"Accounting / Auditing" Essays

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Technology on the Accounting Profession Term Paper

Term Paper  |  3 pages (876 words)
Bibliography Sources: 2


S., as any company in this category must file their financial statements with the U.S. Securities and Exchange Commission (SEC). The SEC has been testing and continually validating the XBRL standard for the last several years and now every company who is publically traded needs to file reports using this standard (Brands, 2013). While the XBRL standard only applies to publically-held companies, all accounting and finance companies need to be able to gain greater insights from their legacy systems through the use of systems and process integration (Ionescu, Ionescu, Mihai, Cojocaru, 2009). This area continues to flourish, with the role of cloud-based integration architectures (Arnesen, 2013) and role of advanced connectivity applications becoming more commonplace than ever.

The impact of smartphones and tablets also continue to have a widespread effect on the accounting profession (Jelen, 2013) completely changing the nature and extent of how analytics and reporting applications are used (Christensen, Skaerbaek, 2010). Designing applications specifically for mobility platforms is becoming commonplace for many organizations whose executives want to have access to analytics and metrics of performance in real-time, regardless of where they are.

How Cincom's Accounting Systems Have Changed Based On New Accounting Technologies

Cincom has been in business over 40 years and has many antiquated legacy accounting systems and professes. It is in many ways trapped in the 20th century in terms of technology. Yet the recent addition of accounting and financial integration tools via a SaaS platform has given the company greater visibility into short- and long-term costs. It has also made it possible for the company to over forward with cloud-based accounting and finance systems that are providing a more realistic glimpse into their license and contact management revenue. By integrating legacy systems and creating a common system of record, Cincom is also now able to create a single dashboard using financial reporting analytics, and their CEO can how pull up a report from anywhere on his smartphone. Cincom relies heavily on accounting and financial reporting systems that are cloud-based to have a more accurate view of their business.


Arnesen, S., C.P.A. (2013). Is a cloud ERP solution right for you? Strategic Finance, 94(8), 45-50.

Brands, K., C.M.A. (2013). XBRL and big data. Strategic Finance, 95(2), 64-65.

Christensen, M., & Skaerbaek, P. (2010). Consultancy outputs and the purification of accounting technologies. Accounting, Organizations and Society, 35(5), 524.

Collins, J.C. (2013). Technology Q&A. Journal of Accountancy, 216(2), 68-70,72.

Ionescu, I., Ionescu, B., Mihai, F., & Cojocaru, S. (2009). Financial And Accounting Information Systems Interoperability. Annales…… [read more]

GAAP Generally Accepted Accounting Principles Essay

Essay  |  3 pages (962 words)
Bibliography Sources: 4


cost basis accounting "which adheres to the revenue recognition, matching, and cost principles…[this method] captures the financial aspects of each economic event in the accounting period in which it occurs, regardless of when the cash changes hands" GAAP, 2013, Houghton Mifflin Harcourt).

GAAP also suggests that entities adhere to what is known as the time period assumption, which suggests that an artificial time period, however 'constructed' must be used to define periods of reportage. "Using artificial time periods leads to questions about when certain transactions should be recorded" (GAAP, 2013, Houghton Mifflin Harcourt). An initial investment in hospital equipment may be very costly one year, but not so in subsequent years and even may result in a gain for the organization in terms of profitability. Regardless, the principle of GAAP is that whatever time frame is chosen, it should be the one which most accurately reveals the organization's financial health. Then, "once the time period has been established, accountants use GAAP to record and report that accounting period's transactions" (GAAP, 2013, Houghton Mifflin Harcourt).

Other principles of GAAP particularly relevant to healthcare include the full disclosure principle which states that "financial statements normally provide information about a company's past performance. However, pending lawsuits, incomplete transactions, or other conditions may have imminent and significant effects on the company's financial status. The full disclosure principle requires that financial statements include disclosure of such information" via footnotes (GAAP, 2013, Houghton Mifflin Harcourt). Given the widespread existence of lawsuits throughout the healthcare industry, this is particularly significant for organizations: not only regarding lawsuits specific to the entities themselves but also to the types of products used and prescribed by providers at the entity.

Conclusion: The principled nature of GAAP

In contrast to some other forms of financial accounting, GAAP emphasizes principles vs. technical knowledge on the part of the accountant. The professional accountant is assumed to uphold a system of ethics rather than solely adhere to the letter of the law. All financial statements must be reflect "relevance, reliability, and consistency" and the conservation principle which means "in reporting financial data…the less optimistic estimate be chosen when two estimates are judged to be equally likely" to protect shareholders and other persons relying upon the report (GAAP, 2013, Houghton Mifflin Harcourt). And above all else, the principle which trumps all is that materiality principle which states that all of the previously-stated principles should be ignored if a misleading portrait of the organization's financial status and health would be created, if these other principles should be obeyed: material honesty is the aim of all accounting efforts in healthcare and all entities (GAAP, 2013, Houghton Mifflin Harcourt).


GAAP. (2013). Houghton Mifflin Harcourt. Retrieved:


Kramer, J & Applebaum, S. (2013). Accounts receivable from third-party payors: A GAAP

refresher. South Florida Hospital News. Retrieved from:

http://southfloridahospitalnews.com/page/Accounts_Receivable_from_ThirdParty_Payors__A_GAAP_Refresher/7434/1/… [read more]

Accounting in Just Essay

Essay  |  3 pages (1,056 words)
Bibliography Sources: 4


If the company borrowed that cash, there would be no entry that reflects the loan obligation, nor would there be any entry that reflects the useful life of that asset. The company would record a substantial loss for that quarter based on cash flows, but then have substantial profits in all the other quarters. This again is a distortion of the company's financial picture, and accrual accounting seeks to remedy this issue. Under accrual accounting, the purchase would be amortized, so that the expense only shows a little bit each quarter for the expected useful life of the asset. This would be offset by the periodic revenues generated from the asset. This matching of asset costs and benefits is closer to economic reality for the company, and that is why it is an important part of the accrual accounting system.

As these examples illustrate, the accrual system is much better with respect to dealing with complexity. Accrual accounting is therefore useful for any business that does not operate on a strictly cash basis. Only those businesses that operate on a cash basis should use cash accounting. The minute that there is a misalignment between when a transaction occurs and when the cash flow occurs, the accrual system is better.

Further, the accrual system is differentiated in that it is used by professional organizations, the SEC and it is the only system used for tax purposes. For financial statements this is an important distinction. Neither investors nor regulators will accept cash basis statements, so a company that is producing them is not going to be treated well. It is too easy to manipulate statements using cash accounting simply by making adjustments to the timing of the cash flows. The IRS in particular is not a fan of this, and insists on accrual accounting as a means of ensuring that companies are portraying their financial condition accurately.

Overall, the cash accounting system only makes sense for very small companies, and even then it runs into problems when large purchases, financing or credit purchases are made. Thus, it is important for companies to understand what accrual accounting is, what the rules are and to always apply it. The basic accrual accounting system in the U.S. is the GAAP, or generally accepted accounting principles, and these guide should be used as the basis for any accrual accounting system. The reason is that we use accrual accounting for its ability to handle complexity, but also for its ability to deliver statements that are consistent. Thus, companies cannot simply make up their own rules, they must instead follow established rules for accrual accounting.

Works Cited:

Fishman, S. (2013). Cash vs. accrual accounting. Nolo.com. Retrieved November 4, 2013 fromhttp://www.nolo.com/legal-encyclopedia/cash-vs.-accrual-accounting-29513.html

No author. (2013). Cash vs. accrual accounting. Inc. Magazine. Retrieved November 4, 2013 from http://www.inc.com/articles/2000/04/19194.html

SBA.gov (2013). Cash vs. accrual accounting for taxable income and expenses. U.S. Small Business Administration. Retrieved November 4, 2013 from http://www.sba.gov/community/blogs/community-blogs/small-business-cents/cash-vs.-accrual-accounting-taxable-income-and-e

Shanker, S. (2013). Accounting methods: Cash vs. accrual. Houston Chronicle. Retrieved November… [read more]

Accounting of Enron Term Paper

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


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]

Harmonization of Accounting and Disclosure Term Paper

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


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]

Auditing and Sarbanes-Oxley Act Term Paper

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


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

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

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

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


1. Leibs, Scott; Krass, Peter. The Never-Ending Audit. October 2002. On the Internet at 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]

Accounting Information the Revolution Term Paper

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


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]

International Accounting - Evaluate Research Term Paper

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



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 Essay

Essay  |  3 pages (995 words)
Bibliography Sources: 2


Enhancing Qualitative Characteristics:

Apart from the fundamental qualitative characteristics, accounting information has enhancing qualities i.e. comparability, verifiability, timeliness, and understandability. Verifiability of accounting information is an important component in promoting reliability and refers to agreement among various measures. This means that the information must be consistent with market value and other factors used by appraisers. Therefore, the information should contain some measure of objectivity, which is associated with verifiability.

Understandability is the expression of accounting information in a clear manner that will be comprehensible by users. This is an important characteristic because users are generally presumed to have rational knowledge of economic and business activities. While accounting information may contain complex matters, it should be presented in a way that it can be understood by all users including a layperson.

Comparability is the ability to assist users to identify the similarities and differences across various financial conditions and events. In this case, accounting information should be prepared in a way that promotes evaluation of the business information within a certain period of time and compared to similar entities within the same period. One of the major ways to ensure comparability of accounting information is by complying with the international accounting standards. The significance of this characteristic is that it allows a business to review accounting information against that of a rival (Vitez, n.d.).

Timeliness is a significant component of relevance and means that the accounting information should be available to users at an appropriate time for its use in the decision-making process. Due to the need for timely information, businesses or companies are legally required to provide information to external users periodically. The significance of timeliness is attributed to the use of accounting information in decision making by internal and external stakeholders.

Effect on Decision Making:

Each of these qualitative characteristics of accounting information play a crucial role in the decision making process of a business. Business owners use understandability to comprehend accounting information while consistency is used to ensure similar handling of financial transactions and usefulness promotes applicability of the information in decisions. Relevance is used during trend analysis of financial information while reliability ensures the development and sustenance of accurate accounting information. In addition, relevance also ensures that accounting information is available to users at the appropriate time in the decision making process.

In conclusion, accounting information consist quantitative and qualitative characteristics, which play a crucial role in the use of accounting information. Generally, qualitative characteristics are attributes associated with the seeming importance of financial information and used for decision making. Some of the major qualitative attributes of accounting information include reliability, relevance, consistency, understandability, comparability, and usefulness.


Spiceland, J.D., Sepe, J.F. & Tomassini, L.A. (2007). Intermediate accounting (4th ed.).

Retrieved February 20, 2014, from http://highered.mcgraw-hill.com/sites/0072994029/student_view0/ebook/chapter1/chbody1/qualitative_characteristics_of_accounting_information.html

Vitez, O. (n.d.). Qualitative Characteristics of Accounting Information. Retrieved February 20,

2014, from http://smallbusiness.chron.com/qualitative-characteristics-accounting-information-3952.html… [read more]

Audit Confidence Auditing and Investment Risk Trust Creative Writing

Creative Writing  |  2 pages (710 words)
Bibliography Sources: 2


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]

Financial &amp Managerial Accounting Certifications &amp Careers Research Paper

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



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+


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


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


¶ … 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]

SOX Case This Set of Facts Essay

Essay  |  2 pages (585 words)
Bibliography Sources: 2


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


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



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]

Restoring Investor Confidence in Audits and Financial Statements Essay

Essay  |  10 pages (3,045 words)
Bibliography Sources: 4


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

Research Paper  |  3 pages (938 words)
Bibliography Sources: 5


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]

Case That Needs to Apply GAAP Essay

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Bibliography Sources: 3



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]

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.


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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Bibliography Sources: 8


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

Research Proposal  |  10 pages (2,813 words)
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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

Essay  |  2 pages (709 words)
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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

Term Paper  |  3 pages (779 words)
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Accounting - Ethics


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]

Auditing the Main Problem Related Term Paper

Term Paper  |  1 pages (334 words)
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The main problem related to many companies leaving Andersen, despite the fact that its Houston office had no part in servicing the engagements, is perception. Primarily, Andersen had a significant business relationship with Enron, which was its largest client. With Enron's demise, this relationship was seen as universally damaging, regardless of the areas of the company that had nothing to do with the scandal.

Secondly, Andersen's reputation even before its relationship with Enron was not crystal clear to begin with. Indeed, its reputation had already been damaged by several investigation into its other accounting and auditing practices. The Enron scandal appears to just have been the final nail into the coffin. It appears then that, regardless of any true wrongdoing, its mere association with the scandal brought about irreversible damage.

If I had an accounting career, my reputation could be damaged by turning a blind eye when I see discrepancies in the accounting practices of my clients. Even if I knew nothing about these concealments, any…… [read more]

Normative Versus Positive Accounting Theory Term Paper

Term Paper  |  12 pages (3,248 words)
Bibliography Sources: 6


Normative vs. Positive Accounting Theory

In the past few decades, accounting theory has slowly evolved; as a result, various research methodologies have been utilized to study the development of accounting theory. As accounting theory has developed, debates have emerged regarding the manner in which financial theory should be developed and applied in the accounting profession. This has been essentially a… [read more]

Accounting Research in the Past Decade Term Paper

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Accounting Research

In the past decade, several scandals involving the improper management of financial data have emerged, bolstering the importance of accounting practices to the forefront of many industries. As a result, various research methodologies have been utilized to study the development of accounting theory. The development of accounting theory has early origins; a majority of the research was conducted in the 1950's and still continues to the present. Deductive, inductive and pragmatic research methods have successfully been applied to research in the accounting area, and variations of accounting research based on these basic foundations have become widespread. This paper will discuss and outline the deductive, inductive and pragmatic accounting research methodologies. It will also use include examples of accounting research that use each of the well-known research methods.

Deductive, Inductive & Pragmatic Research Methods & Examples

Deductive research strategies usually consist of non-empirical studies that are primarily verbal, descriptive-type articles where a logical conclusion follows from a set of assumptions or premises. An example of accounting research that uses this method is historical research that uses archival methods to study an issue of current interest. Also included in historical research are papers that trace the development of a practice or concept using secondary sources and book reviews of accounting classics (Fleming et.al., 2000). In addition, this category was interpreted to include inductive and legal research methods as well (Fleming et.al., 2000). Another accounting methodology used in deductive research is capital market studies, due to the fact that they use security prices to measure reaction or association.

Inductive research strategy has been…… [read more]

Professional Standards of Auditing Term Paper

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Professional Standards of Auditing

According to AICPA - rule 102 (1999) and IFAC (2007), the signing, allowing or directing someone else to sign a document that contains false or misleading information qualifies as knowing misrepresentation and its implications refer to the loss of the auditor's credibility. Indirectly it has a serious impact on his or her firm with respect to integrity, independence and objectivity, which are essential in this line of work.

Courses of action. The first step is to inform the client's management about the discrepancy, which in our case already happened. However, since nothing changed, the problem has to be addressed to a high level of authority. All the implications have to be clearly explained so that the client understands the necessity having the $50,000 reflected in the company's financial statement. At this point the auditor should also start documenting the discrepancy and explain the client the possible outcomes of such a document. In case there will be an external audit resulting in identifying the same discrepancy and the fact that it hasn't been solved despite the auditor's advice, the consequences will more than offset the value of the illegally transferred funds. The last step suggested by AICPA has to do with taking action and expose the discrepancy to the state authorities since it is considered illegal. In our case, since the law is very strict…… [read more]

Accounting Generally Accepted Accounting Principles as New Term Paper

Term Paper  |  2 pages (739 words)
Style: Chicago  |  Bibliography Sources: 2



Generally Accepted Accounting Principles

As new types of transactions evolved in trade and commerce, accountants develop rules and procedures for recording them. These accounting rules, procedures and practices came to be known as the Generally Accepted Accounting Principles. It encompasses the conventions, rules and procedures necessary to define what are accepted accounting practice. It is conventional, that is they become generally accepted by agreement, often tacit agreement rather than derivation from a set of postulates and basic concepts. The principles have developed on the basis of experience, reason, custom, usage and practical necessity.

Historical Cost

In recognition of asset accounts in the financial statements, inherent is the Historical Cost Principle. This principle requires that assets should be recorded initially at original acquisition cost. This initial cost may be carried out without change, may be changed by depreciation, amortization or write-off, or may be shifted to other categories. This principle is applicable in cash transactions. In non-cash or an exchange transaction, the cost is equal to the fair value of the asset given or fair value of the asset received, whichever is clearly evident. In the absence of fair value, the cost is equal to the book value of the asset given.

C. Accrual Basis vs. Cash Basis Accounting

The preparation of financial statements every accounting period is usually based on accrual accounting - that income is recognized when earned regardless of when received and expense is recognized when incurred regardless of when paid. Cash basis on the other hand, recognizes income only when cash received and expenses only when cash is paid.

D. Current Assets and Liabilities vs. Non-current Items

Assets and Liabilities are classified only into two, current and non-current items. Separate classification is useful by distinguishing between assets and liabilities that are continuously used in determining working capital from those used in long-term operations. Current assets are those resources expected to be utilized for current operations and current liabilities are those expected to be paid within the operating cycle the operating period being usually one year. Assets and liabilities not within the classification of current are deemed non-current items.

Balance Sheet, Income Statement and Cash Flow Statement.

A balance sheet is a formal statement showing the…… [read more]

Current Event: Accounting Many Entrepreneurs and Owners Term Paper

Term Paper  |  1 pages (355 words)
Style: MLA  |  Bibliography Sources: 1


Current Event: Accounting

Many entrepreneurs and owners of small businesses downplay the importance of taxes, to their detriment according to Hershey. Although not nearly as exciting or creative as the rest of small business development, proper accounting can help managers save money and avoid costly penalties. Taxes and the accounting activities that promote good tax reports are essential to the survival of any business. Without proper accounting know-how, business owners may neglect to claim valuable deductions or create incorrect totals even when using accounting software. Business owners should consider hiring trained accountants at least so their taxes are in order.

The entrepreneurial spirit is built into the American dream. Moreover, the number of new small businesses has increased recently as an aging baby boomer population seeks new ways to secure income after retirement. Before small businesses get off their feet, Hershey advises that owners pay close attention to how their business can and should be structured for tax purposes. Sole proprietorships, partnerships, and incorporated businesses are each taxed differently. Accountants also take into consideration personal tax returns…… [read more]

Accounting Information System for Harmonization, Siva Sankaran Term Paper

Term Paper  |  2 pages (569 words)
Style: APA  |  Bibliography Sources: 1


Accounting Information System for Harmonization," Siva Sankaran and Dhia AlHashim (2006) make an argument for a harmonization of varied accounting systems into a common web-based platform. Currently, different organizations use varied accounting systems, a practice that is increasingly at odds with the growing globalized economy. To facilitate the globalized way that many organizations are conducting their businesses, Sankaran and AlHashim (2006) point to the need for an international accounting system that is able to "harmonize" or adapt to these different accounting systems. Making this program web-based would further allow for a more synergistic global economy, since an Internet-based program would be accessible throughout the globe.

The authors of this article make a strong case for the need for harmonized accounting standards and procedures. Many large corporations have substantial dealings both domestically and in many parts of the world, creating the need for a system that could handle its diverse accounting needs. Similarly, different investors need to make economic choices, and their success is greatly influenced by their ability to compare financial information. The harmonization of financial reports also ensures that corporations and watchdogs -- both industry and from national and international governments -- are able to detect any corporate wrongdoing.

In devising a harmonized model of accounting, the authors noted a number of challenges. First, they note the current incompatibility of hardware and software programs within companies, and the accompanying security risks that harmonization entails. They also note that different accounting practices are in place in different parts of the world. However, the authors believe that their generalized model provides a practical architecture for computer-assisted harmonization. The model that they present includes a user friendly interface, a detailed directory service to aid a user…… [read more]

System Controls Term Paper

Term Paper  |  2 pages (782 words)
Bibliography Sources: 1


CBU's New Accounting System

Periodic Inventory System Instituted at CBU

There are Periodic and Perpetual systems of inventory. Under the Perpetual system the inventory is constantly updated when the merchandise is purchased, and is also double-entried by recording the cost of the merchandise in the "Cost of Goods Sold" account, debited at the time of each sale. The Perpetual Inventory System asks that the merchandise be continuously recorded in one or more Purchases Accounts each time a purchase is made. CBU may have had this system in the past, but it has instituted a new system, the Periodic System. (Accounting)

Under the Periodic system, which CBU obviously has begun to use with their new computer system, the Inventory account is not updated when purchases are made, but is adjusted at the end of the year. However, the Inventory Account is not reduced by that amount. Only at the end of the year, when the Purchases Accounts are closed is the Inventory account adjusted to equal the cost of the merchandise. This Periodic system allows for no "Cost of Good Sold" account to be updated when a sale of merchandise occurs. The problem with Periodic Accounts is that there is no way to tell from the general ledger accounts how much inventory there is during the year, or how much inventory has been sold.

On January 1, CBU installed a new computer system for tracking and calculating inventory costs. Accountant A was proud of having a good system of internal control. CBU had followed good internal control procedures by having a regular physical inventory count to safeguard a valuable enterprise resource." (The system was obviously a Periodic Inventory system, but a physical check was done periodically, in order to add control numbers.) Double-entry accounting is the basic standard system to record variables, so that a record was kept in two areas of any changes in inventory. If the item was purchased (debit inventory) then it must also be paid for (credit bank account). Balances are kept during periodic counts, but on the Inventory account adjustments would not be made at that time. Waiting until December 31 to adjust entries is standard for the Periodic Inventory system, which CBU uses. It is all right to have an Adjusting Entry, to reflect actual numbers, however, as Accountant A mentioned, to safeguard the resources.

Accountant…… [read more]

Legislative Counsel Bureau Audit Division Term Paper

Term Paper  |  4 pages (1,121 words)
Style: APA  |  Bibliography Sources: 1


Audit Report: Nevada Athletic Commission

Legislative Counsel Bureau Audit Division:

Audit Report on "Nevada Athletic Commission"

Brief Description of Nevada Athletic Commission

The Nevada Athletic Commission (NSAC), first established in 1941, is a five-member body appointed by the State Governor for a three-year term. It regulates all contests and exhibitions of unarmed combat within the state of Nevada, through issuance of licenses to hold contests or exhibitions where an admission fee is charged, and to all contestants, promoters, boxers, seconds, ring officials, managers, and matchmakers who participate in a professional contest or exhibition. "Unarmed combat" in Nevada includes sports such as boxing, professional wrestling, kickboxing, and martial arts. The Commission is the final authority on licensing matters, and has the powers to approve, deny, revoke, or suspend all licenses for unarmed combat. Due to Nevada's prominent role as a center for combat sports, the NSAC is often regarded as the preeminent state athletic commission in the United States.

The Commission meets its expenditures by collecting fees from the sale of tickets, and the sale or lease of radio, television, and motion picture rights. Its responsibilities also include ruling in disciplinary cases, and in disputes between contestants and their managers, which are brought to it. In addition, the NSAC is responsible for enforcing the Nevada State laws governing unarmed combat.

The Commission approves all championship bouts and special events and appoints the judges and referees to supervise the contest; it also determines befor hand that a contestant is not banned or suspeded by any athletic commission and ensures that a contest is not a gross mismatch.

The Findings of the Audit Report

The auditors found that the Nevada Athletic Commission needs to improve its financial and administrative practices in certain areas by clarifying regulations and improving agency revenue collection procedures. The audit report findings pointed out the following areas that needed improvement:

Defective Fee Reporting Process

Inequitable Fee Computation: Due to lack of adequate guidance in the Commission's regulations and procedures, the process of computing and collecting the promoters' event fees has become overly complex. The complexity has resulted in the fees not being always computed correctly. For example, the report found that when determining event fees, regulations allow promoters to exclude complimentary tickets totaling up to 4% of the seating capacity, but the procedures in place do not provide sufficient guidance on how the exemption is to be applied. This leaves room for errors, inconsistency, and inaccurate calculation of the payable fee. As a result, some promoters paid more than the required amount while some others paid less. In one instance, the Commission had allocated the exemption to the most expensive seats, thus reducing the amount paid for an event; in other instances, two promoters did not get the complimentary tickets exemption for not having provided sufficient detail, while two others who had provided the same level of detail were allowed the exemption. The auditors, therefore, recommended a standard fee reporting form.

Delayed Payments: The complex procedures results in the… [read more]

Accounting Deals With Financial Transactions Research Paper

Research Paper  |  2 pages (740 words)
Bibliography Sources: 2


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]

Accounting Convergence Among Public Companies Research Proposal

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


¶ … 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)


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 Information System Essay

Essay  |  2 pages (650 words)
Bibliography Sources: 2


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]

Advanced Financial Reporting and Theory Essay

Essay  |  6 pages (1,621 words)
Bibliography Sources: 8



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 and Financial Statements Term Paper

Term Paper  |  2 pages (655 words)
Bibliography Sources: 1


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.


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.


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

Managerial Accounting: Organizations and Expectations Essay

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


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.


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

New PCAOB Reporting Requirements Case Study

Case Study  |  4 pages (1,295 words)
Bibliography Sources: 3


" (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


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]

Creative Accounting Term Paper

Term Paper  |  4 pages (1,343 words)
Bibliography Sources: 1+


The disadvantages of such a method include higher costs for each company, the fact that the activity of accounting firms would be severely limited (from a qualitative and not a quantitative point-of-view) and the setbacks provoked by the fact that two accounting firms may have very different methods of solving some issues.

Another solution to fraudulent accounting is making accountants and financial officers more liable for the damage caused to investors. Criminal penalties for corporate financial fraud and obstruction of justice or liability for incorrectly attesting to the accuracy of their financial reports would certainly make the people involved much more careful and unwilling to perform any malfeasance.

Still, it should be mention that criminal penalties are actually a solution for the effect and not the cause of the phenomenon. Scientific studies have concluded that there is no direct relationship, as one might think, between the increase in prison sentences and the reduction of the criminal phenomenon. After all, there are always people who would risk anything, simply by believing that they will never be caught. Unfortunately, corporate fraud attracts a great number of extremely intelligent persons who are, in the vast majority of cases, never caught. Therefore, a greater effect would probably be obtained by making accountants aware of their moral and social responsibilities.

The second method, however, making the managers personally liable for the damages they have caused is actually very effective. After all, one could spend a few years in jail and then retire in the Caribbean with a 100 million in bank accounts all over the world. Still, if people would know that they would have to pay for the damages, perhaps they would not be so swift at making them happen.

All solutions should be implemented at the same time. However, if only one is to be applied, one could use the 'Plus/Minus/Implications' (PMI) decision-making technique to establish which one would be the most effective. The first solution was the setting of accounting standards by an independent board.


1. standardized form for all operations + 5


1. transition time needed -3

2. some standard forms may not be adequate / accepted all across the industry-3


1. more safety in financial operations: + 5

2. increased costs (training, wages for the members of the independent board) -2

Total PMI: +5-3-3+5-3 = +1

The second solution was limiting the consulting services accounting firms can perform for their audit clients.


1. increased safety, by avoiding conflicts of interest +4

2. more accurate financial control + 2


1. two accounting firms doing practically the same thing -2

2. different methods employed by these accounting firms -2


1. significantly higher costs for each company. -5

2. A larger work volume for accounting firms: -1 (the existing firms may find themselves crowded with their activity, which is not good news for their clients)

Total PMI: +4+2-2-2-5-1=-4

The third solution involved the increase of criminal penalties and making the managers personally liable for the damages they… [read more]

History of the International Accounting Term Paper

Term Paper  |  2 pages (574 words)
Bibliography Sources: 1+


The requirements for membership relate to technical competence and the ability to function independently.

In terms of ethics, the IASB requires all its members to be meticulous in setting and following international accounting standards. The enforcement of these standards is also an important issue that should be applied uniformly worldwide. Noncompliance appears to be a problem, and the Board's reaction to this is the inception of regulating bodies in order to ensure enforcement.

One of the problems faced by the Board is the very fact that it is international. Problems related to this include the fact of cultural diversity. The code of the board is to recognize cultural differences and promote a culture of diversity within its professional activities. Standards should thus be set that transcend individual cultural values.

Issues that should be addressed include corruption fraud and misrepresentation, while dealing with the challenge of enforcing these regardless of cultural barriers. The Board thus works towards being globally accepted, and is currently operating in over 180 countries around the world on a consistent basis.

A high quality of regulating committees, as well as a standard of control should be implemented in order to make the work of the Board easier. Each culture should be penetrated by recruiting members from the culture. These members can then serve as interpreters for companies from their country and help them accept the accounting standards as approved by the Board. Furthermore these members can serve to help the Board achieve a greater understanding of how ethics and values function in foreign cultures.


IASB Web site. www.iasb.org.uk/

QuickMBA.com. "Financial Accounting Standards." 1999-2004. http://www.quickmba.com/accounting/fin/standards/

Wikipedia. "The International Accounting Standards Board." http://en.wikipedia.org/wiki/International_Accounting_Standards_Board… [read more]

Hand Crafted Cheese Term Paper

Term Paper  |  3 pages (922 words)
Bibliography Sources: 1+


¶ … Crafted Cheese

Generally Accepted Accounting Principles (GAAP).

GAAP is a set of specific common guidelines, provided by the institutions such as the Financial Accounting Standards Board, the American Institute of Certified Public Accountants and the Securities and Exchange Commission, about "acceptable accounting practices." These acceptable practices should not necessarily be regarded as a set of ground rules. In fact, it is a common denominator, useful when foreign firms, especially auditing companies, proceed to financial verifications. The GAAP provide for an easier task from the auditing companies and anybody else who interprets the financial statements.

Historical Cost.

The historical cost is "an accounting technique that values an asset for balance sheet purposes at the price paid for the asset at the time of its acquisition." This means that the current market value or any opportunity cost are not taken into consideration. In my opinion, this methodology simplifies greatly work related to recording assets in the balance sheets. The original cost can be quickly taken from the invoice, instead of evaluating all possible costs involved.

C. Accrual Basis vs. Cash Basis Accounting.

The accrual basis accounting records payments and revenues when the actual business activity occurs. On the other hand, cash basis accounting records payments and revenues only when cash is received or paid. For example, if we buy a car in December and pay for it in February the following year, under the accrual method, the payment will be recorded in December, while under the cash method, it will be recorded in February the following year.

From this example we can also figure out the main impact of each method on the financial statement. Indeed, in this particular case, using the accrual method means that the payment is recorded in the current fiscal year. On the other hand, the cash method records the payment in the following year, because it is noted in February.

The accrual methodology is generally recommended, mainly because it is "more realistic for measuring business performance." Indeed, a manager would be able to see exactly how his company has performed in each month because the revenues are noted as each business is concluded.

D. Current Assets and Liabilities vs. Non-Current Items

In my opinion, the current assets and liabilities give a keen overview of the company's short-term solvability, but also of the company short-term revenues. Each term will provide information on how the company is performing in terms of inventory, current liabilities, etc. Many of the current assets and current liabilities entries can also be used in financial ratios that provide information on the company's overall financial health.

Part II

The financial reports are quite similar for the three companies mentioned, with mainly the same organization of the balance sheet, the income statement and the cash…… [read more]

Ethics and the Auditor Essay

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


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]

Accounting Internal Controls That Must Be Applied Essay

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



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]

Fall of Enron Worldcom and Authur Andersen Term Paper

Term Paper  |  6 pages (1,740 words)
Bibliography Sources: 0


¶ … Fall of Enron, WorldCom and Arthur Andersen

What a tangled web we weave, when first we practice to deceive." Deception is what Enron was all about. From the beginning of its rise to prominence, it was little more than a shell game, designed to make a few selected executives rich, at the expense of other employees and shareholders.… [read more]

Technology and Accounting Essay

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


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]

Government Accounting Is Substantially Different Term Paper

Term Paper  |  2 pages (596 words)
Bibliography Sources: 1


It is, after all, the most important duty of a state to balance its entire budget, not to focus too narrowly on one single fund; for example, a surplus in one individual fund can balance out increased expenditures in another, otherwise, additional debt service may be necessary to balance the financial statement as a whole.

An even more specific example of these balancing maneuvers is shown on page 42, the "Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances," which outlines why some amounts reported are different in the Statement of Activities; eight separate reasons behind the discrepancies are listed. (GA CAFR 2004) One specific instance of a difference in a fund statement with the general Statement of Activities is that "inventories accounted for using the purchases method are reported in the government funds. [However,] in the Statement of Net Assets, such amounts are reported as assets until the inventory is consumed." (GA CAFR 2004, p. 42) Different accounting methods and reporting mechanisms among different funds, which operate to a great extent independently of one another and of general fund oversight, result in a need for a reconciliation in a comprehensive statement such as that of the state as a whole.

In the summarization of significant policies, the CAFR states that "separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds." (GA CAFR 2004, p. 50) The duty of the state, in an accounting capacity, is to ensure that all of these separate statements can be reconciled into one comprehensive and balanced statement for the entirety of the state.

Work Cited

Georgia Comprehensive Annual Financial Report, 2004. Prepared by State…… [read more]

Finance Comparing Nike vs. Adidas Term Paper

Term Paper  |  3 pages (766 words)
Bibliography Sources: 1+


Adidas -- Adidas's financial data includes current assets, non-current assets, current liabilities, non-current liabilities, accounts receivable, inventories, goodwill, borrowing and credit lines, pensions and similar obligations, shareholders' equity, operating expenses, and income taxes (Adidas, Balance Sheet).

l. What were the dividends over the last three years?

Nike -- The dividends were 0.95 per share in 2005, 0.74 per share in 2004, and 0.54 per share in 2003 (Nike, Ten-Year Financial History).

Adidas -- The dividends were 1.30 per share in 2004, 1.00 per share in 2003, and 1.00 per share in 2002 (Adidas, Financial Highlights: Five-Year Overview).

m. does the company have more than one type of stock (common, preferred, treasury)?

Nike -- Nike has Class A common stocks and Class B common stocks (Nike, Annual Report 2005).

Adidas -- Adidas only has common stocks.

n. How many common stock shares are outstanding?

Nike -- 98.1 Class A common stocks and 168.0 Class B common stocks were outstanding as of June 30, 2005 (Nike, Annual Report 2005).

Adidas -- 46,023,655 common stock shares were outstanding as of June 30, 2005 (Adidas, Basic Data).

o. Does the company have any outstanding bonds?

Nike -- Nike does not have any outstanding bonds.

Adidas -- Adidas does not have any outstanding bonds.


Adidas. "Basic Data." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/investor/share/default.asp

Adidas. "Financial Highlights: Five-Year Overview." 2005. Retrieved October 1, 2005. URL:


Adidas. "History." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/overview/general_information/default.asp

Adidas. "Share Price." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/investor/share/share_price/default.asp

Adidas. "Financial Analysis." 2005. Retrieved October 1, 2005. URL:


Adidas. "What We Do." 2005. Retrieved October 1, 2005. URL: http://www.adidas-group.com/en/overview/history/default.asp

Nike. "Annual Report 2005." 2005. Retrieved October 1, 2005. URL: http://www.nike.com/nikebiz/investors/annual_report/ar_05/docs/2005_10k.pdf

Nike. "Stock Quote." 2005. Retrieved October 1, 2005. URL: http://invest.nike.com/quote.cfm

Nike. "Ten-Year Financial History." 2005. Retrieved October 1, 2005. URL: http://www.nike.com/nikebiz/investors/financial/docs/10-yr_financial_history2005.xls

Nike. "Timeline." 2005. Retrieved October 1, 2005. URL: http://www.nike.com/nikebiz/media/nike_timeline/nike_timeline.pdf… [read more]

International ACCT Standards Term Paper

Term Paper  |  5 pages (1,969 words)
Bibliography Sources: 1+


International Accounting Standards

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

The position regarding this in the current month is that… [read more]

Accounting Earnings and Profits Essay

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


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]

FASB, SEC and PCAOB the Financial Accounting Term Paper

Term Paper  |  4 pages (1,571 words)
Bibliography Sources: 1+



The Financial Accounting Standard Board -- FASB is seen to be an important organization, the primary goal of which is to devise Generally Accepted Accounting Principles in United States and has close resemblance to Government Accounting Standards Board operating in the sphere of local and state governments in the United States. Its origin is… [read more]

Federal Government Accounting Versus Private Sector Term Paper

Term Paper  |  5 pages (1,401 words)
Bibliography Sources: 1+


Federal Government Accounting vs. Private Sector Accounting

In the United States, Governmental accounting is the aggregate notion for several accounting systems exploited by different public bodies for their accounting and financial statement purposes. There are three major governmental levels at which the bodies follow different accounting standards worked out and monitored carefully by private bodies. Federal Accounting Standards Advisory Board… [read more]

IFRS and GAAP Convergence Research Paper

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


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

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

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

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

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

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


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

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

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

Deontology and Utilitarianism in Accounting Article Review

Article Review  |  2 pages (594 words)
Bibliography Sources: 2


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]

Ethics in Forensic Accounting Essay

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


¶ … 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]

Accounting the Accrual Basis Essay

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


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]

Accountant Mentor Term Paper

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



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]

Skillset for Forensic Accounting Term Paper

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


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]

Integration With an Accounting Pathway, I Studied Essay

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


¶ … 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]

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

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


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]

Understanding Accounting and Financial Statements Term Paper

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


¶ … 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]

Accounting Ethics a Sad Tale Essay

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


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

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

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

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


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

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

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

Ethics and Regulatory Essay

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


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

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

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

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

Proposed rules or laws to prevent similar occurrences

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

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

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


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

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

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

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

Public…… [read more]

Wendy Wanderer Essay

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


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

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

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

3. Rules as they apply to this case

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

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

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

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

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

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


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


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


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



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


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


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

The ceiling or the floor? The Professional Line, 7.2. Retrieved:

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

Itemized Deductions the Federal Tax Essay

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


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]

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