...MEMO To: Client From: Accounting Firm Re: Lawsuit Pending lawsuits against a company are both expensive and detrimental to a company’s image. The decision to understand the implications of a lawsuit to the company is the first step in minimizing risk and potential loss to the organization. Research was conducted based on the guidelines of the FASB to answer the client’s questions pertaining to the lawsuit. The memo provided to the client will answer the following questions: How are requirements for contingencies reported? What would happen to the financial statements if the client loses the lawsuit? Will the client’s debt be forgiven if the mortgage is refinanced or if their mortgage will be refinanced if they file Chapter 11? How will the treatment on the financial statement be resolved? How will the reparations of the patent be treated on the financial statements as a result of losing the lawsuit? To report requirements for contingencies and explain the financial statements consequences if the client loses the lawsuit. When dealing with a lawsuit, a company must know whether or not to consider contingencies. According to Schroeder, Clark, and Cathey (2005), a contingency is a possible future event that could perhaps have possible implications on the firm. The four most common contingency methods: Pending lawsuits Income tax disputes Notes receivable...
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...| Jax-on Co. | Memo To: | All Employees | From: | Matthew Deitrich CEO | Date: | February 2, 2014 | Re: | Financial Systems | Starting January 1, 2014 we here at Jax-on Co. have implemented a new accounting system for payroll. This includes using the CRC reimbursement system, and Concur expense reporting to accurately keep track of all mileage for full time employees and all expenses made while working for the company. Keeping track of expenses and mileage used by employees has been outsourced to this company to ensure that we are providing all employees with the right amount of compensation for their time and effort given to our company, as well as saving us time and effort in our accounting department and keeping track of receipts and mileage amounts. Entering receipts into the system is easy and simple by simply taking a snapshot of the receipt from your smart phone! Another reason we need to keep track of all of these expenses is to keep our costs down. The Concur system allows us to monitor the exact items that you are trying to expense out, and saves us cost on employees trying to expense added items on receipts that they should be purchasing on a separate receipt. Both of these applications are automatically integrated into our payroll system and then sent into our accounting department. This helps us monitor all of the expenses going out, and also helps us to figure out if there are items we are going to put through as expenses that should not be used...
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...To: Manager From: Hunter, CPA Re: Deferred Taxes, Accounting Errors and Changes, Subsidiary As of May 14, 2012, this memorandum will provide thorough explanations the following questions: the methodology used to determine deferred taxes, the procedures for reporting accounting changes and error corrections, and the rationale behind establishing the subsidiary as a corporation. We will also discuss the professional responsibilities of a CPA, and the difference between a review and an audit. Deferred Taxes According to FASB, deferred tax assets or liabilities are recognized for temporary differences that will result in taxable or deductible amounts in future years and for carry forwards. Temporary differences arise when the tax basis of an asset or liability is different from its carrying value on the financial statements. Accounting Changes and Error The three main types of accounting changes are as follows: • Change in Accounting Principle-a change from one accounting principle to another. • Change in Accounting Estimate- a change that happens when new information or additional experience has been given. • Change in Reporting Entities- a change from one entity to another. Although error corrections are not considered as an accounting change, it is still an important asset to use for the financial statements. Errors result from mathematical mishaps, misappropriating accounting principles, or misuse of factual information when preparing a financial statement....
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... you as the Owner of Fu Foods, your equity The Basic formula for determining owner’s equity To determine your owner’s equity, use the accounting formula of: Owner’s equity = Assets – liabilities I suggest to retrieve the balance sheet which provides an accurate picture of a corporation, sole proprietorship or a partnership assets, liabilities, and stockholders, sole owner or a partnership equity. Your assets or things you have of economic value are current assets, long-term investments, property plant and Equipment (PP&E) and intangible assets. Your liabilities or debts to external parties are your current liabilities, and your long-term liabilities. Your equity is determined by subtracting the liabilities from the assets, the answer that you get is your equity. Accounting systems role in the modern enterprises Since your business is in a current growing state, you will to re-evaluate your information systems. The modern accounting systems is very important to your business, because it tells you where are the money goes and money is the name of the game in this capitalist society that is America. What are your profits and what are your losses for a specific or general period of time. Modern accounting systems allow you to track all your financial and economic activities year round, or just your fiscal year periods. Accounting systems allows businesses to make internal report for managers concerning expenses, payroll, receivables, and overdue payments. It also allows...
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...two of its audit clients’ affiliates. Second, KPMG hired former staff of its third audit clients’ affiliate within the cooling-off period. Third, KPMG allowed certain employees to own stocks in both the clients and affiliates. In response to SEC charges, KPMG agreed to pay $8.2 million without admitting or denying wrongdoing. The reporter concludes that the Public Company Accounting Oversight Board will investigate more on registered audit firms’ consulting business. Moreover, the SEC’s settlement with KPMG reminds firms the value of independence. This article reflects the materials in chapter 2 and chapter 3. In chapter 2, the second generally accepted auditing standard indicates that auditors should maintain an independence in mental attitude. Similarly, the item number 3 of the principles underlying an audit conducted in accordance with GAAS states that auditors should comply with relevant ethnical requirements. Furthermore, the AICPA’S Code of Professional Conduct identifies actions that may impair auditors’ independence. In chapter 3, the second preliminary engagement activity suggests that public accounting firms should establish policies and procedures to ensure that all persons comply with the profession’s ethnical requirements including maintaining independence. The settlement indicates that KPMG failed to comply with the independence rules. This article reminds future auditors the value of independence from two perspectives. First, auditors’ independence is vital to...
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...| Deloitte & Touche LLC1 | Memo To: | Mary Stanford | From: | Ben Ji | Date: | September 26, 2012 | Re: | Goodwill Impairment Test | | | Galaxy Sports Inc. is a manufacturer of sports equipment. It is a public company with three reporting units: Fitness Equipment, Golf Equipment, and Hockey Equipment. During our audit, certain accounting treatments by Galaxy regarding goodwill impairment were found to possibly contradict with the Accounting Standard Codification. Based on my research of the ASC, my recommendations are that management should perform an interim goodwill impairment test at the end of third quarter of fiscal year 2009; and that management should not carry forward the 09 goodwill impairment test for Fitness and Hockey in 2010. Galaxy is in a competitive industry in which growth and profitability are tied to market and consumer demand. During 2010, as discussed in a press release by the management, Galaxy faced strong competition from Chinese imports that are sold at a lower price. Reduced consumer spending resulted from a slowing economy also hurt Galaxy’s sales. These “unanticipated competition” coming from affordable Chinese imports, and “significant adverse changes in the business climate” represented by a weak economy and reduced consumer spending are circumstances under which the ASC 350-20-35-30 mandates a goodwill impairment test between annual tests3. Therefore, an impairment test shall be carried out as of Sep 30, 2010. Figure 1 ...
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...University of Phoenix ACC/561PR Prof Rafael Marrero Diaz November 26, 2014 Accounting Laws Memo To: Rafael Rodriguez From Carlos Carrion Pastrana – Business Consultant Re: Process and Laws that apply in Puerto Rico to establish a business corporation. It is a pleasure to help and guide you through the process of regulations and steps in establishing a community pharmacy in Puerto Rico. This type of business is very regulated and includes both state and federal laws. -The first thing that must be done is to get incorporated in the Department of State in accordance with the corporations law 164 of 2009 with a company name that is not registered yet and offering a physical address into which municipality will be the headquarters. Then a business social security issued by the Department of Treasury Internal Revenue Services must be obtained. This number will identify the corporation when doing business among other business and when paying taxes to the state and municipality. -A merchant registry number (registro de comerciante) must be obtained also by the department of treasury, here you will specify the exact mailing and physical address and what type of business will be conducted under that corporation. Additional documents are needed: * Lease Contract * Use Permit (Obtained in the municipality if it is autonomous, if not in OGP offices) and is granted by ARPE * Fire Department endorsement (Extinguishers and emergency exits) *...
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...Axia College Material Yuma N. Vuono turtlelove15@email.phoenix.edu Assignment 1-2 Accounting Software Memo Resource: September 2003 article “A Strategy for Finding the Right Accounting Software” by Randolph P. Johnston located at the website for the Journal of Accountancy. Read the following memo: Your department’s accounting software is extremely outdated and you have included the purchase of new software in this year’s fiscal budget. You have decided it is time to start looking into purchasing your company’s accounting software and have chosen someone in your department to undertake the task. You want to draft a memo for your employee to help guide her in the purchasing process. Prepare a 350-word memo discussing the factors to consider when choosing accounting software. Analyze why each factor is important and the risks of not considering each factor. Post your memo as an attachment. Post your Certificate of Originality. Interoffice Memo: To: | Jane Assistant | From: | Yuma N. Vuono | CC: | John President | Date: | 1/29/2012 | Re: | Accounting Software | Comments: | Hello Jane,As you know, our accounting software is extremely outdated. I have included the purchase of new software in this year's fiscal budget and decided you would be the perfect person to research the various types of accounting software systems on the market and choose the most suitable system for our company. We both understand the importance of choosing a system that will...
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...As many of you heard that, the Chief Financial Officer (CFO) for XYZ Construction Inc. has been promoted to the newly created position of Vice President of Overseas Operation. The CFO’s absence leaves a void in the knowledge base of the owners group regarding several key financial and accounting principles. There will be all hands training meeting on May 25 @ 1100 local time, expected to last until 1300 and will be held at the Denver Embassy Suites conference room. The hotel will provide the video conference need for the offsite employees who will not be able to attend in person. This training meeting will provide the employees the necessary knowledge and understanding of these key financial and accounting principles. That is associated with the financial management, accounting internal control cash management and Sarbanes-Oxley Regulations. During this training meeting agenda, the following financial and accounting principles will discuss: • Balance of the Account • Sarbanes-Oxley Act of 2002 • Cash Equivalents • Petty Cash • Voucher Background XYZ Construction Inc. performs horizontal construction work including roads, airfields, and bridges. The company’s headquarters is in Denver, Colorado and has 16 field offices located in 11 states. The workforce includes heavy and light equipment operators, civil engineers, and project managers along with an administrative staff in the headquarters facility with support staff in each of the 16 field offices. The company has...
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...Accounting Memo Summary BCOM/230 Accounting Memo Summary The time of an Executive is extremely valuable, thus the information you’re going to present must be equally as valuable. The information must be presented to them in a manner that is easy to understand and comprehend. This will be what they use to base they their decision on, or at least explore the possible benefits further. This summary should be started off with the same change that has greatly benefited a competitor recently. (i.e. the news about $9M in tax refunds for Macy’s) This would be enough to spark this person’s interest for sure. Then, data and figures should be provided regarding how this change would directly affect our company, not just “because someone else did it.” Be sure to list the advantages and disadvantages, to show that this has been looked at in an objective manner. Is the overall and ongoing benefit worth the cost of changing the way we account for inventory on our P&L’s? (i.e. IT work, reporting changes, legal fees for case vs. U.S., etc.) Making a change like this will have an impact on more than one department. Information like this would be most easily communicated with the use of Powerpoint slides and graphs for quick and easy analysis. This isn’t just an interoffice memo and shouldn’t have that look. It should be presented in a more formal manner. The information should be concise. If it’s too wordy, the actual point of the intended message may not get across, especially...
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...Memo To: Kristen Huffman, President and CEO From: Date: September 25, 2012 Re: Huffman Trucking Ratio Analysis Team B has completed a ratio analysis on Huffman Trucking. Our team has looked over financial statements to determine the liquidity, profitability, and solvency ratios of Huffman Trucking. These ratios provide detailed information to creditors, investors, and employees. Together, the ratios reveal data related to the performance and position of Huffman Trucking. What do the liquidity, profitability, and solvency ratios reveal about the company’s financial position? * The liquidity ratio of a company shows the way the company is able to pay back short-term debt that is owed. Creditors would be interested in this type of ratio. The profitability ratios are the profit performance that makes up the financial success of the company. Profitability ratios would be beneficial to individuals outside of the company such as investors and creditors. Solvency ratios are the ability of the company to pay off the long-term debt. The company’s solvency ratios are of interest to long-term creditors and the company’s’ shareholders. Shareholders and long-term creditors would be most interested in solvency ratios of the company. * Which users may be interested in each type of ratio? Huffman Trucking are mainly suppliers, other trader creditors and staff such as: Government – profitability ratio. Suppliers - they are interested in liuidity. Electronics cunsumers –...
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...accounting issue memorandUM to: Audit files FROM: [YOUR NAME], MEMBER OF AUDIT TEAM FOR PARKER & PROCK APPROVED BY: FRANK REEDY, ENGAGEMENT MANAGER ON AUDIT FOR PARKER & PROCK SUBJECT: TREATMENT OF MANUFACTURING OVERHEAD COSTS AT PARKER & PROCK FOR YEAR ENDING DECEMBER 31, 2013 DATE: JANUARY 16, 2014 CC: CLAIRE ALLYSON, CONTROLLER, PARKER & PROCK In performing the audit planning for the audit of Parker & Prock (P&P) for the year ending December 31, 2013, we discovered that P&P has an accounting policy that results in only direct manufacturing labor and direct material costs being included in the cost of manufactured inventory. Furthermore, this accounting policy results in all other costs, including those properly categorized as “manufacturing overhead,” being accounted for as period costs that are being expensed as incurred. This accounting policy has the effect of understating inventory balances at period end and as well as understating the cost of goods sold and overstating operating expenses for the period. P&P is a private company. Prior to undertaking tests of inventory balances, we determined that a review of P&P’s inventory accounting policy was warranted. The subject of this review is to research whether P&P’s treatment of manufacturing overhead is in accordance with generally accepted accounting principles (GAAP). In performing our research we used the FASB Accounting Standards Codification (the Codification). Within the Codification we identified...
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...BLUMENGARTEN (BLG) – Phase 5 Group P2 MEMORANDUM To: Professor Teri Ziegler From: Group P2 Subject: Year 4 and 5 Analysis for BLG Date: October 21, 2011 The purpose of this memorandum is to compare the income summaries from the first 3 years of operation for comparison and analysis and to make predictions for year 5. Attached are supporting materials for further analysis. * BLG Year 4 Income Summary, page * Growth Comparison Chart, page * Target Profit Analysis, page * Sensitivity Analysis, page * Flexible Budget for Year 5, page * Returns on Hours and Investments, page The Target Profit Analysis (pg. XX), provides the number of containers that BLG would have needed to sell to meet a target profit of $40,000. Actual sales of small, medium, and large containers in year 4 were 109, 122, and 35, respectively. Based on calculations from the Analysis (pg. XXX) Sales necessary to meet the goal were 140, 157, 44. Even though this goal was not met, BLG was capable of achieving the target profit of $40,000 in year 4. The Growth Comparison Chart (pg. XX) displays that from year 2 to year 3 BLG increased container sales by 156%. Growth was only 45% from years 3 to 4, while the target profit required 85% growth. Because the growth necessary was less than the historical growth rate, BLG could have feasibly reached a target profit of $40,000. A Sensitivity Analysis (pg. XX) was prepared to examine how sensitive net income is to changes in cost...
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...COURSE OBJECTIVES Financial and management accounting are more closely linked in practice than one might expect from reading traditional textbooks and the problems to be resolved often have income tax and auditing consequences as well. This seminar is designed to provide you with opportunities to apply general concepts and principles learned in intermediate and advanced financial accounting courses to new economic transactions and business decisions. Cases will be used to permit you to practice the skills you will need as a professional accountant whether in public accounting or private industry. In particular, this course is intended to refine your skills in researching the professional accounting literature to solve particular accounting problems, to arrive at defensible solutions where GAAP is vague or nonexistent, and to present your research conclusions in a professional manner. You will have opportunities to present your work orally and in writing. REQUIRED MATERIALS: A recent Intermediate Accounting text (Kieso used in Acct 315 & 414 would be fine) A recent Advanced Accounting text (whatever was used in for Acct 415-515 would be fine) On-line access to FASB’s ASC (accounting standards codification). The Department has purchase academic license so you can use the $850 “professional” version rather than the free version which has fewer bells and whistles. You can log on from fasb.org but it will take you to http://aaahq.org/ascLogin.cfm where you enter...
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...Memo To: Jeff Smart, Chief Operating Officer of Mitchell From: Yuxi Zhang, Accountant Subject: Responsibility Accounting Method in Corporation Operation Date: September 20, 2015 This memo is in response to your questions concerning the responsibility accounting method. The memo will first explain responsibility accounting and then discuss how to correctly applying it in operation. Finally, some precautions of system installed are provided too you. After you understanding responsibility accounting method, you will be better able to decide whether you want to install for the company. What Is Responsibility Accounting? Based on Managerial Cost Accounting Implementation Guide, the definition of responsibility accounting is: “Collection, summarization, and reporting of financial information about various decision centers (responsibility centers) throughout an organization; also called activity accounting or profitability accounting. It traces costs, revenues, or profits to the individual managers primarily responsible for making decisions about the costs, revenues, or profits in question and taking appropriate actions. Responsibility accounting is appropriate where top management has delegated authority to make decisions. The idea being that each manager’s performance should be judged by how well he or she manages those items under his or her control.” The responsibility accounting system is based on the idea that proper management should take place as closely to...
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