Course Project Part Iii Essay

We conducted our audit in accordance with generally accepted auditing standards in the United States of

In 1973 the Financial Accounting Standards Board (FASB) was established to set the financial accounting standards in the United States of America for nongovernmental entities. These standards are collectively called U.S. Generally accepted Accounting Principles, or U.S. GAAP. The Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants acknowledge the authority of these standards (FASB, n.d). A “proven, independent due process” is used to collect the viewpoints of the financial statements prepares and users for the constant improvement of these standards. An Accounting Status Update(ASU) is not an authoritative source however documents the amendments to communicate the changes in the FASB Codification for a user to understand the reason and future of those changes (FASB, n.d).

The financial statements of ABC Company have been prepared in agreement with current accounting rules and regulations, and are compliant under GAAP. ABC Company is a parent company, and all reporting rules and regulations have been adhered to in the reporting of ABC Company's subsidiaries. ABC Company and all subsidiaries use the same accounting methods. Individual columns that do not total within the financial statements and related data are due to differences in rounding.

14. In which paragraph of the standard audit report does the auditor communicate to the user that certain combining fund information in the financial statements is not part of the basic financial statements, but that such information has been subjected to auditing procedures and, in his or her opinion, is fairly presented in all material respects in relation to the basic financial statements?

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate (Louwers & Reynolds, 2007). We believe that the audit evidence obtained is sufficient and appropriate to provide a reasonable basis for our opinions.

Gauthier, S. J. (n.d.). Better Understanding of The Financial Statement Audit. Retrieved 06 26, 2011, from

The documents that comprise GAAP vary in format, completeness, and structure. As a result, financial statement preparers sometimes are not sure whether they have the right GAAP; determining what is authoritative and what is not becomes difficult. In response to these concerns, the FASB developed the Financial Accounting Standards Board Accounting Standards Codification. The FASB’s primary goal in developing the Codification is to provide in one place all the authoritative literature related to a particular topic. Professional accountants pay for access to the FASB. The OU Accounting Department has paid for academic access to the FASB Codification. Our Login information is:

The accounting system in the US was strongly influenced by the SEC as opposed to a governmental influence. The SEC sells, exchanges and trades securities, protects investors while maintaining fair, orderly and efficient markets and ultimately facilitates capital formation (Pereira, 1992, p17). The US has the largest and one of the most important, stock exchanges in the world - the New York Stock Exchange located on Wall Street in New York City. This makes the US a huge market for investors world-wide. All investors would like to have access to certain facts about an investment before buying it and while holding it. In order to achieve this, the SEC requires all public firms and companies to disclose meaningful financial and other information to the public, to follow GAAP (SEC, 2007). Thus, any company that wishes to be a market in the SEC’s securities must register with the SEC. For those companies with foreign registrants, the SEC requires them to either report under US GAAP or to provide reconciliations to US GAAP (Nobes, p146, 2006). The SEC also requires public firms to follow GAAP in order to be audited. It is quite evident that most of American accounting is rule based, not government based. According to Nobes’ textbook, Comparative International Accounting, the commission since its inception has intended to limit the exercise of its accounting standard-setting authority to a supervisory role, permitting and encouraging the private sector, currently

The requirements in these newly-issued risk standards represent significant changes to the standards governing audits of financial statements. They enable the auditors to focus more clearly on areas where there is a greater risk of misstatement of the financial statements. The belief is that these risk standards will increase audit quality. This is as a result of better risk assessments through a more detailed understanding of the entity and its environment, including internal control, and improved design and performance of audit procedures to respond to assessed risks of material misstatements. The improved linkage of audit procedures and assessed risks is expected to result in a greater concentration of audit effort on areas where there is a greater risk of material misstatements.

On February 24, the SEC unanimously agreed to publish a statement of continued support for a single set of high-quality global accounting standards. The SEC acknowledged that IFRS is best positioned to be the global standard. Even without a set conversion timeline from the SEC, IFRS has been affecting

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Financial statements most likely will consist of income statements, balance sheets, statements of retained earnings, and cash flow. Generally accepted accounting principles (GAAP) is the method of choice to maintain these records across domestic and international borders. Since these statements are regularly audited by government agencies or accounting firms to validate accuracy of these statements. Financial analysts utilize data to evaluate the performance and/or make predictions about the future of a business’s stock price. The three main financial statements are the balance sheet, the income statement, and the statement of cash flows.

The author in the article “A board member’s guide to financial statement emphasizes the manner in which this information can assist board members to comprehend the accounting routine and the submission of the data in detail to its members via the treasurer. Observations made while being a guest at a board meeting appalled him at the approach the treasurer took to deliver the financial statement and at the board members who accepted the statement without querying the data.

 an analysis of the company’s accounting policies that are likely to affect interpretation of its financial reports (at least 3 policies)

In the United States, the International Auditing and Assurance Standards Board (IAASB) works as an independent body, setting standards for auditing under the International Federation of Accountants (IFAC). The IAASB establishes the best quality auditing, quality control, assurance, and related services in order to ensure uniformity of practice by professionals all across the world. Until 2002, the IAASB was formerly known as the International Auditing Practices Committee or IAPC. With such high standards in place for auditing and assurance, public confidence is therefore improved (International Federation of Accountants, 2014).