In 1992, Kaplan and Norton first published a paper about the Balanced Scorecard(BSC). It was a huge success and BSC soon became very popular all over the world. Before BSC emerged, organizations usually use traditional methods of performance evaluation focused mainly on financial measures such as ROCE, sales and profits. BSC translates an organization's mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and managem...
Independence is fundamentally an attitude of mind for exercise of professional judgment and defined as an abstract concept that is easily subject to misinterpretation. Quality of integrity, objectivity, honesty, and impartiality are included in the concept to characterize independence. Independence is also a basic element to the reliability of auditor's reports. However, it does not mean that an auditor must be free of all economic, financial, and other relationships to comply with independen...
The paid amount for employees for their services. This transaction goes into the income statement report and it comes from the Human Resources Department. Operating Expense. It is the total amount that is spent to run a firm in a specific period of time. This transaction goes into the income statement report and it comes from the Operational Department. Equipments Are assets that the business will use in several years to produce their products. This transaction could be in the income statemen...
Financial accountants and independent auditors commonly face challenging technical and ethical dilemmas while carrying out their professional responsibilities. This case profiles an accounting and financial reporting fraud orchestrated by the chief financial officer (CFO) of a major public company and his subordinates. The CFO, who was a CPA, took extreme measures to conceal the fraud from his company's audit committee and independent auditors. Despite those measures, the independent auditors...
Analysing the Audit Documentation from the PCAOB The Sarbanes-Oxley Act of 2002 created the Public Company Accounting Oversight Board (PCAOB), which became responsible for managing and regulating the public accounting profession of auditing. The PCAOB created a set of standards for preparing an audit report this paper will focus on Auditing Standard No.3-Audit Documentation. Standard number 3 requires that publicly traded companies that are registered with the Securities and Exchange Commissi...
An intangible asset is an identifiable non-monetary asset without physical substance. Recognition and measurement The recognition of an item as an intangible asset requires an entity to demonstrate that the item meets: the definition of an intangible asset; and the recognition criteria. This requirement applies to costs incurred initially to acquire or internally generate an intangible asset and those incurred subsequently to add to, replace part of, or service it. An asset meets the identify...
Activity-based management has brought about radical change in cost management systems. ABM has grown largely out of the work of the Texas-based Consortium for Advanced Manufacturing-International (CAM-I). No longer is ABM's applicability limited to manufacturing organizations. The principles and philosophies of activity-based thinking apply equally to service companies, government agencies and process industries (CIMA, 2001). The acronym itself has evolved from ABC to ABCM (activity- based co...
Answers to Questions on Auditing and Corporate Ethics The auditor did an excellent job in detecting the falsification of data. By conducting a thorough investigation, he was able to discover that there were two sets of data, the first being the findings of the original studies that revealed that the drug failed every single FDA test, while the second was a doctored version which showed that the drug passed every required test. From this startling discovery, the auditor was faced with two opti...
Accounting is primarily concerned with recording, maintaining and reporting of financial data of business entities. It provides information about the resources available to the firm, the means employed to finance those resources and the result thereof. When publishing financial statements, Accountants need a set of standards to look up to, so that the data published can be consistent through the years. Also reliable and relevant to the users of such information. This is where the need for con...
Chapter 6 [LO1] The audit plan documents detailed information about audit procedures to be performed on the engagement. T [LO2] Scaling the audit refers to fitting the audit work into the proper context in terms of the engagement's size, environment, and complexity. T [LO2] Statutory audits are required on all integrated audits performed in accordance with international accounting standards. F [LO2] An audit plan will be the same regardless of whether the client company outsources its financi...