...No. 2014-15 August 2014 Presentation of Financial Statements— Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern An Amendment of the FASB Accounting Standards Codification® The FASB Accounting Standards Codification® is the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. An Accounting Standards Update is not authoritative; rather, it is a document that communicates how the Accounting Standards Codification is being amended. It also provides other information to help a user of GAAP understand how and why GAAP is changing and when the changes will be effective. For additional copies of this Accounting Standards Update and information on applicable prices and discount rates contact: Order Department Financial Accounting Standards Board 401 Merritt 7 PO Box 5116 Norwalk, CT 06856-5116 Please ask for our Product Code No. ASU2014-15. FINANCIAL ACCOUNTING SERIES (ISSN 0885-9051) is published quarterly by the Financial Accounting Foundation. Periodicals postage paid at Norwalk, CT and at additional mailing offices. The full subscription rate is $242 per year. POSTMASTER: Send address changes to Financial Accounting Standards Board, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116. | No. 404 Copyright © 2014 by Financial Accounting Foundation. All rights reserved. Content copyrighted by Financial...
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...The chart of accounts lists all the accounts that a company uses in its accounting system. The accounts are usully organized into the following sequence. 1. Asset accounts Examples: * Cash | (Amount of cash on hand) | * Accounts Receivables | (Amount owed to the company for services performed or products sold, where the cash has not yet been received) | * Property and Equipment | (Amount of land, buildings and equipment) | * Prepaid Insurance | (Insurance paid in advance, but not yet used) | 2. Liability accounts Examples: * Accounts Payable | (Amount owed to suppliers of goods or services that the company received but has not yet paid) | * Unearned Revenues | (Amount received in advance for goods that the company did not deliver yet or for services that the comapny did not produce yet) | * Salaries Payable | (Amount owed to employees for work performed but not yet paid) | 3. Stockholders' Equity accounts Examples: * Capital Stock | (Amount the company received from investors when it issued stock) | * Retained Earnings | (Accumulated net income that has not been distributed as dividends) | * Dividends | (Amount distributed to stockholders) | 4. Revenue accounts Examples: * Sales | (Amount earned from selling goods to customers) | * Service Revenue | (Amount earned from providing services to clients) | 5. Expense accounts. Examples: * Salaries...
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...Going Concern Group 4 ACCT 632, Advanced Financial Acct Theory Liberty University Aug 7, 2013 GOING CONCERN Summary of Going Concern current exposure draft Comparison and Contrast of current Going Concern theory and standards 1 Guidance provided by AU Section 341 2 Guidance provided by 17 U.S.C. §229.303 3 Proposed guidance of exposure draft Comparison and Contrast of U. S. GAAP and IFRS with respect to Going Concern 1 Current Going Concern variations between U. S. GAAP and IFRS 2 Variations between proposed changes to Going Concern issues The Benefits and Costs of a Going Concern Amendment 1 Providing preparer guidance 2 Making management responsible 3 Addressing investor concerns Provisions in light of the FASB’s Conceptual Framework 1 Understandability 2 Decision usefulness 3 Relevance 4 Comparability Response to Going Concern Exposure Draft 1 Proposed changes or corrections to the current exposure draft References Going Concern People go into business for many reasons, but no one goes into business with the expectation that they are not going to be successful. For that reason, acquisition is made for those assets that are needed to run the company with the understanding that there will be no need to arrange for early liquidation. Because there is no prediction to inform someone that their business may or may not make it, managers must rely...
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...Auditor’s Responsibility for Assessing Going Concern In auditing, going concern is identified as an entity’s capability to continue operating as a business entity. It is the auditor’s responsibility to evaluate the company’s financial statements to assess whether or not the going concern assumption is appropriate. An entity is obligated to include a disclosure in the footnotes of the financial statement stating if there is substantial doubt of the company to continue as a going concern. According to the Public Company Accounting Oversight Board, AU 341 describes the requirements for the auditor’s evaluation of an entity’s going concern. This standard states that an auditor’s responsibility is to evaluate if there is substantial doubt about an entity’s capability to carry on as a going concern for the next year. The period of substantial doubt is not to exceed twelve months. This evaluation is based upon any evidence that he or she has accumulated during the normal course of the audit. If there is substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time not to exceed one year, the auditor should review management’s plan to remedy the problems. If the substantial doubt goes unresolved, the auditor should add an explanatory paragraph to the audit report. In the event that an auditor receives a request to reissue his or her evaluation of going concern and remove the explanatory paragraph, one can refer to the PCAOB’s...
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...quality and the objectives to be achieved in an audit. Auditing procedures differ from auditing standards. Auditing procedures are acts that the auditor performs during the course of an audit to comply with auditing standards. Auditing Standards .02 The general, field work, and reporting standards (the 10 standards) approved and adopted by the membership of the AICPA, as amended by the AICPA Auditing Standards Board (ASB), are as follows: General Standards 1. The auditor must have adequate technical training and proficiency to perform the audit. 2. 3. The auditor must maintain independence in mental attitude in all matters relating to the audit. The auditor must exercise due professional care in the performance of the audit and the preparation of the report. Standards of Field Work 1. The auditor must adequately plan the work and must properly supervise any assistants. 2. The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures. The auditor must obtain sufficient appropriate1 audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit. 3. 1...
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...performed by a person or persons having adequate technical training and proficiency as an auditor. 2. In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors. 3. Due professional care is to be exercised in the performance of the audit and the preparation of the report. Standards of Field Work 1. The work is to be adequately planned and assistants, if any, are to be properly supervised. 2. A sufficient understanding of internal control is to be obtained to plan the audit and to determine the nature, timing, and extent of tests to be performed. 3. Sufficient appropriate evidential matter is to be obtained through inspection, observation, inquiries, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under audit. Standards of Reporting 1. The report shall state whether the financial statements are presented in accordance with generally accepted accounting principles (GAAP). 2. The report shall identify those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period. 3. Informative disclosures in the financial...
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...1. A. The standard unqualified report is comprised of the report title, audit report address, introductory paragraph, scope paragraph, opinion paragraph, name of CPA firm, and the last day of field work. Auditing standards requires the report to have a title, as well as having the word independent in the title. The requirement to have the word independent within the title explains to users that the auditor is independent of the company. In terms of the audit report address, the report is generally addressed to the company, its stockholders, or the board of directors to indicate that the auditor is independent of the company. The first main section in the unqualified report is known as the introductory paragraph. This paragraph explains that the CPA firm has performed an audit, and it intends to distinguish the report from a review report. Additionally, the introductory paragraph lists the financial statements that were audited, including the balance sheet dates and the accounting periods for the income statement, as well as the statement of cash flows. The wording of the financial statements in the report should be identical to those used by management on the financial statements. Finally, this paragraph states that management is responsible for the statements, and the auditor is responsible to express an opinion on the statements based on an audit. The second core part of the report is the scope paragraph and it is an accurate statement about what the auditor did in the audit...
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...INTERNATIONAL STANDARD ON AUDITING 700 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS (Effective for audits of financial statements for periods beginning on or after December 15, 2009) Introduction Scope of this ISA 1. This International Standard on Auditing (ISA) deals with the auditor’s responsibility to form an opinion on the financial statements. It also deals with the form and content of the auditor’s report issued as a result of an audit of financial statements. 2. ISA 7051 and ISA 7062 deal with how the form and content of the auditor’s report are affected when the auditor expresses a modified opinion or includes an Emphasis of Matter paragraph or an Other Matter paragraph in the auditor’s report. 3. This ISA is written in the context of a complete set of general purpose financial statements. ISA 8003 deals with special considerations when financial statements are prepared in accordance with a special purpose framework. ISA 8054 deals with special considerations relevant to an audit of a single financial statement or of a specific element, account or item of a financial statement. 4. This ISA promotes consistency in the auditor’s report. Consistency in the auditor’s report, when the audit has been conducted in accordance with ISAs, promotes credibility in the global marketplace by making more readily identifiable those audits that have been conducted in accordance with globally recognized standards. It also helps to promote the user’s understanding...
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...THE PREPARATION AND PRESENTATION OF FINANCIAL STATEMENT ARE REGULATED BY LAWS. REQUIRED: (1) LIST THESE LEGAL PROVISIONS. The constitutional and the regulatory framework of public sector accounting. Public sector accounting is governed by the following regulatory framework; such as: (a) Nigerian constitution: The 1999 constitution of the federal Republic of Nigeria Is one of the legal frameworks that regulate the receipts and pa;yments of public funds. (b) Audit Ordinance of 1956 or Act of 1956: section 13,sub- sections 1-3 mandate the accountant General of the Federation to finish the Auditor- general for the federation with the country’s financial statements. The Auditor- general shall within 60 days of the Accountant – General’s financial statements submit his report to each House of the National Assemble. (c) Finance (control & management) Act of 1958: This governs the management and operation of all government funds. It regulates the accounting system, the books of account to be kept and the procedures to be followed in the preparation of accounts and financial statements. (d) Financial Regulations: these are the accounting manual of the government ministries / Extra ministerial Departments which deals with financial and accounting matters. It set out the procedures and steps to be followed in treating most of government transctions. (e) Finance/ Treasury Circulars: These are administration tools which are used to amend the provisions...
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...financial statements include a balance sheet, statement of operations, statement of cash flow, and statement of changes in net assets (Cleverley, Song, & Cleverley, 2011). Professionals, to prepare financial documents based on a common standard, implement the principle. GAAP is beneficial to companies as it alleviates the difficulties of comparing a company’s financial statements, establishes creditworthiness of a company, and provides financial strength ("How does GAAP aid in health care," n.d.) GAAP is reinforced by eight accounting concepts. The concepts are as follows: (a) Entity concept, (b) Going-concern concept, (c) Matching principle, (d) Cost principle, (e) objective evidence, (f) Materiality, (g) Consistency, and (h) Full disclosure (Finkler, Jones, & Kovner, 2012). This paper provides a description of each concept and how the concept relates to health care. In accounting there must be an entity that is used to prepare financial statements such as balance sheets for the health care organization. This can include the organization as a whole but typically is broken down into units or departments. Identifying the entity on which the accounting focus determines applicable information. Establishing these boundaries is fundamental to the accounting entity principle. It is how financial information in health care is recorded and reported indicative to the specific individual entity (Cleverley, Song, & Cleverley, 2011). The going-concern concept assumes that the...
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...Name____Morenike Onibon___________________________ Individual Learning 55 Question Form General Information ORACLE CORPORATION’S 2014 FINANCIAL STATEMENT WAS UNAVAILABLE AT THE TIME I WORKED ON THIS PROJECT: I THUS USED THE 2013-2012 FINANCIAL STATEMENT. 1. What is the name of your corporation? The name of my corporation is Oracle Corporation. 2. Where are the corporate headquarters? The headquarters of Oracle is in Redwood City California. 3. What is the corporation’s fiscal year end? Oracle’s fiscal year ends on May 31. 4. What are the primary products or services of the corporation? Oracle corporation mainly produces hardware and software systems. 5. Graph the high and low price of the company’s stock for each quarter of the last two years. What was the high and what was the low? [pic] |Oracle Corporation High and Low Stock Prices | |Quarter per Year |High Prices |Low Prices | |Q1FY12 |26.78 |34.09 | |Q2FY12 |26 |33.69 | |Q3FY12 |25.51 |31.9 | |Q4FY12 |25.61 |30.24 | |Q1FY13 |26 |32.2 | |Q2FY13 |29.58 |33.1 | |Q3FY13 |31.61 |36.21 | |Q4FY13 |31.25 |36.34 | The highest price was $36.34, and the lowest price was $25.51. 6. Who is the...
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...Compilation of Financial Statements 2011 AR Section 80 Compilation of Financial Statements Issue date, unless otherwise indicated: December 2009 See section 9080 for interpretations of this section. Source: SSARS No. 19 .01 This section establishes standards and provides guidance on compilations of financial statements. The accountant is required to comply with the provisions of this section whenever he or she is engaged to report on compiled financial statements or submits financial statements to a client or to third parties. Establishing an Understanding .02 The accountant should establish an understanding with management regarding the services to be performed for compilation engagements1 and should document the understanding through a written communication with management. Such an understanding reduces the risks that either the accountant or management may misinterpret the needs or expectations of the other party. For example, it reduces the risk that management may inappropriately rely on the accountant to protect the entity against certain risks or to perform certain functions that are management's responsibility. The accountant should ensure that the understanding includes the objectives of the engagement, management's responsibilities, the accountant's responsibilities, and the limitations of the engagement. In some cases, the accountant may establish such understanding with those charged with governance. .03 An understanding with management and...
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...affairs of the business. B. Independent auditing can best be described as 5) A branch of accounting. 6) Adisciplinethatatteststotheresultsofaccountingandotherfunctionaloperations and data. 7) A professional activity that measures and communicates financial and business data. 8) A regulatory function that prevents the issuance of improper financial information. C. Which of the following professional services is an attestation engagement? 9) A consulting service engagement to provide computer processing advice to a client. 10) An engagement to report on compliance with statutory requirements. 11) An income tax engagement to prepare federal and state tax returns. 12) The preparation of financial statements from a client’s financial records. D. Which of the following attributes is likely to be unique to the audit work of CPAs as compared to the work performed by practitioners of other professions? 13) Independence. 14)...
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...ISA ISA 706 January 2009 International Standard on Auditing Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report 706 INTERNATIONAL STANDARD ON AUDITING 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report Explanatory Foreword The Council of the Malaysian Institute of Accountants has approved this standard in January 2009 for publication. This standard should be read in conjunction with the Preface to Malaysian Approved Standards on Auditing; Preface to International Standards on Quality Control, Auditing, Review, Other Assurance and Related Services; Glossary of Terms and International Framework for Assurance Engagements. The status of International Standards on Auditing is set out in the Preface to Malaysian Approved Standards on Quality Control, Auditing, Review, Other Assurance and Related Services. Applicability International Standards on Auditing (ISAs) are to be applied in the audit of financial statements under all reporting frameworks. Reporting frameworks are determined by legislation, regulations and promulgations of the Malaysian Institute of Accountants and where appropriate mutually agreed upon terms of reporting. ISAs are to be applied in the audit of historical financial information. Effective Date in Malaysia Effective for audits of financial statements for periods beginning on or after January 1, 2010. Reproduction of Full Text of Final IFAC Publication “Copyright...
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...Business Reporting Language (XBRL) — as the electronic financial reporting standard. This indicates the dawn of a new digital era in business and financial reporting. This document is intended to help companies develop an XBRL implementation strategy that includes an understanding of the key considerations and decisions required to create a quality XBRL submission. Thus allowing investors, analysts, regulators and other financial statement users to realize the full benefits of XBRL. It outlines the building blocks for a company’s XBRL implementation plan. The foundation of this plan is for a company to develop the necessary background on XBRL basics and the SEC’s XBRL mandate. With an implementation framework comprised of education, preparation and compliance, the development of a company’s XBRL implementation plan can begin to take shape. As with every new regulatory mandate or legislation, we encourage organizations, as a critical first step, to conduct an internal assessment of their needs to determine how the rule will affect their business. We hope you find this publication...
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