Jill Karnick should have performed an inventory roll forward given the several red flags HMI carried during the audit period. The red flags included the SEC’s inquiry regarding HMI’s allowance for doubtful accounts, the premature press release reporting the company’s 1995 earnings, the anonymous letter that BDO Seidman received, and the suspicious in-transit inventory at year-end. All those incidents together are very suspicious and can possibly put a material effect to the financial statement, so Jill Karnick should perform all necessary substantive procedures to validate the inventory account balance. According to AU Section 312A.1, “Audit risk and materiality […] need to be considered together in determining
Under Section 404 of the act, these findings must detail any uncovered control deficiencies or instances of employee fraud, and must also be reviewed and attested by the registered accounting firm. The authors of the report must certify that the report does not contain any false information, misleading statements or significant omissions, and that the financial statements and information included in the report accurately represent the financial condition of the company. Under Section 401 of the act, this representation must account for both balance and off-balance sheet debts, obligations and transactions in order to facilitate maximum transparency for shareholders (Nikolas, Daniel. Nd Effects of the Sarbanes-Oxley Act). The act serves as a guideline and governs what an accountant should and should not do when reporting financial flows.
The existence assertion is to make sure that the client and accounts exist, the completeness is to make sure that all of the balances are recorded, and the valuation is to make sure that the balances are recorded at the correct amount. It is important that the auditor obtains a confirmation from a third party for the information in accounts receivables. After communicating and obtaining the information, the auditor is to evaluate the information (SAS No. 67, AU Section 330.11). The audit objectives auditors use to perform year-end sales cutoff tests are to determine if the information they obtained by the confirmation reduces the audit risk level.
Question N007 (2.0 points) Operations planning and scheduling is the process of making sure demand and supply plans are in balance. a. false b. true 6. Question N011 (2.0 points) Which one of the following statements about managerial inputs to production and staffing plans is best? a. Finance provides labor and machine standards.
Employee Theft Prevention Employee theft prevention is a proactive approach to deter theft perpetrators. The program includes selective hiring policy, implementation of positive workplace culture, and segregation of duties. Selective Hiring Policy The primary preventive technique is to implement a detailed and effective hiring policy. Brian P. Nichoff, professor of Entrepreneurial Studies at the Kansas State University College of Business Administration, and Dr. Robert J. Paul from Kansas State University College of Business Administration, suggest (as cited in Appelbaum, Cottin, Paré & Shapiro, 2006) that background checks should be conducted in the pre-employment stage as thoroughly as laws will allow. BDO Stoy Hayward is an audit, accounting and business service firm in United Kingdom.
However it must be remembered that a successful trial balance is no guarantee that the accounts are error free and it only means that all transactions have been entered in balance. How to construct a trial balance To prepare trial balance accountants must follow these steps: 1. Close all ledger accounts by totalling up transactions. 2. Create a table with three columns – one for account titles, another for debits and the other for credits.
TABLE OF CONENTS INTRODUCTION PG 1 COMPANY EVALUATION PG 2 COMPLIANCE AND RECOMMENDATION PG 4 SUMMARY / CONCLUSION PG 5 REFERENCES PG 6 Introduction The primary objective of Accounting Ink, is to provide LJB Company with the required information to consider the regulations for converting to a publicly traded company. Within this analysis we will identify internal controls currently being used within business operation and the required mandated internal controls enforced by the Sarbanes Oxley Act. Internal Controls are established and or regulated by the Sarbanes-Oxley Act. There are six principles of internal controls 1) Establishment of responsibility, 2) Segregation of Duties, 3) Documentation Procedures, 4) Physical Controls, 5) Independent Internal Verification and 6) Human Resource Controls (Keller, 2012). Companies and their independent accountants or auditors should report the effectiveness of the companies internal controls based on these six principles.
In a thorough review of LJB Company’s internal controls it has been found that, although there are some practices currently in place that satisfy a few of the basic principles, there are a significant number of areas of weakness. Based on your company’s current practices and your plan to go public in the future the following internal controls are required: 1. Establishment of duties: Control is most effective when one person is responsible for a given task. As such, you will need to establish one individual to handle petty cash disbursements to employees. 2.
This also includes educating staff about the responsibilities of maintaining costs. What are the reports that can be used for financial planning in an organisation? Profit and Loss Balance sheet Revenue and Expenditure report Cash flow statement Debtors and Creditors reports What is the process for preparing budgets or other financial plans? 1. Identify data that needs to be collected.
The disclosure shows the loss contingency and states the estimate of loss. Before the company issues the financial statement and after the enterprise’s financial statement is done, the company can impair an asset or incur the liability. Disclosure of loss contingencies helps the company to keep its financial statements not being misleading. When the disclosure is necessary, the company must report the loss contingency in financial statements with a given estimate of the mount of loss. Reference Financial Accounting Standards Board (2010).Statement of Financial Accounting Standards No.