

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 http://www.irs.gov/publications/p17/ch20.html#d0e67864

Viard, A. (2013). The myth of the limits on itemized deductions. The American, January 9, 2013. Retrieved from http://www.aei.org/article/economics/fiscal-policy/taxes/the-myth- of-the-limits-on-itemized-deductions/

Wood, R. (2013). Shh, Home Office and other IRS Audit Trigger Secrets. Forbes, 25 Jan 2013. Retrieved from http://www.forbes.com/sites/robertwood/2013/01/25/shhh-home-office- and-other-irs-audit-trigger-secrets/… [read more]


Skillset for Forensic Accounting Term Paper

Term Paper  |  6 pages (1,680 words)
Bibliography Sources: 6

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Forensic Accounting

Skill Set for Forensic Accounting

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


Mf Global Research Paper

Research Paper  |  4 pages (1,252 words)
Bibliography Sources: 4

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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

Term Paper  |  3 pages (765 words)
Bibliography Sources: 3

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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

Essay  |  2 pages (567 words)
Bibliography Sources: 2

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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. QuickMBA.com. Retrieved October 12, 2012 from…… [read more]


Themido, I., A. Arantes Term Paper

Term Paper  |  2 pages (415 words)
Bibliography Sources: 2

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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.

Reference

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

Essay  |  8 pages (2,417 words)
Bibliography Sources: 8

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

Over the last several years, the… [read more]


Deontology and Utilitarianism in Accounting Article Review

Article Review  |  2 pages (594 words)
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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

Research Paper  |  6 pages (2,041 words)
Bibliography Sources: 4

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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.

References

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

Essay  |  2 pages (647 words)
Bibliography Sources: 2

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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]


Technology and Accounting Essay

Essay  |  2 pages (743 words)
Bibliography Sources: 2

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Technology and Accounting

Technology has now become a euphemism for the information age. As individuals, information rarely escapes our grasp as now anybody can have access to its vast array of knowledge. More importantly, in the midst of our global society, technology has a profound role on our nation's ability to participate in a more competitive environment. As the age old adage states, "Knowledge is power," and in many instances this statement is correct. Information allows individuals to make better informed decisions regarding projects that can have grave implications on society if the solution is incorrect. Further, information allows more convenience in regards to access and search of particular concepts. Technology allows humans to live longer while allowing them to live more productive lives. The benefits that technology derives are as difficult to enumerate as they are to fully comprehend. It is my contention that the information age has a very profound impact on society, especially if society is dependent on a particular technology to flourish. For one, technology can be used to supplement human judgment to make better informed decisions. Further, technology can help streamline processes in an effort to make individuals work more efficient. Finally, technology can help institutions better safeguards information thus reducing fraud, miscalculations and other human errors.

In regards to accounting, technology has a profound role in terms of accuracy. The profession of accounting is predicated on accuracy of financial aspects such as assets, liabilities, cash, accounts receivable, accounts payable and so forth. Errors in these particular ledgers can result in consequences for both management and stockholders who ultimately make decisions based on this information. If the input is wrong, it is possible for management to make a misinformed business decision due to errors in accounting. For example, Insight Enterprises lost $70 million due to an accounting error. These transactions started in 1996 and ended in 2008, a stretch of 12 years with accounting errors. Chief Financial Officer Glynis Bryan explained on a conference call with investors that the company moved credits on sales made from its balance sheet to its income statement before it legally should have. This error, overtime, cost the company over $50 million dollars. Technologies helps abate of diminish the prevalence of…… [read more]


Accounting Methods and Taxpayer Income Term Paper

Term Paper  |  2 pages (589 words)
Bibliography Sources: 2

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This practice is nearly universal among small businesspeople, and is used particularly often during prolonged stretches of difficult economic conditions. By artificially inflating or deflating income in order to reduce tax liability for a given year, cash-basis accounting allows small business owners to level the proverbial playing field, by giving them the chance to present income statements that more accurately reflect the day-to-day operations of their company.

Conversely, large multinational corporations have long used accrual accounting to manage the payroll complications of thousand-member workforces, to shield themselves from paying appropriate taxes on massive profits, and to create tax liability accounts for employee taxes. Every incorporated company in the United States must use accrual accounting, according to the generally accepted accounting principles (GAAP), and the annual financial reports and investment prospectuses sent to stockholders each year are premised on the results of this accounting method. The benefit of accrual accounting for major corporations, for which posting a quarterly loss is akin to financial suicide, lies in the practice's ability to guard against such losses. Because cash-basis accounting would result in months of steady profit being interrupted when tax bills are paid, accrual accounting allows for the formation of tax liability accounts which separate those payments into proportional allotments. This technique enables corporations to spread these losses evenly over 12 months, rather than absorb major losses every quarter which would scare off potential lenders and damage their reputation on Wall Street.

References

Accrual accounting (2010, May 09). Forbes Financial Glossary, Retrieved from http://www.forbes.com/sites/forbesfinancialglossary/2011/07/12/accrual-accounting/

Cash basis accounting. (2011, June 21). Investopedia, Retrieved from http://www.investopedia.com/terms/c/cashbasis.asp?partner=forbes-pf… [read more]


Accounting Internal Controls That Must Be Applied Essay

Essay  |  2 pages (535 words)
Bibliography Sources: 2

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Accounting

Internal Controls That Must Be Applied

When Taking a Physical Count of Inventory

There are many potential internal controls companies can use when completing a physical count of inventory. Of the controls mentioned in this analysis the majority are focused on ensuring a segregation of duties, authorizations, and support for independent checks of performance to protect physical inventory (Giannoccaro, Pontrandolfo, 2002). The internal controls include segregation of duties, proper authorization, adequate documents and records (Howard, 1984), physical controls, and independent checks of performance (Randall, 1984).

Analysis of Control Principles

All five of these approaches to managing physical inventory are predicated on being able to be used standardized processes and procedure's that have over years had variability removed from them, in addition to being auditable from a performance standpoint (Corman, 1988). From a staffing standpoint, having the segregation of responsibilities for those who are completing inventory counts during physical inventory sessions is critically important. This alleviates the potential for fraud and over-reporting to cover up theft or shrinkage of inventory that staff members may not be conversant in how to handle (Giannoccaro, Pontrandolfo, 2002). The need for segregation of duties is also critical for ensuring the next control principle as well, which is ensuring proper authorization of each manager and their teams involved in the inventory counts. This ensures the best-trained members of a company are managing the actual inventory counting process.

The second control principle is that of ensuring proper authorization of managers and teams completing the internal counts and audits of physical inventory levels (Giannoccaro, Pontrandolfo, 2002). This is critical down to the level of…… [read more]


Ethics and the Auditor Essay

Essay  |  2 pages (619 words)
Bibliography Sources: 1

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Ethics and the Auditor

Looking around you, anyone can see the clear financial mess that is in front of us. Currently, the United States has proven an economically vulnerable country. The value of the American dollar has steadily decreased, and many people find themselves trying to make sense of an unstable economic time. It is getting harder and harder to practice ethical behavior in a modern context, however, as doing such can have a negative impact on one's financial standing in such an unstable world.

Still, it is important to retain a strong sense of ethics in today's world. It is important for any family to have a strong sense of ethics, considering that many of these families pass down lessons through ethical lessons that are learned by a child. Ethical behavior comes from adherence to elements of certain moral codes and standards that aim to protect and benefit the lives of the modern people. As such, ethical behavior is a behavior that produces the greatest good. This is the aim of most ethical behavior, as it aims to help provide good to the actor and those around him or her.

In accounting, that greatest good can often be clouded. There are many individual interests that can step into the equation that makes the situation biased to a certain extent. Yet, this becomes an incredibly intricate issue when dealing with large amounts of money and funding within an organization or a group of organizations. Ethical accounting becomes important because it is an accounting style that fails to be tempted by the lure of recording accounting principles falsely or misleadingly for personal gain. Most of the case in such situations ethical accounting requires that individuals disclose the appropriate number for their annual income. Ethical accounting is when an individual, group, or company, does not lie about making less or more…… [read more]


Sarbanes-Oxley Act Essay

Essay  |  2 pages (584 words)
Bibliography Sources: 1

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Still, it is often difficult to legislate moral conduct and behavior. Critics of the Sarbanes-Oxley Act cite this as a weakness (Weinberg, 2003). However, I view this in another light, particularly because there are provisions in the Act that offer checks and balances that did not exist prior. It is much harder to have conflicts of interest in corporate accounting today. Auditors used to provide higher margin consulting services to audit clients. Corporate directors often lacked understanding or independence -- or both. Today, firms must register with the PCAOB which acts as an independent, non-profit, self-regulatory organization. This helps ensure standards, quality control and greater transparency in reporting. Auditors now operate under the direct oversight of the SEC.

Sarbanes-Oxley also prohibits accounting firms from doing non-audit work for clients. Services such as bookkeeping; outsourcing internal audit work; actuarial services; investment banking services; unrelated legal services; and the designing and implementing financial information systems are not permissible under the PCAOB. In addition, CEOs and CFOs must "sign off" that financial reports are accurate and "fairly present in all material respects the financial condition and results" of the company. The Act specifies "that it is unlawful for any officer or director of an issuer…to take action to fraudulently influence, manipulate, coerce, or mislead" auditors. In this way, management is held accountable. Similarly, insider trader is strictly limited and annual and quarterly reports must include off balance sheet transactions, arrangements and obligations. Excessive use of stock options as a form of management compensation is scrutinized today, and there are now stiffer penalties for criminal acts and fiscal dishonesty.

References

Weinberg, J.A. (2003). Accounting for Corporate Behavior. Economic Quarterly…… [read more]


Accounting and Corporate Governance Essay

Essay  |  5 pages (1,618 words)
Bibliography Sources: 1+

SAMPLE TEXT:

Officers must further assert that their attestation is based on their accepting personal responsibility for the effectiveness of internal controls over their financial processes. These requirements eliminate the ability of officers to claim ignorance of financial wrongdoings as a legal defense (Thomas & Klutz, 2006).

Section 404 discusses the Management Assessment of Internal Controls and works together with Section 302 to make organizations responsible for setting up adequate controls against risk. This section sets forth details for how companies must conduct their assessments thereby decreasing the likelihood of material fraud or misrepresentation of financial data. Section 409 deals with Real Time Disclosure, requiring companies to disclose information indicating a pending material change in financial or operating conditions on a current basis. This provision provides an early warning that protects investors from delayed reporting of financial events that potentially increase their losses (Thomas & Klutz, 2006).

Section 802 deals with criminal penalties for altering documents, which protects investors and the public by discourages companies from impeding a legal investigation. Section 806 encourages and protects whistleblowers, intended to help those employees disclosing instances of potential fraud. Section 807 discusses criminal penalties for defrauding shareholders, providing further investor protection against fraud (Thomas & Klutz, 2006).

Reference List

Adkins, T. (2009). Financial statement manipulation An ever present problem for investors. Retrieved April 11, 2012 from: http://www.investopedia.com/articles/fundamental-analysis/financial-statement-manipulation.asp#axzz1rldrKyTT

AICPA. (2012). Considering internal controls. Retrieved April 11, 2012 from: http://www.aicpa.org/interestareas/forensicandvaluation/resources/fraudpreventiondetectionresponse/pages/considering%20internal%20controls.aspx

AICPA. (2006 June 19). Appendix to SAS No. 99, Fraud Risk Factors. Retrieved April 11, 2012 from: http://www.aicpa.org/interestareas/forensicandvaluation/resources/fraudpreventiondetectionresponse/pages/appendix%20to%20sas%20no.aspx

Guerra, J.E. (2004 March). The Sarbanes-Oxley Act and evolution of corporate governance. The CPA Journal. Retrieved April 11, 2012 from: http://www.nysscpa.org/cpajournal/2004/304/perspectives/nv5.htm

Thomas, G. & Klutz, A. (2006). What is Sarbanes-Oxley? also Sarbanes-Oxley essential information. Retrieved April 11, 2012 from: http://www.sox-online.com/whatis.html and from http://www.sox-online.com/basics.html… [read more]


New PCAOB Reporting Requirements Case Study

Case Study  |  4 pages (1,295 words)
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" (U.S. Department of Interior 2003 P1).

"The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud."( Apostolou & Crumbley 2008 P. 1).

Responsibility of an auditing firm is to assess whether the financial statement presented by a publicly traded company fairly reflects the company performances. SEC requires a publicly traded company to use independent auditor to assess whether the financial statements presented by the company reflects their financial positions. Auditing involves evaluation of a company financial position and present auditing note in accordance with the general accepted accounting principles.

Following are the responsibilities of an auditing firm to detect fraud:

First, an auditing firm should perform the test of the financial statement of a company to determine whether the company financial data comply with the law and regulations.

In addition, an auditing firm should implement internal control testing to assess the effectiveness of internal system within a company. When an auditing firm sees that internal control is strong, an auditing firm should implement substantial analytical procedure by comparing financial information with non-financial information to ascertain whether data collected make sense. If the company internal control is weak, an auditing firm should implement a substantial test for detail by selecting major account balance and find hard evidence such as invoices or bank statement in order to detect any fraud

Giving challenges in detecting fraud, one of the effective methods that an auditing firm could employ to detect fraud is to subject a company to forensic auditing. Forensic auditing is the most aggressive method to detect fraud. Typically, forensic method to detect fraud is much more detail and involve evaluation of complete company record which includes all the company financial data. Forensic method to detect fraud also includes questioning of all company employees. Thus, a public company needs to undergo forensic auditing methodology on a regular basis. While forensic method to detect fraud is very effective, the procedure is significantly more expensive to implement and the method is time consuming than regular auditing system. While financial auditing system does not cover every transaction, a forensic auditor performs detailed analysis of the company to detect fraud. (Apostolou & Crumbley 2008).

Recommendation for alternatives to the PCAOB.

Alternative recommendation to PCAOB is to allow SEC, PCAOB and FASB to work together. Changes will reduce the auditor liability in the presentation of financial information. The changes will shield the body from the litigation.

A sample Timeline for PCAOB Reporting

Appropriate time for the PCAOB reporting is 15-month starting from April of the preceding calendar year to March of the next calendar year. (Berger, 2010). Timeline for PCAOB reporting is as follows:

PCAOB Reporting

Timeline

Filing of Annual report on form 2

April 30, 2012

Filing of Form 2 reflecting information

May 10, 2012

Fining Information about Public Issuer Related Practice which include information about issuer fee billed

July 15, 2012

Filing Information about… [read more]


Ethical Issues Term Paper

Term Paper  |  2 pages (796 words)
Bibliography Sources: 1

SAMPLE TEXT:

Moreover, the CFO routinely overstated the value of DHB's inventory by fraudulently increasing inventory quantities, labor costs, overhead costs, and the amount of raw materials used in DHB's products. The two officers also transferred millions of dollars of expenses from cost of goods sold R. And D. costs in order to materially increase the company's gross profit (SEC, 2011).

The effect of DHB ethical issues, which compromised their accounting information system, was to overstate DHB's gross profit margins, as well as their earnings in some cases. Investors were given a false picture of DHB's operating results. The resulting misstatement of the company's financial position and profitability caused the stock price to climb, allowing the senior managers to profit by selling their own holdings at inflated prices. According the SEC, the company's former COO and CFO together profited by more than $8.2 million from the cashless exercise of warrants and their sale of over 400,000 DHB shares before the public knew about the misrepresentations in DHB's filings and financial statements.

The impact to DHB of the company's overvaluation due to the executive's massive accounting fraud was to force the company into filing bankruptcy. The company was also forced to restate its financials and settle with the SEC. DHB's stock price declined by more than 45% in 2006 following information becoming public about the company's accounting fraud along with the resignation of the CEO and CFO.

The role of the accountant has changed following the passage of the Sarbanes-Oxley (SOX) Act of 2002. Due to SOX provisions, certain consulting services, internal audit outsourcing along with certain other activities routinely provided to clients in the past became illegal when performed by the audit firm. The new restrictions on the practice of auditing were intended to strengthen auditor independence (Gantt, Generas & Lamberton, 2007).

Works Cited

Cohn, M. (2011, November 10). Body armor execs settle accounting fraud charges. Accounting Today for the Web CPA. Retrieved January 13, 2012 from: http://www.accountingtoday.com/news/Body-Armor-Execs-DHB-Point-Blank-Settle-Accounting-Fraud-Charges-60767-1.html

Gantt, K., Generas, G., & Lamberton, B. (2007, September). Sarbanes-Oxley, accounting scandals, and state accountancy boards. The CPA Journal online. Retrieved January 13, 2012 from: http://www.nysscpa.org/cpajournal/2007/907/essentials/p18.htm

Norris, F. (2011, March 3). For boards, S.E.C. keeps the bar low. New York Times website. Retrieved January 13, 2012 from: http://www.nytimes.com/2011/03/04/business/04norris.html?pagewanted=all

Securities and Exchange Commission. (2011, February 28). SEC charges military body armor supplier and former outside directors with accounting fraud. Retrieved January…… [read more]


Managerial Accounting: Organizations and Expectations Essay

Essay  |  2 pages (502 words)
Bibliography Sources: 1

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With the publications and other information provided by membership in the IMA, the expectations and responsibilities of managerial accountings can be better and more comprehensively understood, meaning that accounting managers will be able to more effectively and efficiently carry out their jobs (IMA, 2012). Expectations for accounting managers range from the broad and basic to the detailed and specific, including elements such as commitment to ethical behavior and truthfulness in all dealings, maintaining appropriate transparency while also protecting sensitive information pertaining to the company, and understanding the specific needs, complications, and interactions of various projects within the company and their impact upon accounting practices and the job of accounting management itself. Keeping abreast with changing national and international rules, laws, and standards as they apply to a given company or set of operations is also a major expectation for managerial accountants, and in this area the updated information and atmosphere of collaboration created by the Institute of Management Accountants can be of great benefit (IMA, 2012).

Though the accounting world has not been dragged into the spotlight for the best of reasons, the increased scrutiny on the profession can be used for positive purposes. Increasing the prominence of professional organizations and the membership numbers in these organizations will increase stability and confidence in the accounting profession by increasing the standards by which the profession is practiced. This will serve all interested parties quite well.

Reference

IMA. (2012). Institute of Management Accountants. Accessed 10…… [read more]


Accounting Standards and Concepts Violated Research Paper

Research Paper  |  5 pages (1,561 words)
Bibliography Sources: 4

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The PCAOB also has a history of announcing disciplinary actions primarily against small firms as opposed to the big accounting firms that generally audit the largest companies. The board also participates in the revolving door practice that employs auditors with ties to the industries that they regulate, allowing shuttling back and forth between jobs with each. Lynn Turner, former chief accountant at the Securities Exchange Commission, said he gives the board "a B. For its routine inspections of accounting firms, a C. minus or D. plus for its standard-setting and an F. For enforcement" (Hilzenrath, 2010, p.2).

PCAOB Improvements

According to industry consultant Francine McKenna, the following recommendations would improve the PCAOB:

Eliminate the revolving door and enact stricter rules regarding post-PCAOB employment.

Remove obstacles to inspections of international firms so that information is shared between countries and firms are actually held accountable.

Make Part 2 of inspections reports publicly available, which currently remain nonpublic if the firm addresses them to the Board's satisfaction within 12 months after the issue date.

Give the PCAOB the power, under law, to review or stop mergers and acquisitions by firms that are contrary to the public interest or that may cause independence violations.

Put teeth into the inspection process so that audit firms bear consequences for their failures (McKenna, 2010).

Works Cited

AICPA. (1972). AU Section 560 Subsequent Events. Retrieved December 2, 2011 from: http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00560.pdf

FASB. (1981). Statement of Financial Accounting Standards No. 48). Retrieved December 2, 2011 from: http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175820909255&blobheader=application%2Fpdf…… [read more]


Accounting and Financial Statements Term Paper

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Starting with the amount of equity shown at the end of the previous fiscal year, net income is added and then cash dividends paid to the owners are subtracted. If owners contributed any additional capitol this amount, such as the sale of new shares, is also added to the equity. Any capitol withdrawn by the owners is shown as a loss and equity is subtracted. Taken together these the additions and subtractions show the changes in owner equity from one fiscal year to the next.

The Statement of Cash Flows

A statement of cash flows gives investors and creditors pertinent data about a firm's cash receipts and cash payments for its operation, investments, and financing during an accounting period. All public companies are required to prepare and publish this statement. Statements of cash flows are necessary because of the use of accrual accounting, which recognized revenues and costs when they occur, not when actual cash changes hands. This results in a difference between what is reported as sales, expenses and profits and the amount of cash that actually flows into and out of the business during a period of time.

This statement provides investors, creditors, and other interested parties with critical information; for example if a firm's income statement reports rising earnings, yet at the same time the statement of cash flows reveals that the firm's inventory is rising faster than sales, this could be an indication that demand for the firm's products is softening. This may be an indication of future financial difficulty.

Conclusion

The four financial statements all have one common purpose, to evaluate the economic health of a business. They are interactive in the sense that each one affects or is affected by the other in one way or another. These statements provide indispensable information to assist managers, investors and creditors when making financial judgments.

References

Kurtz, D.L. (2010). Contemporary Business, 13th ed. Hoboken, NJ: John Wiley…… [read more]


Advanced Financial Reporting and Theory Essay

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Bibliography Sources: 8

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IFRS

In a speech on February 9, 2011 in Brussels, the new chairman of the International Accounting Standards Board (IASB) Hans Hoogervorst discusses the issue of the role that financial reporting plays in society. His points were that financial reporting is focused on investors first and other stakeholders were secondary, and that transparency is the primary objective of financial reporting… [read more]


Accounting Information System Essay

Essay  |  2 pages (650 words)
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Accounting Information System

Greater Providence Deposit and Trust needs more effective control and audit procedures over the disbursement of loan funds, with greater oversight and validation of approved customers getting the loan amounts by check, not by cash. A fundamental flaw in the processes Providence relied on was to allow a person with audit control over the financial statements to allow have loan origination and decision-making authority eventually up to $25.000. A fundamental design criterion for ensuring auditor employees do not gain access to loans and embezzle is to both rotate auditors through an organization while also never allowing anyone with audit clearances to also have loan approval authority (Van Wijk, Holmes, 2007). Clearly Providence Deposit and Trust broke this fundamental rule of sound risk management. Creating an effective division of labor across auditing, accounting, and loan management can avert millions of dollars in embezzlement over time, ensuring auditing procedures track transactions by originator and requiring identification before dispersements are made (Wells, 1998).

Another strategy Providence Deposit and Trust could concentrate on reducing fraud risk is to rotate loan clerks and the auditors assigned to each type of loan over time. The continual rotation of loan clerks and auditors will eventually disrupt patterns of fraud and embezzlement, making them easier to discover and prosecute (Wells, 1998). The spot-check based auditing of loans and the use of random sampling of transactions throughout any given loan clerk's tenure is also an excellent idea. Going as far as to call customers to see if the loan transaction met their expectations or not would not only provide insights into customer satisfaction, it would also ensure that loans were actually being originated by real customers. Another area the bank could significantly improve the loan review procedure would be to audit the deposit of each loan dispersements or check down to the individual account number of patrons. In fact the bank could put into place an innovate marketing and customer service…… [read more]


Accounting Convergence Among Public Companies Research Proposal

Research Proposal  |  2 pages (624 words)
Style: Harvard  |  Bibliography Sources: 5

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¶ … Accounting Convergence among Public Companies

Over the last several years, a variety of businesses have been facing challenges in implementing new international accounting standards. Part of the reason for this, is because there are concerns that these tighter regulations could have an impact upon the way everyone is complying with these rules. To determine why this is taking place we will be answering the following research questions. (The Path to IFRS Conversion 2010)

What are the main reasons why so many firms are hesitant about switching to the new IFRS guidelines?

What steps can be taken to address these issues?

Overview / Description of the Problem

One of the major issues affecting most businesses these days are the implementation of IFRS accounting standards. This is because many are fearful, that switching to this method will increase regulations and expenses. Once this occurs, a variety of firms will be hesitant about implementing the IFRS standards into their business model. To address these issues we will be looking at the underlying reasons for such resistance and what strategies can increase compliance. (The Path to IFRS Conversion 2010)

Methodology

The methodology that we will be using will involve the Delphi and qualitative procedures. The Delphi approach is when we are randomly looking at the opinion of various experts about a particular subject. The basic idea when using this methodology is to understand the opinions of experts and how their views can help us to answer the research questions. (The Delphi Method 2011) The qualitative approach is when we are looking at variety of sources to understand what is happening. This involves examining a number of areas to include: what was said, the actions that were taken, the culture of an individual and if their actions are based on needs / desires. These elements are important, because the combination of them will help to…… [read more]


Accounting Deals With Financial Transactions Research Paper

Research Paper  |  2 pages (740 words)
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Accounting deals with financial transactions between a firm, its employees, customers, suppliers, and owners as well as bankers and various other government agencies. Financial statements provide managers with essential information they need to evaluate the liquidity of an organization. This is the firm's ability to meet current obligations and needs by converting assets into cash, the firm's profitability, and its overall financial health. The balance sheet, income statements, statement of owner's equity, and statement of cash flows provide a foundation on which managers can base decisions. Of the four financial statements only the balance sheet is considered to be a permanent statement, its amounts are carried over from year to year. The income statement, statement of owners' equity, and statement of cash flows are considered temporary because the close out at the end of each year. By interpreting the data provided in these statements, the appropriate information can be communicated to internal decision makers and to interested parties outside the organization ("The Four Financial Statements" NDI).

The Four Financial Statements

The Balance Sheet

The balance sheet is based on the following fundamental accounting model: Assets = Liabilities +Equity. A firm's balance sheet shows its position on a particular date. It is similar to a photograph of the firm's assets together with its liabilities and owner's equity at a specific moment in time. Balance sheets must be prepared at regular intervals because a firm's managers and other internal parties often request this information every day, every week, or at least every month (Kurtz, 2010).

The Income Statement

The income statement represents the flow of resources: revenues, expenses and profits, which reveal the performance of the organization over a specific period of time. In addition to reporting the firm's profit or loss results the income statement helps decision makers focus on overall revenues and costs involved in generating these revenues. The income statement provides much of the basic data need to calculate the financial ratios mangers use in planning and controlling activities. An income statement begins with total sales or revenue generated during a year, quarter, or month, and then deducts all the costs related to producing the revenue. The final figure on the income statement, net income after taxes, is the…… [read more]


Internal Auditor, the External Case Study

Case Study  |  4 pages (1,335 words)
Bibliography Sources: 5

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com, n.d.).

The CFO is responsible for presenting and reporting accurate and timely historical financial information for the company. Every stakeholder in the company, including shareholders, analysts, creditors, employees and other members of management, all rely on the accuracy and timeliness of information that the CFO is responsible for. It is imperative that the information be accurate because so many decisions are based on it (Investopedia, 2011).

The CFO is also responsible for the company's financial condition, which means he or she must decide how to invest the company's money, while taking into consideration such factors as risk and liquidity. Also, the CFO manages the company's capital structure, one of his or her most important duties, and determines the optimum mix of debt, equity, and internal financing (Investopedia, 2011).

In addition to other duties, the CFO is responsible for economic strategy and forecasting, and is an integral part of the company's financial future. The CFO must be able to identify and report what areas of the company are most efficient and make decisions as to how the company can capitalize on this information. The CFO must be able to pinpoint which products or services make the most money for the company, and decide how this information can best be used to improve the company. The CFO's duties then include economic forecasting and modeling, that is, trying to predict, given multiple scenarios, the best way to ensure the company's future success. The CFO's performance is judged by his or her ability to project the company's long-term financial picture, and by how the company thrives based on his or her analyses (Investopedia, 2011).

Inherent conflicts can arise between the internal and external auditors' roles when the external auditor examines and renders opinions in areas that would seem to critique the way the internal auditor does his or her job, such as evaluation of controls or processes and prevention of fraud. They may also differ significantly in their assessment of risk. The CFO and external auditor may differ in whether the company's statements conform with GAAP; whether the statements fairly present the financial position of the organization, and whether the financial statements have been materially affected (Institute of Internal Auditors, 2010).

One example where they could have different opinions regarding balance sheet items could be with respect to laying off employees and the makeup of their severance packages. The external auditor may focus on the timing of layoffs and recognition of liabilities, the internal auditor may be concerned with the impact of layoffs on his fellow employees and whether operations and internal controls will be negatively affected, while the CFO may be more concerned with the company's overall reputation, the stock price, and bottom line profitability.

Conflicting viewpoints like these can be mitigated up to a point by having clear descriptions of the scope of work of each individual, clear communication of company's goals and objectives, and by agreeing to disagree in some cases. Ultimately though, such disagreements may be irreconcilable, because few… [read more]


Auditing Fair Value the Explanatory Essay

Essay  |  11 pages (3,048 words)
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Auditing Fair Value

The explanatory note accompanying Roman Holiday's financial statements details accounting policies they used in the preparation of their 2007-year-end financial statements. The most relevant assertions regarding the reacquired franchise rights involve the client's valuation approach and impairment testing. The client accounted for the value of reacquired franchise rights by determining the excess of the net amount assigned… [read more]


Case That Needs to Apply GAAP Essay

Essay  |  3 pages (1,057 words)
Bibliography Sources: 3

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Accounting/Finance

Repo 105 and Lehman Brothers

Banks utilize the repo market all the time in their daily business. It is essentially a manner in which they borrow capital from large businesses that have spare money they can lend. In order to make the loan more secure for the big business, the bank sells them something like a bond. Under this method, if the bank goes under prior to repaying the loan, the large business can sell the asset and recoup its money. Included in this kind of arrangement, the bank concurs to purchase back the asset at the end of the agreement, less a little amount that the business gets to retain as interest. Repo is short for repurchase. The arrangements are short tenure and the bank frequently purchases back the bond just a few days subsequent to selling it (Goldstein, 2011).

Everyone realizes that the bank isn't actually selling the asset to the big business, it's actually borrowing capital. So in regards to accounting rules, the capital a bank utilizes in repo arrangements remain on the bank's balance sheet. But when Lehman Brothers desired to make it look like it wasn't borrowing so much capital, the company utilized a unique method to circumvent this regulation. It did repo deals where it took somewhat less money than the asset was valued at. For instance: if Lehman possessed a bond that was valued at one hundred and five, it would sell it on the repo market for one hundred dollars. The 105 in Repo 105 refers to the detail that the capital had a value at least one hundred and five percent of what Lehman was getting for them (Goldstein, 2011).

This gap permitted the business to verify the operation as if it had been a real sale of the bond; in spite of the reality that, under the accord, the business would repurchase the bond just a week after it had sold it. Lehman would take the cash it got from selling the bond and pay off some of its liabilities. Then, following that it had put out its quarterly statement, the business would borrow more cash to buy back the asset. Lehman went large on this system. "In the second quarter of 2008 it utilized Repo 105 to move $50 billion off of its balance sheet. Lehman did not reveal its utilization of Repo 105 to the Government, to the rating agencies, to its stakeholders, or to its own board" (Goldstein, 2011). One senior representative inside the company cautioned that the use of Repo 105 would present great danger to the company if the public ever found out (Goldstein, 2011).

Lehman used these off-balance sheet strategies in order to briefly remove securities accounts from its balance sheet, typically for a timeframe of 7 to 10 days, and to make a significantly deceptive depiction of the firm's monetary circumstances. These Repo 105 transactions were almost the same as normal buy back and resale dealings that Lehman along with other banks… [read more]


Financial &amp Managerial Accounting Certifications &amp Careers Research Paper

Research Paper  |  2 pages (571 words)
Bibliography Sources: 2

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Accounting

Financial accounting is an accounting discipline related to the compilation and preparation of financial accounting statements. The statements are produced in accordance with accepted accounting standards (GAAP in the U.S.). Financial accountants are therefore necessary in all publicly traded companies. In addition, financial accountants work in related fields such as auditing, taxation and consulting. Financial accountants are typically licensed.

The basic accreditation is Certified Public Accountant. The accreditation course is conducted by the American Institute of Certified Public Accountants (AICPA). Upon completion of the exam, an accountant becomes a licensed CPA. It is not necessary to be fully licensed to get a job in the field, but the training program must be underway and eventually nearly any firm will require licensure. If the candidate wishes to use his or her financial accounting background to enter the auditing field, there are other certifications that are required. The Institute of Internal Auditors can license a candidate as a Certified Internal Auditor. There is also a Certified Information Systems Auditor, focusing on the use of information systems in auditing.

There are ample career opportunities in both financial accounting and its related professions. The Bureau of Labor Statistics (2011) predicts that growth in these fields will be "much faster than average." Certification as a CPA is recommended for the best job prospects in the coming years. Typically in the field, supplementary training is required. This includes gaining knowledge of International Financial Reporting Standards (IFRS) as there is a move to reconcile these with GAAP. In total, this field is expected to see around 20% growth in positions between 2008 and 2018.

Managerial accountants develop accounting systems that provide information to managers to improve decision-making. The Institute of Management…… [read more]


Auditing Standard Research Paper

Research Paper  |  2 pages (635 words)
Bibliography Sources: 1+

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Auditing Standard

Standard: AU Section 339 Auditing Documentation

Summary of the new standard (main issues addressed and/or new concepts).

In Section 339, it discusses the basic standards that all auditors must embrace: before, during and after an audit has been conducted. It is providing guidance in a number of areas to include: documentation, conducting audits, reporting irregularities and maintaining confidentiality. As far as documentation is concerned, the standards define what forms need to be used and how the auditor is to keep track of the work that has been conducted. It then, discusses how findings should be interpreted as: a significant breach and what is considered to be nothing more than an anomaly. ("AU Section 369")

Conducting audits is when the rule is defining how: various interviews should take place and what items need to be looked at during the test. This is when the auditor will: sample various documents and scan for possible trends in the balance sheet. Once this occurs they will then, record and analyze this information, to identify structural weaknesses. ("AU Section 369")

Reporting irregularities is when the rule is stating how: anomalies and differences in the financial information should be documented. In this case, the auditor must conduct an alternative audit, recording the results in their working papers. This will disclose how the anomaly was discovered and the results of the alternate procedure. ("AU Section 369")

Maintaining confidentiality is when the auditor must ensure that their client's personal information is not compromised. As they must take reasonable steps, to ensure that they are always protected. In this case, the auditor will: limit the overall scope when revisions that could take place and the amounts access (to only certain team members / authorized parties). These different elements are important, because they are showing the basic procedures and documentation that should be utilized during an audit. ("AU Section 369")

Part 2: Comments on how…… [read more]


Enron Staged a False Energy Crisis Essay

Essay  |  5 pages (1,450 words)
Bibliography Sources: 3

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Enron: The Smartest Guys in the Room

How did Enron manipulated the California energy market/

Enron staged a false "Energy Crisis"

Enron Traders Manipulated California Energy Costs: Enron's own attorneys admitted that Enron manipulated the California market (accordingly, California's two Democratic senators, Dianne Feinstein and Barbara Boxer, then demanded a criminal investigation by the U.S. Attorney General to see whether… [read more]


Cost Accounting for Contractors Research Paper

Research Paper  |  4 pages (1,077 words)
Bibliography Sources: 5

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¶ … Accounting for Contractors

Cost Accounting is a method of assessing the possible costs which can be incurred in a certain business. It is a tool applied to analyze the categories and amounts of expenditure expected in order to sustain a certain business model. It aids in the efficient use of company resources. Predicting the expected costs in future business cycles can identify trends which can ensure taking measures to protect the profit margin. The advancement in the product life cycle and strategies devised to market them are governed by cost accounting as well. The costs of raw materials and manual labor are compared to the estimated product price to see if they are realistic or not. Cost accounting elements are incorporated in marketing practices to check the potential for their sales. It can prevent financial losses by establishing whether a product has enough market value or not. A marketing model which had worked previously might need to be changed to accommodate a new product. Cost accounting can be crucial in making decisions such as analyzing the priority of fund allocation for a department and the practicability of opening or closing store locations. Cost accounting standards have been developed in order to enhance the reliability of the data provided by contractors. This form of data usually helps in drawing settlements, deciding on prices and supervising contracts. These are rules which check indecisive accounting stunts which can disrupt an organization's reputation ("What is Cost," 2011).

Government contractors encounter a multitude of economic and administrative challenges. The accounting guidelines accompanied by contract terms levied on government agencies are usually multifaceted with periodic updates. This can prove to be pretty overwhelming for small and medium sized businesses. The government nowadays is reinforcing their endeavors in defending funds collected from taxpayers. Contractors need to exhibit their proficiency in cost accounting procedures and prove their compliance with requisites set forth by the government. Those who manage to accomplish this effectively and implement it on their strategies, business models and workflows get acclimated to any new requirements and hold an advantage over their opponents (Tinsley, 2010).

There are a quite a few areas in cost accounting which are vulnerable to contractors making mistakes. Government rules can be multifarious and it is necessary to understand them properly. It is wrong to consider that cost accounting for the government implies a slight edited version of commercial establishments. Government contactors need to deal with a requirement set which is beyond the ones prescribed the Financial Accounting standards board. These are usually detailed and include rules for Federal Acquisition and their agency supplements apart from Cost accounting standards. For instance, the government confines the level of compensation to what it considers reasonable. Any amount beyond that cannot be expected from that government contract. Similarly expenses accrued in the name of entertainment is cannot be charged (Tinsley, 2010).

Government contractors eventually try to make the cost accounting functionality automatic. This goes on to make conformity to government rules easier. An… [read more]


Fraud Positive Accounting Theory Essay

Essay  |  1 pages (327 words)
Bibliography Sources: 0

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Each of these hypotheses explains a different incentive structure for the manager to commit accounting statement fraud. In the first, the manager will move profits from future periods into the current period. Even if they would receive a bonus on that money in the next period, that future dollar is discounted so the manager is incentivized to move it to the current period. In the second, the manager also movies earnings to the current period from the future period, making it less likely to violate a debt agreement -- though technically they are incentivized to attempt to move the earnings into any period that would not violate the agreement. In the final one, having more earnings can lead to increased political pressure. This could also lead to new taxes or even regulations for large firms or industries.… [read more]


Leslie Fay Company Case Essay

Essay  |  2 pages (630 words)
Bibliography Sources: 2

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Answer 2

If SOX is followed, there is no specific test name that can be specified in the case under consideration. However there are other audit tests available which could help in detection of fraud and irregularities. One such test is Model Audit Rule (MAR) test that allows firms to check for irregularities through an independent auditing committee. Even though this test applies specifically to insurance companies, it can be just as easily applied to other sectors. This test recommends choosing an independent auditing company which is selected by the auditing committee and would meet with the management to determine if the company's financial reporting has been on track.

Even compliance with the two important tests of SOX would help companies like Leslie Fay from suffering so massively due to one person's unethical behavior. These two tests are rather the two steps that must be followed in order to comply with SOX guidelines. For one companies need to have a system of internal controls and secondly, it must meet with independent auditors who are registered with the government to see if these internal controls are truly effective or not.

Again it must be mentioned that SOX or MAR are as effective as their implementation in an individual firm. There is no guarantee that any audit test would be prove to be acid test for financial reporting activities, still it is believed that these standards should be present to check for financial oversight. They may not completely protect against fraud but they would at least serve as a deterrent or at least that is what we hope they can achieve. The whistle blower protection program under SOX can also be effective in early detection as some people are bound to discover financial irregularities sooner than others and these p[people can report the irregularities if they don't fear being outcast or treated unfairly by…… [read more]


SOX Case This Set of Facts Essay

Essay  |  2 pages (585 words)
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SOX Case

This set of facts definitely presents significant problems for both XYZ and Big 4 when it comes to violations of the Sarbanes-Oxley Act of 2002. Though sections 302 and 402 of the legislation are often focused on by companies and individuals in terms of compliance (with the latter being especially bemoaned by many), this case actually involves more diverse and less-familiar parts of the legislation dealing with auditor independence, conflicts of interest, and corporate responsibility while at the same time touching (to a lesser degree) on issues of disclosure to investors and even potential fraud or other criminal behavior (H.R.3763.ENR 2002; Kuschnik 2008). Titles Two, Three, and Eight all have some bearing on the facts at hand, and specific provisions make it clear that certain of the actions and relationships taking place between members of XYZ and Big 4 are inappropriate for companies involved in an auditing relationship under Sarbanes-Oxley.

The fact that Big 4 performs bookkeeping services for XYZ is in clear and direct violation of Section 201 of the Sarbanes-Oxely Act, which explicitly forbids the same public accounting firm or any individual associated with that firm from performing both bookkeeping and auditing duties for another corporation (H.R.3763.ENR 2002). This means that it is unlawful for Big 4 to act as the auditing entity for XYZ at all, rendering all actions taken by both Big 4 and XYZ to represent the audit as legal and compliant are false on their face, whether or not this is known to the specific individuals at all. Aside from the totality of the illegality here, however, there are several other violations of the legislation in the presented facts.

There are several other management and human resources functions mentioned in the facts of this…… [read more]


International Harmonization of Accounting Standards Real Benefits and Drawbacks Research Proposal

Research Proposal  |  13 pages (4,450 words)
Bibliography Sources: 13

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International Harmonization of Accounting Standards: Real Benefits and Drawbacks

Over the last several years, globalization has been having a profound impact upon daily life. As the advancements in technology and communications have meant that the distances have become much smaller. At the same time, the reduction in trade barriers and the focus on free market principals have meant that it… [read more]


Accounting According to FASB Term Paper

Term Paper  |  3 pages (917 words)
Bibliography Sources: 3

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Accounting

According to FASB, discuss at what point, and how compensation cost should be measured.

The compensation cost should be measured with the use of an intrinsic value-based method of accounting. Economic agents can also use the fair value-based method to measure the compensation cost, but this method is mostly applicable in cases when changes are incurred in the stocks, rather then throughout the common processes and stages.

Based on the selection of the method to be used, the timings of compensation cost measurement differ. In this instance, in the case of the fair-based value method, the cost is measured at the grant date, whereas in the case of the intrinsic value-based method, the date is set at either the grant date, or a date established by the economic agent. The Financial Accounting Standards Boar explains: "Under the fair value-based method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. Under the intrinsic value-based method, compensation cost is the excess, if any, of the quoted market price of the stock at grant date or other measurement date over the amount an employee must pay to acquire the stock" (Website of the FASB).

2. Explain how compensation expense should be measured for the stock option plan in 2009 and later.

Given the context presented, the desirable method of measuring the compensation expenses is that of the fair value-based method. This method is desirable at this stage as it estimates the expenditures from three different angles -- the marketing period, the existence of a seller and the existence of a buyer. Additionally, the greater benefit is that of using the concept of time value of money, which in fact translates the past and future costs into earnings correlated for today. The editors at the Teach Me Finance website explain: "To calculate that price, fair value converts the asset's future earnings into what they are worth in today's dollars, using a formula that discounts the assets' future net cash flows" (Teach Me Finance, 2005).

3. If options are forfeited because an executive resigns before vesting, what is the effect of the forfeiture of the stock options on the financial statements?

The financial statements of an economic agent testify to its operations and validate its resources and its incomes. The financial statements have to be completed in full respect with the situation encountered, as well as the solution implemented. At a generic level, financial statements reflect the organizational reality not only because this is legally required, but also because it is ethical. Was an economic agent to not be transparent and honest in its financial declarations, its reputation -- and as such its…… [read more]


Accounting Process and Financial Statements Term Paper

Term Paper  |  5 pages (1,533 words)
Bibliography Sources: 4

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Second, the cost of sales reflects the cost of inventories purchased for resale that were sold. When total sales revenue equals the total cost of producing the revenue, there is no profit or loss exists, thus establishing the breakeven point. If total sales revenue exceeds total cost of producing the revenue, then a profit exists. If total sales revenue is less than the total cost of producing the revenue, a loss exists. The income statement shows the ending results of operations as of a specific date for a specific period.

In conclusion, accounting is not a static system but rather a dynamic process that incorporates generally accepted accounting principles (GAAP) that "evolve to suit the needs of financial statement readers, such as business managers, equity owners, creditors, and governmental agencies with meaningful, dependable information."

Sources

BASIC FINANCIAL ACCOUNTING REVIEW: media.wiley.com/product

Smith; Outlines & Highlights for Financial Accounting Basics. AIPI; 3 edition (October 19, 2006).

Stickney, Clyde P., Weil, Roman L.; Financial Accounting: An Introduction to Concepts Methods, and Uses. South-Western College Pub; 10 edition (July 2, 2002).

Maher, Michael W., Stickney, Clyde P., Weil, Roman L.; Managerial Accounting: An Introduction to Concepts, Methods and Uses. South-Western College Pub; 10 edition (March 13, 2007)

Roman L. Weil (Author)

> Visit Amazon's Roman L. Weil Page

Find all the books, read about the author, and more.

See search results for this…… [read more]


Accounting Cycle for La Rue Research Paper

Research Paper  |  3 pages (915 words)
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At the beginning of each month, Keri balances the previous month's journals, ensuring all credits and debit have entered the business account. Once all transactions have matched and her accounting journals, are balanced and matches the computer, Keri closes out the prior month's accounting. If there are any discrepancies she must go through the records to find the mistake and make the necessary corrections. If there are missing credits to her account she must find the credit card receipt to call the bank. Keri also pays all bills on Tuesdays and order new inventory to replenish the low inventory. Keri pays herself and her one employee twice a month on a salary basis. If there are temporary staffs used, she pays the staffing agency for the services utilized.

Since La Rue Catering is a small business, at the end of each quarter Keri has an accountant who closes the quarter for her, by preparing her balance sheet, and income statements. The accountant verifies Keri's accounting cycle by looking at her journals, QuickBooks and receipts. The accountant also reconciles Keri's bank account with her QuickBooks software, to ensure all debits, credits and checks are entered. Once all reconciliation is completed for this business, the accountant pays the quarterly business taxes to ensure La Rue Catering is up keeping her tax obligation.

La Rue Catering has three main persons involved in the accounting cycle, the employee who is mainly involved in taking orders, collecting payments and working with inventory. Keri is the main accounting person for business, handles the weekly balances; she also does the payroll, pays bills and order new inventory. Keri is also responsible the weekly or monthly reconciliations, and making bank deposits. The role of the accountant in this business is to ensure that Keri's records are complete and accurate. The accountant also acts as a check and balance system for business, ensuring that Keri's taxes is paid, records are in order, and other financial obligations are met.

Conclusion

In conclusion the accounting cycle for each business is different, however they do share same goals of ensuring the proper debits and credits are posted to the business account and the accounts are reconciled. La Rue Catering's owner Keri does most of the accounting cycle herself, however she has an accountant that comes to her business to ensure everything was done properly. The employee is mainly involved in the inventory and sales aspect of the accounting cycle. The accountant's main role is to ensure all financial documents are in order and all financial transactions are recorded.

References

The accounting process. (2010). Retrieved on November 19, 2010 from http://www.netmba.com/accounting/fin/process… [read more]


Restoring Investor Confidence in Audits and Financial Statements Essay

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Public Confidence in Accounting

Restoring Investor Confidence in Audits and Financial Statements

Scandals in the accounting profession have led to a sense of mistrust among the public. Investors depend on the accuracy of accounting statements to make key financial decisions. They must feel that they can trust the information on the accounting reports in order to make the best decisions… [read more]


Accounting Fraud at Worldcom Research Paper

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WorldCom's Collapse And The Accounting Profession

The decade which came before the turn of the millennium was a period of great economic expansion for North America and the global community. Advances in communication and web technologies, changes in the nature of the global economy and a period of generally robust corporate growth would suggest limitless opportunities for Americans at every level of the economy. However, this period would also be characterized by widespread deregulation of corporate behaviors and entitlement. The would create an environment of corporate lawlessness. Companies and CEOs would commit many dishonest acts in terms of the presentation of financial outlooks, accounting realities and performance reports for major upstarts and long-standing, reputable financial firms alike. The turn to the 2000s would bring with it new circumstances such as those that would accompany the events of September 11th and a bevy of devastating revelations concerning the behaviors or America's leading corporations. Across the next decade, Enron, Adelphia, Tyco, Nortel, Worlcom, Lehman Brothers, Merrill Lynch, Bear Stearns, AIG and Bernie L. Madoff Investment Securities LLC, just to name some of the most noted examples, would either fall into financial ruin after the revelation of massive corruption or would declare bankruptcy due to gross mismanagement. Among these, WorldCom is an instructive example of the accounting scandals that dismantled American economic growth over just a few years

At the time of its collapse, WorldCom was the single largest corporate bankruptcy declaration in American history. And the event of its collapse seems to have been foretold by a pointedly negative corporate culture. Highly decentralized and absent of any internal control mechanisms, Kaplan & Kiron (2007) report that the culture at WorldCom largely reflected that of American corporate culture on the whole. That is, an atmosphere of deregulation and poor administrative oversight would allow for a lack of accountability. This was particularly so in a legal regard. So indicates the text by Kaplan & Kiron, which finds that the company's CEO, Bernard Ebbers was particularly resistant to any meaningful legal oversight. The article notes that "Ebbers did not include the company's lawyers in his inner circle and appears to have dealt with them only when he felt it necessary. He let them know his displeasure with them personally when they gave advice -- however justified -- that he did not like. In sum, Ebbers created a culture in which the legal function was less influential and less welcome than in an healthy corporate environment." (Kaplan & Kiron, p. 3)

According to the article by Kaplan & Kiron, the ambition to be the top earning company on the stock market produced a culture of aggressive growth orientation. This was precipitated on the idea of ever-increasing revenues. It is thus that, in the face of the market downturn to which the whole global community has…… [read more]


Auditing Standards Standard: SAS No. 110 Term Paper

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Auditing Standards

Standard: SAS No. 110. Performing audit procedures in response to assessed risks and evaluating audit evidence obtained. AU Section 318

AU section 318 establishes standards for determining overall responses to assessed risks of material misstatement. The auditing role requires a degree of professional skepticism, and this should be reflected in the overall response to the financial statements. This standard focuses on the ways that an appropriate overall response should be achieved. The auditor has a number of control mechanisms that can be used as part of the overall response, for example changing the nature, timing or extent of auditing procedures, providing more supervision or adding elements of unpredictability to the selection of audit procedures performed.

In designing the audit, the auditor should consider the significance of the risk, the likelihood that misstatement will occur, the characteristics of the transaction, the nature of controls used by the entity and whether the auditor expects to obtain evidence of effectiveness with respect to the controls. Essentially, the auditor needs to understand the risk of material misstatement and design the audit based on that risk. The procedures, timing and intensiveness of the audit will be impacted by the auditor's assessment of this risk.

For example, with respect to timing, the auditor should consider the control environment, when relevant information is available, the nature of the risk at hand, and the time period to which the audit evidence relates. With respect to the nature of the audit procedures, the auditor must base this on his or her view of the nature of the risk at hand -- emphasizing some tests over others. There should be a correlation, therefore, between the way the audit is designed and the types of risks that are involved.

This standard essentially gives the auditor…… [read more]


Audit Case Study

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Audit Case Study -- Cheese Please Ltd.

Question A: Internal control weaknesses

The internal control at Cheese Please Ltd. is marked by five distinct weaknesses, as follows:

The control process is constructed predominantly on the assessment of the employee working hours. The amount of time they put in, the hours they are present on the job and so on. The emphasis of the control procedures as such resembles a policemen style of verifying the employees, rather than stimulating them and the performances.

The punch cards can easily get lost or forgotten in a different jacket, in the car, in a different purse, at home, they can get stolen and so on. The loss or misplacement of a single punch card can easily lead to control insufficiencies, delays and irrelevant results.

It appears that the internal audit is insufficiently focused on safety in the workplace, which subsequently materializes in financial, reputation and otherwise loses.

It centralizes organizational information and control, meaning as such that it implements uniformization and standardization. These might not be perfectly applicable in all organizational instances and the results of the audit process might as such be irrelevant.

5. The control is extremely complex, which materializes in tedious work and decreased operational efficiencies.

In order to reduce the organizational imposition of these weaknesses, the following suggestions are forwarded:

1. The diversification of control to include elements such as employee motivation, satisfaction or performance. This would improve organizational results by stimulating employee efforts and results.

2. The search for a different manner of keeping track of employee hours. At this stage, it would be recommendable for the track system to be loosened and the employees to be…… [read more]


Five Parts of a Cost Accounting System Term Paper

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¶ … accounting allows managers to better understand a product's costs throughout its entire product life cycle. There can be a financial accounting element of cost accounting, but it is more often used in management accounting. Firms use cost accounting to help make decisions with respect to production location, the types of products that are produced, and the quantities of those products that are produced. Firms also use cost accounting to help them decide if a new product should be brought to market, to make decisions about product design or to determine the amount of marketing that a product should be supported with (Cooper & Kaplan, 1988). Cost accounting information can be useful both for the internal managers but also for external stakeholders such as shareholders as well. Cost accounting includes both direct and indirect products costs, including both upstream and downstream costs (Kinney & Raiborn, 2009).

Cost accounting systems have parts, each of which helping to provide the information that management needs to determine a product's costs. These five parts are input measurement bases, inventory valuation methods, cost accumulation methods, cost flow assumptions and recording interval capability (Martin, no date). Input measurement bases are the foundation of a cost accounting system. There are three ways to measure the cost of inputs -- pure historical costing, normal historical costing and base cost systems. Each of these systems relies on different treatments of costs (direct material, direct labor, etc.) so the decisions with respect to the best input measurement bases will impact how the final product costs are determined. It is important, as with other elements of the cost accounting system, that the method used is consistent over time so that the resulting product cost information is comparable.

The inventory valuation method helps the firm to treat inventory costs consistently and includes an option of the direct method, full absorption costing and activity-based costing. Cost accumulation "refers to the manner in which costs…… [read more]


Audit Confidence Auditing and Investment Risk Trust Creative Writing

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Audit Confidence

Auditing and Investment Risk

Trust is essential to auditing, and even the incremental erosion of that trust would likely be disastrous for the auditing profession and detrimental to the capital markets. As such, a reprisal of the confidence-destroying scandals of 2000-2002 would be extremely unwelcome and should be guarded against by the surviving Big Four firms.

In effect, trust is the value that auditors add to the corporate environment and the investment process. Since management has a privileged insider's perspective on the company's operations, outside investors looking for a comparable level of transparency into those organizations rely the audit process to assure them that management's claims accurately reflect reality. While management may not misrepresent the truth, the temptation to do so is still too strong to ignore:

[Because] those seeking capital want to raise it on the most favorable terms to themselves [and] also have the ability to mislead capital providers about the issuer's prospects for future success, capital providers are inherently disadvantaged in their ability to control, negotiate, or evaluate the terms of offerings and trading prices in public capital markets (Johnstone 1).

By bridging this inherent conflict of interest, the auditor is able to level the field and give investors confidence in management's assertions about the company. This ability is generally considered an inextricable component of the auditor's independent role vis-a-vis both management and investors; free of inherent interest, the auditor is better positioned to certify that information is accurate. As Arthur Levitt, then chairman of the Securities & Exchange Commission, summed up in 2000, well before Enron's failure, "Independence is at the core of the profession, the very essence that gives an auditor's work its value" (2).

Auditors can maintain this independence in the face of increasingly close or long-term working relationships with the enterprises they audit; significant research indicates that even accounting firms that generate significant consulting revenue from a company will choose their reputation over their near-term receivables and report errors in its results (DeFond et al., 1250). However, this independence must be apparent to the investors in order to be meaningful. While close relationships between auditor and…… [read more]


Accounting Profession One Thing That Took Me Thesis

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¶ … Accounting Profession

One thing that took me off guard in this week's reading was the transactional analysis process, which seems at once like a no-brainer and yet has been laid out with a great deal of seeming complexity. That is, the fact that transactions affect at least two accounts, one with a debit and another with a credit, seems like basic spending arithmetic (is, in fact, basic arithmetic -- if I give someone a quarter for an apple, my account has been diminished by a quarter and increased by an apple; the apple seller would record the exact opposite transaction -- the loss or debit of an apple and the gaining or credit of twenty-five cents). The fact that huge systems and computer programs have been developed in order to deal with this ultimately simple process is somewhat mind-boggling, and really makes me question when and where things seem to have gotten away from us.

The splitting of all transactions into a variety of accounts does an allow for a system with greater control and oversight, I suppose, but the way the system is set up -- and explained -- seems incredibly complicated when it is quite simple in practice. The example of paying a utility bill is raised in the reading; while it is true that the expense account is increased while the cash is decreased, this is the same as saying, "I spent x number of dollars on electricity." The splitting of the record keeping seems to say, I had expenditures of utilities in this amount, and losses to my cash supply due to my expenditures on utilities by the same amount." Personal budgets aren't generally divided into many accounts -- there is income and expense, with the former needing to cover the latter. While I understand the more complex accounting system, I do not understand why it is so necessary.

GAAP v IFRS

The differences between GAAP and IFRS appear to be largely in the details, but these details can have drastic effects in the ultimate presentation of financial data and accounting practices. The fact that most of the rest of the world already uses the IFRS standards and practices, and that the U.S. has signaled its plan to move to the use of IFRS as an option and perhaps as a mandate, makes it clear that the differences are not large…… [read more]


Accounting Principles (GAAP) Are Important to Financial Essay

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¶ … Accounting Principles (GAAP) are important to financial statements because they allow for statements that are consistent across all public companies. This allows all external stakeholders, including regulators, shareholders and potential investors to be able to analyze the statements easily, and compare them to the statements of other companies.

Whereas the GAAP are country-specific (fore example, American GAAP and Canadian GAAP), International Accounting Standards (ISFR) cover countries around the world. These standards serve the same function in the development of liquid and transparent capital markets as the GAAP, but on an international basis.

Liquidity is an important concept for financial statements, because it reflects the ability of a company to pay its debt obligations. A liquid company can pay its debt; an illiquid company cannot. Financial analysis via the financial statements is often geared to examining liquidity issues at firms, as it is a key indicator of financial health.

Part II. Some of the differences between Unilever and Kraft stem from the fact that they use different accounting conventions. Unilever, being a British company, follows the International Accounting Standards. They only convert their statements to GAAP for submission to the SEC for their American depository receipts. Kraft is an American company, and therefore compiles its statements according to U.S. GAAP.

For Unilever, the most useful is the cash from operating activities. The net income has risen steadily over the past several years, giving the impression of steadily improved performance. Cash from operating activities, however, has not been as stable, and for many years declined. The consistent steady growth in the net income is therefore not the result of successful operations. For Kraft, both are valuable. The company has seen a steady increase in revenues over the past several years. Cash flow from operating activities is perhaps the more…… [read more]


Custom Research Cousteau's Decision to Waive Thesis

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Custom Research

Cousteau's decision to waive the material error may seem, in the context of the subsequent SEC litigation release, to have been an error on the part of the auditor. Indeed, the responsibility of the auditor is to detect and report material errors

There is, however, some leeway in practice, for the auditor to do as Cousteau did and… [read more]


Managerial Accounting Thesis

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Managerial accounting has long been at the forefront of discussion about business management. Indeed, Managerial Accounting is vitally important to the success of any firm. Without this type of accounting, managers would not have the ability to make the proper decisions concerning business strategies. In addition, the most effective financial management can not occur if the proper accounting procedures are… [read more]


Traditional Management Accounting Essay

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Traditional Management Accounting -- Opposing Views

The past decades have seen tremendous changes within the business community, some referring to a grater focus on the satisfaction of the customer, the training of the human resource or the creation of more value to the stakeholders. Just as these changes became more prominent, managers saw the need for evolving accounting techniques. Today, most organizational leaders use a combination of traditional and modern tools, but the dispute on the superiority and efficiency of one of the two categories has yet to be settled. The main difference between traditional and modern accounting systems is that the first is largely focused on pegging all costs to the final products, whilst the more modern approaches place less emphasis on this technique. In this context then, two sets of opinions are emergent. The first sees that the traditional management accounting techniques, largely cost accounting techniques, are no longer relevant in today's business community. The second opinion on the other hand, strives to explain that the traditional systems are still useful, but more consideration must be given to the pegging of costs to the final service, not just the product. This view seems extremely relevant given the major switch from manufacturing to services. Within the United States for instance, services play a crucial role in the national economy, accounting for 79.2% of the total national revenues (in the composition of the gross domestic product) and employing nearly 77% of the overall labor force (Central Intelligence Agency, 2009).

It can be mentioned that both arguments are based on solid reasons, and while it is true that traditional accounting many not apply to the contemporaneous business sectors, some alterations in the initial perceptions could be made, and these would further increase the relevance of traditional systems. For decades now, traditional management accounting has focused on ensuring that everybody worked and all machines were utilized at full capacity. Today's managers however, are not interested in these features, but focus on issues such as increased operational efficiency or stakeholder satisfaction. The traditional system could be…… [read more]


Taking a Bath in Accounting Context Essay

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Bath Accounting

Taking a bath

The dirty accounting trick of taking a 'bath'

In an accounting context, what is a definition of 'taking a bath?'

The representatives of a company, including its accountants, have a responsibility to make the company look as good as possible to increase its perceived market value and to enhance shareholder value. To do so, accountants must strive, within the guidelines of the law and generally accepted accounting practices, to present a sunny financial picture to the world. However the degree to which certain practices are acceptable remain controversial. For example, "taking a bath" is defined as writing off expenses or "pre-booking" expenses during bad or transitional economic times (Kothari 2004). Write-offs are accelerated and revenues are deferred to a later date when a company 'takes a bath.' Taking a bath means writing off assets to make a company look as if it is performing less well than it actually is performing.

Thus, taking a 'bath' means that when a company is doing particularly poorly, its accountants will often write-off as many expenses and assets as possible. This can occur in a number of scenarios: for example, a new management team may want to make the previous or present year look as bad as possible, so their leadership looks particularly strong by comparison with the previous administration. "Taking a bath" makes future expenses seem significantly reduced and thus future projected earnings also increase in a way that favors a change of regime. "In other words, the company is taking a bath in the worst year so it can wipe its slate clean. This almost always guarantees record-breaking earnings in subsequent years," and thus justifies record-breaking bonuses for the CEO and leadership team (Yuan 2008).

Additionally, poorly-performing companies with deep structural problems and a fundamentally unsound business model may also decide to 'take a bath' during a year that is economically difficult for the entire market, such as during the credit crisis of today. Thus, the company can blame a particularly bad year on forces that are unavoidable and affecting every organization and make subsequent years look better by virtue of comparison.

Question 2: How is this practice explained using agency theory?

It is arguable that accountants are not behaving unethically when they act in such a fashion: after all, by boosting the perception of a company's financial status, they encourage…… [read more]


Global Accounting Standards Essay

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International Accounting Standards: Adoption And Transition

Traditionally, the accounting profession has been seen as a functionary occupation, the practitioners of which are concerned with the presentation of economic figures relating to individual and organizational financial performance. Accountancy has been seen largely as a field reserved for mathematical grunt-work, with its output serving as indicative of performance rather than incursive upon… [read more]


How Will Accounting Help Me Run My Business? Essay

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Accounting is the basic function of tracking inflows and outflows of good and capital. There are two main types of accounting - financial and managerial. Both are critical to the success of any business. For the purposes of this project, we shall analyze the benefits of accounting in the context of a small apiary that has been set up as… [read more]


Worldcom Mci Research Proposal

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Worldcom-Mci

Case Analysis - WORLDCOM-MCI

The age of the internet - the age of the multinational corporations - the age of record high profits and bankruptcies

The modern global context is filled with examples of greed, deceit and manipulation. And more sadly, these affect the business communities, the organizations we trust to provide our commodities, services, jobs or the organizations… [read more]


Graduate Admissions Accounting CPA Preparation MBA Essay

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¶ … Graduate Admissions

Accounting CPA Preparation MBA

The need for honest and ethical practices in accounting has become a media obsession. While an undergraduate economics major at Whatever University, my interest in the field of accounting blossomed into a determination to become a Certified Public Accountant (CPA). In my accounting coursework, I was fascinated by how the course materials reflected what I was reading about in the newspaper on a daily basis. I am proud to see that the Whatever School of Business is focused on the need for accountants to have a strong ethical education. Accountants must strive to give an accurate portrait of a business' health. The role of an accountant is to make individual and commercial enterprises work better by providing people with the correct financial information they need to know to make good economic decisions about the future.

I am now resolved to enter the field as a CPA after supplementing my current knowledge of economics with the education at the Whatever University Whatever School of Business. Whatever's location in the heart of the currently troubled, but always relevant and exciting financial world of New York City would make it an ideal place to study to become a professional in my chosen financial field. Having access to New York's resources has been a vital part of my undergraduate education at Whatever and I want to use the city's work and internship opportunities during my graduate education, as well as further tap into its enthusiasm and energy.

I think my economics major and the holistic perspective it has given me about the world's economy will make me a better accountant. So will the general managerial courses I hope to take while a business student at Whatever. I see myself becoming a vital part of class discussions, merging the knowledge I have gained of global finance with the technical aspects of the accounting profession. I am also eager to pursue an MBA in accounting at Whatever because of the additional information the Whatever School will give me about leadership, the law, organizational behavior, and the international economy, as well as taxation…… [read more]


Green Building Construction From an Accounting Perspective Thesis

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Green Building Construction

From An Accounting Perspective

The objective of this study is to examine the accounting and financial management in the process of 'green building construction'.

The work of Miller (2008) entitled: "Green Building Regulations Proliferating" states that the number of counties in the United States "administering green building regulations or laws rose from just eight to 39 -… [read more]


Personal vs. Professional Judgement Term Paper

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Accounting - Ethics

PERSONAL and PROFESSIONAL ETHICS in ACCOUNTING

Accounting is a field rife with potential for ethical dilemmas addressed in great detail, both in the private sector and in public (government) sector by the American Institute of Certified Public Accountants (AICPA) Code of Professional Responsibility and the generally accepted government auditing standards (GAGAS) defined by the U.S. Comptroller General in the U.S. Government Auditing Standards (GAS), AKA "the Yellow Book," published annually by the U.S. General Accounting Office (GAO).

According to the AICPA, the fundamental ethical obligation of the Certified Public Accountant (CPA) is expressed in the AIPCA Code of Responsibility, Section 55 - Article IV -- Objectivity and Independence, as follows:

member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services" (AICPA 2008). [Emphasis supplied.]

According to the GAO, the fundamental GAGAS of professional ethics is expressed in GAS Section 3.03, pursuant to which, "The general standard related to independence is: In all matters relating to the audit work, the audit organization and the individual auditor, whether government or public, should be free both in fact and appearance from personal, external, and organizational impairments to independence." (GAO 2008). [Emphasis supplied.]

Further, the GAO GAGAS recognizes the AIPCA ethical standards and specifies, in GAS Section 1.09, that GAGAS may be used in conjunction with the "professional standards used by other governing bodies" including the AIPCA. To the extent there is any discrepancy between the GAGAS provisions and those of any other applicable standards, GAS Section 1.10 specifies that government auditors rely on GAGAS when multiple standards are used. The Logic of Applying Professional Judgment Instead of Personal Judgment to Resolving Ethical Dilemmas in Matters of Professional Accounting:

In private personal judgments, we are free to assign value to human behavior and motivation, as well as to the worth or worthlessness of vocational choices; we may also give credit for certain choices of conduct or behavior. If professional accounting standards allowed for personal judgments, our natural predisposition might be to reward benevolence or charitably-motivated actions, for one example, even if strict technical application of tax codes or auditing standards disallowed a deduction. Likewise, we might allow more latitude to institutions affiliated with causes close to…… [read more]


Public Trust Term Paper

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Accounting Credibility

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


AIG Accounting Fraud Term Paper

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AIG Accounting Fraud

One of the ethical principles of accountants who are in compliance with Generally Accepted Accounting Principles (GAAP) of the United States is the concept of full disclosure. All of the relevant information pertaining to a financial decision should be openly disclosed and based upon an honest assessment of the costs to the party or two parties involved in the transaction. However, this was not the case in the dealings between AIG and General Re, the former a unit of Berkshire Hathaway. AIG used the transaction in question to help cover its recent financial difficulties by an accounting "sleight of hand" (Kay 2005). In a reversal of common practice, the reinsurance firm General Re paid AIG a $500 million premium so AIG would assume the risk of General Re's policies (Kay 2005). This was not illegal per se, what was illegal was the method used to disclose this upon the AIG balance sheet.

The result of the deal, therefore, was that AIG received $500 million from General Re, money that it would eventually have to pay back to General Re but without the risk of having to pay more money. General Re received a substantial fee from AIG in exchange for this deal. Similar arrangements are generally categorized as loans on financial statements, as AIG essentially received an amount of cash that it would later have to pay back plus interest in the form of the fee to General Re. However, "to categorize the $500 million as a loan would reduce the company's income" on its balance sheet (Kay, 2005). AIG was unwilling to do this, given its current financial losses. Instead, AIG categorized the deal as a normal insurance contract, and accounted the $500 million it earned as income to improve its financial image, although according to GAAP a transaction of this kind is a loan, as it was virtually…… [read more]


Accounting History Accounting Texts Term Paper

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Accounting History

Accounting texts were written in the mid of the third century AD by the Greco Roman's. By the thirteenth century various methods for accounting started to appear such as receipts and payments and double entry bookkeeping. Different ways for calculations were introduced as well. By eighteenth century accountants were hired in Scotland. Not only different organizations adopted this method but by the nineteenth century government also adopted different methods of accounting.

Accounting History

Accounting was basically written by the Greeks mostly on papyrus. Almost the accounting texts date are in written form which was happened to be in the mid of the third century AD. These accounts were made to run a huge empire which was known as Appianus estate. Early accounts are not source of information but also have an historical importance in them. The accounting systems of the Appianus estate was presently known from the Greco Roman world and was also used as to measure their profit in each units of their estate. In Greek and Roman accounting, before thirteenth century ancient accounts are refer in their forms and contents. Most of the proofs for double entry were hardly found but many of the accounts were in the form of groups more like chronological narratives with receipts and payments init, also known as double entry accounts. These accounts were kept to track the movement in various assets plus for the receipts and payments of money such as grain accounts but were recorded in physical terms. Manorial account appeared during the first decade of the thirteenth century, when the method of double entry was being adopted. Manorial accounts were used to show the state an account between the landlord and his official for the purpose of how much was owing to one another once the transaction had been allowed for. Although it was not in the form of written account as their is an indication that in the mid of thirteenth century it was not usual to set down and write details in the form of accounts, local officials would simply presented and audited by their own words and for the calculations and brief notes tally sticks were used. Canterbury Cathedral Priory (1207-8) was the first estate from which manorial accounts was appeared. Manorial accounts were mostly used to cover corn and cash as well. From thirteenth century from Tuscany, modern accounting takes its rise. From this period the earliest business accounts came in debit and credit form. It was Tuscans who evolved the double entry system which is now days used as the basis of well ordered accounting system.

Early accounting shows that how human being used to cope up with various kinds of conditions as compared to the modern days, it's totally opposite. In past, people used to keep their accounts when paper was still unknown and was very expensive as the coins were rare and men were not educated. They used two devices to record their accounts, one was tallies on which they used… [read more]

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