Activity Based Costing (ABC) was an approach that was adopted by a very few organizations few times back. But in present scenario where competition is rising without any upper limit, it has to be ensured by the organizations especially operating in service sector that they possess enough internal strength to take care of competition in an appropriate manner. For this purpose, ABC provide a tool to the companies to identify the cost associated with various activities that are being carried out...
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...
International accounting standards, hereinafter IAS, have been issued by the IASC (International Accounting Standard Committee) since the 1973 until 2001. In 2001 the IASB settled in London (International accounting Standard Board) is composed by 14 members from nine different countries and in 2001 substituted the IASC. The IASB changed some already existing IASs and adopted new IFRS (International Financial Reporting Standards) to amend some already existing IASs and to covered topics uncove...
M. Mussa et al [1] built a comparison matrix of 15 different testing approaches according to specific criteria including the modeling language, automatic test generation, the testing target, and the tool support. Their results are helpful for software engineers while selecting a testing approach that best fit their needs and also for researchers in the field as a reference work that can help them build upon existing approaches. 2) A model based testing technique to test web applications using...
The audit expectations gap has been and continues to be considered one of the most major issues that the accounting profession is concerned about and comes up against. There have been proposed various definitions for the audit expectations gap. The American Institute of Certified Public Accountants (AICPA, 1992) suggest that the expectation gap could be defined as the difference between what auditors believe their responsibilities are and what the financial statements users and public believe...
Audit documentation or work/working papers, is all memoranda, confirmations, correspondence, schedules, audit programs and letters of representation created during an audit engagement which can be in the form of papers, electronic files, or other media. Audit documentation serves the purpose of providing evidence, which the auditor uses to support the conclusions reached during the engagement. It also facilitates the planning, performance and supervision of the audit engagement. Because audit...
Cost allocation is an extensively used practice in virtually every organization and in nearly every facet of accounting (Hongren, Foster, Datar, 1987). Cost allocation is defined as a method of assigning and reassigning of a cost to one or more cost objectives. The major reason for adopting this practice is concerned with "best" decision making for managers. These decisions may not necessarily be seen as profit-maximizing (Wouters, M.J.F., 1996) Indirect cost allocation is kept simple but eff...
In the auditing standard number 5, how to identify a company's internal controls and how to identify the controls' weaknesses and strengths is discussed. The method an auditor uses to analyze a company's internal controls is the top-down approach. This method starts by realizing the overall risks associated with the financial statements. After realizing this, he must look at the company internal controls and see where there may be a risk of misstatement getting into the financial statements. ...
There are several types of budgeting system and techniques being implemented by Malaysian Government since 1960s. Budgeting system is referred to the methods or the techniques of how a budget was prepared and presented. Different budgeting system will apply different approaches for planning, controlling and evaluation roles of budgeting. The budgeting systems that being performed are Line Budgeting System, Program and Performance Budgeting System (PPBS), Modified Budgeting System (MBS), and O...
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...
