...history of auditing The evolution of auditing is a complicated history that has always been changing through historical events. Auditing always changed to meet the needs of the business environment of that day. Auditing has been around since the beginning of human civilization, focusing mainly, at first, on finding fraud. As the United States grew, the business world grew, and auditing began to play more important roles. In the late 1800’s and early 1900’s, people began to invest money into large corporations. The Stock Market crash of 1929 and various scandals made auditors realize that their roles in society were very important. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. The auditors’ job became more difficult as the accounting principles changed, and became easier with the use of internal controls. These controls introduced the need for testing; not an in-depth detailed audit. Auditing jobs would have to change to meet the changing business world. The invention of computers impacted the auditors’ world by making their job at times easier and at times making their job more difficult. Finally, the auditors’ job of certifying and testing companies’ financial statements is the backbone of the business world. Introduction Auditing has been the backbone of the complicated business world and has always changed with the times. As the business world grew strong, auditors’...
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...Auditing standards history in the United States Auditing profession has relied on agreed upon procedures at the beginning of its emergence. The current formal audit practice has evolved relatively recently. The story of how auditing evolved started in the early 20th century with the growth of industrial revolution, when firms entered the stock market which was unregulated at the time a growing need evolved to detect fraud and make more reliable financial statements as investors began to depend on financial reports. Federal Trade Commission requested AICPA to provide guidance to accountants and auditors in 1917 as a response AICPA issued a series of recommendation to the accounting community on financial reporting and auditing. In 1929 the AICPA issued a specific guide for auditing (Verification of Financial Statements) and it stated that the extent of the work is a responsibility of the auditor which is one of the most important auditing concepts even now. In 1936 AICPA issued Examination of Financial Statements by Independent Public Accountants, a guide on performing audit procedures on small and mid-sized companies. The SEC which was created in 1934. A part of its duties was to oversight the auditing profession, and it required the companies to send periodic reports in accordance with GAAP and to provide assurances with their reports. Auditing standards issuance used to be triggered by financial fraud events or crimes. Statement on Auditing Procedure (SAP) No. 1 in October...
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...Auditing Auditing has been around since the mid-1800's, which originated in British. Some of firms today have been around since the 1800's, such as Deloitte & Co. Price Waterhouse & Co. In this paper, I will state the functions of auditing, the nature of auditing, how the standards apply to financial, operational, and compliance audits, and some other items that pertain to auditing in general. Nature of Auditing The nature of auditing is that auditors are placed with a special purpose, which is to provide credibility to the information that is reported on the financial statements, along with any other audits that are done by them.... [tags: Accounting Audit]1104 words (3.2 pages)FREE Essays[view]The History of Auditing - The History of Auditing Abstract The evolution of auditing is a complicated history that has always been changing through historical events. Auditing always changed to meet the needs of the business environment of that day. Auditing has been around since the beginning of human civilization, focusing mainly, at first, on finding efraud. As the United States grew, the business world grew, and auditing began to play more important roles. In the late 1800’s and early 1900’s, people began to invest money into large corporations.... [tags: GCSE Business Marketing Coursework] :: 6 Works Cited3399 words (9.7 pages)$39.95[preview]Auditing Percedure - The factor of client relationship that creates a power imbalance in favor of the client is money. When partners...
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...The independence of internal auditing in China Term Paper Advanced Auditing February, 15 * The independence of internal auditing in China Abstract China’s rapid economic growth boosted its accounting system that has evolved at a singular rate. The national government encourages foreign investors to participate in the domestic capital market actively. The government also strictly supervises the different national economic activities; as a result, the credibility of the auditing system plays a important role. Chinese government as well as some firms seek reliable and independent internal audit services. This paper will examine some factors which may cause lack of independence in Chinese internal audit systems, the difference between the internal auditing in China and in western countries. Based on interviews and questionnaires, suggestions are made for future improvement on the internal audit system in China. Key words: internal auditing, audit independence I INTRODUCTION The globalization of economy, complexity of business and allegations of fraudulent financial reporting have recently sharpened the ever-increasing attention to internal controls and internal auditing. (Karagiorgos et al., 2009) The role of internal auditing is also evolving as reflected in the following definition ‘an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing...
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...A SHORT HISTORY OF ACCOUNTING AND BUSINESS By Gary Giroux September 1999 Preface Overview: Accounting toward the 21st century: Where are we now? How did we get here? 1. From the Ancient World to Pacioli The First Cities Trade Tokens: The First Accounting The Sumerians Complex Tokens and Clay Tablets Cuneiform Writing and Beyond Money, Banking and Credit The Dark Ages and the Rise of the Italian Merchants Luca Pacioli: The Father of Accounting 2. Britain and the Industrial Revolution Prior to 1750 Ironbridge Textiles The Steam Engine Wedgwood and the Importance of Cost Accounting Early Cost Accounting Transportation Development of the Accounting Profession 3. American Big Business and Cost Accounting Early Developments in Manufacturing and Accounting Rockefeller Morgan and Carnegie Cost Accounting in the Era of Big Business Alternative Systems in Asia and Europe Relevance Lost: The Critique of Johnson and Kaplan The American Response 4. Financial Accounting and the Structure of Accounting Regulation The Great Crash and Government Response The New Role of the Accounting Profession The Financial Accounting Standards Board Earnings Management and Economic Consequences Accounting Principles and the Conceptual Framework 5. Auditing Auditing in the U. S. The Big...
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...Enron Corporation (Case 1.1) Most of us work from rags to riches but this is not the case of the Enron Corporation. Instead of becoming the nation’s greatest company, Enron instead laid claim to being the largest corporate bankruptcy in the history. The greediness and egotism wiped out the honesty and integrity that should instill on the persons who were involved in this case. Arthur Edward Andersen built his firm, Arthur Andersen & Company, into one of the largest and most respected accounting firms in the world through his reputation for honesty and integrity. His motto was “Think straight, talk straight” and he insisted that his clients adopt that same attitude when preparing and issuing their periodic financial statements. Arthur Andersen’s auditing philosophy was not rule-based; instead he invoked a substance-over-form approach to auditing and accounting issues. He avidly believed that the primary role of the auditor was to ensure that clients reported fully and honestly to the public, regardless of the consequences for those clients. Ironically, Arthur Andersen & Co.’s dramatic fall from eminence resulted from its association with a client known for aggressive and innovative uses of “accounting gimmicks” to window dress its financial statements. Enron Corporation was the second largest client of the firm and was involved in large, complex transactions with hundreds of special purpose entities (SPEs) that it used to obscure its true financial condition and...
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...The Sarbanes-Oxley Act of 2002 and the PCAOB Liberty University Abstract As a result of massive accounting scandals in the United States between 2001 and 2002 involving notorious companies, such as Enron, Worldcom, Tyco, and various other recognized entities, President George W. Bush signed into legislation during 2002 the Sarbanes-Oxley Act of 2002. This historic piece of legislation has had a profound effect on the accounting profession. As a result of the act, the PCAOB was created. Since its inception, the PCAOB has created some of the most importing accounting standards that are used every day by auditors of public companies. This paper takes a look at the Sarbanes-Oxley Act of 2002 and its effect on internal controls and small businesses. Also, I will discuss the purpose and specific pronouncements related to accounting information systems and internal controls; as well as the impact of possible future pronouncements. Keywords: Sarbanes-Oxley, PCAOB, Accounting information systems The Sarbanes-Oxley Act and the PCAOB Massive accounting scandals in the United States between 2001 and 2002 involving notorious companies, such as Enron, Worldcom, Tyco, and various other recognized entities, led to the creation of the Sarbanes-Oxley Act of 2002. This historic piece of legislation has had a profound effect on the accounting profession since it was signed into law. As a result of the act, the PCAOB was created. Since its inception, the PCAOB has created some of the most...
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...Memorandum To: DeLaune/Simonov From: Courtney Lancaster Date: October 15, 2013 Subject: History of the Auditing Profession Similar to all aspects of the accounting profession, the auditing focus in the business world has evolved considerably over its history. The main drive behind the changes has been new legislation and a strict enforcement standard which more times then not was influenced by the fraudulent activity delivered by corporate management. By the creation of oversight policies and standard setting entities, these countless scandals have shaped the accounting and auditing profession into what we know today. In 1986 the state of New York passed legislation in which the credentials regarding a Certified Public Accountant were formally acknowledged and recognized, thus creating the accounting profession itself. In 1913 the United State of America ratified the 16th amendment leading to the creation of income tax causing a spike in demand for accountants. While these changes in legislation were coming about and the profession itself was growing rapidly there was still no entity in the US that regulated the profession. In 1917 the first step to set a standard for the profession was put into action. The Federal Reserve Board and Federal Trade Commission requested that American Institute of Accountants produce a bulletin for a standardization of auditing procedures. A publication titled “Uniformed Accounting” was released shortly after as a first set of published...
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...Academic Year: 2014/15 Module code: P13505, Level 3 Autumn Semester Module Outline: Auditing, Governance and Scandals (AGS) |Module Convenor |Dr. Kevin Dow, AB474 | |Lectures |Dr. Kevin Dow | | |TH 4:00-5:30, TB 329 | |Additional Staff |Cass Lai, AB247 | |E-mail addresses |kevin.dow@nottingham.edu.cn | | |cass.lai@nottingham.edu.cn | |Office Hours |Dr. Kevin Dow: Th, 2:00 pm - 4:00 pm, every Thursday until Exams (except December 11 and 25) | | |Cass Lai: Th, 2:00 pm - 4:00 pm | KEY POINTS • This is a Level 3, 10 credit module; • Assessment basis: a one and a half hour Examination (100%); • Keywords: Audit; Governance; Corporate Scandals; Audit Theory and Practice; Accountability; • Pre-requisite module: P12307 Financial Reporting. MODULE AIMS To use a mix of textual and...
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...WorldCom history The history of WorldCom Company dates back in 1983 which started as a partnership between a former basketball coach Bernard Ebbers. This company was established at Mississippi as a coffee shop, which later developed to long distance Telephone Company. The company’s name initially was Long Distance Discount Service whose operations began on 1984. After several years in operation, the company became public in August 1989 with Bernard Ebbers as the company’s CEO (Moberg 4). Over the years, the company developed through mergers and acquisitions and becomes public in the year 1989. The notable merge which enabled the company to go public was the merger with the advantage companies Inc. This led to changing of the name from just LDDS to LDDS WorldCom in 1995 and to just WorldCom a year later (Moberg 4). In 1993, the company acquires long distance providers in the name of Resurgence Communications Group and Metromedia communications. This made history as the fourth largest long distance communication firm in United States. There were also several other mergers and acquisitions such as with IDB in 1994, WilTel in 1995, MFS communications in 1996, and the greatest merger which involved MCI communications. In 1998, WorldCom completed the merger with MCI at a cost estimated to be $40 billion. This was viewed as the greatest merger after brooks fiber properties and CompuServe which were valued at $ 1.2 and $ 1.3 billion respectively (Moberg 6). Another notable aspect...
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...function of the PCAOB and AS 5 and AS 11 Ramecha Davis This paper is submitted in partial fulfillment of the requirements for Auditing BUS5423 Section 70 Texas Woman’s University Dr. John Nugent April 20, 2015 Abstract The purpose of this research paper is to provide an in depth review of the Public Company Accounting Oversight Board (PCAOB) and how it contributes to the interest of the Sarbanes Oxley Act of 2002. The research highlights the importance of the PCAOB’s role in the accounting profession as well as prospective changes that may evolve in the future related to PCAOB. Upon reading this research the reader will be familiar with PCAOB’s roles and functions, as well as auditing standards (AS) released such as AS5 and AS11. The PCAOB’s significance in the protection of investors is revealed as well. Keywords: SEC, PCAOB, SOX, AS 5, AS 11, Internal Control, Materiality Table of Contents Introduction……………………………………………………………………………………………….5 PCAOB…………….……………………………………..……………………………….……….……5-6 a) The PCAOB Mission, Vision, & Core Values………………………………….………........6-7 b) Current Standards…………………………………………………………….…..............…7-8 c) Future Standard Plans…………………………………………………………………….…8-9 Sarbanes Oxley Act of 2002 Section 404……………………………………………………………...….9 a) Auditing Standard 5…………………………………………………………………….….9-10 b) Auditing Standard 11……………………………………………………………………..10-12 c) Communication Requirements..............................................
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...Trident University International ACC501 Case Assignment #1 Core Faculty: Dr. Timothy Brown Introduction The purpose of the following paper is to address common terms used in accounting, to include Generally Accepted Accounting Principles (GAAP), double entry accounting, historical cost, accrual basis vs. cash basis accounting and current assets and liabilities vs. non-current items. I will also describe the general organization of the following three companies; Apple, Inc., Swatch Group, and Nikon. In doing so, I will attempt to determine and demonstrate what is more useful – net income or cash from operating activities. Part I The field of accounting can be understood as the art of analyzing and interpreting data. Every organization uses a form of accounting in its day-to-day operations. While some may use it knowingly or unknowingly, nonetheless, accounting is an indispensable method in understanding any business/endeavor in today's global marketplace. It is the means of providing the financial information of any given organization. It summarizes all the company’s transactions and provides a clear image of the business. Accounting keeps the record of all financial reports which is very important for all the managers and stakeholders, such as shareholders, creditors or owners. Among the terms that are necessary to be familiar with and understand are the following: Generally Accepted Accounting Principles (US GAAP) – Accountants use Generally...
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...Do you know how Sarbanes-Oxley Act of 2002 (also known as SOX) came about? Many do not know the history behind this law that congress created. This research paper is about the history of the law, why it needed to be created, what it means for companies, the effectiveness of the law when it pertains to companies and the responsibilities of the auditors, the board of directors and the managers of the companies. Arthur Anderson was 23 and the youngest CPA in Illinois, he partnered up with Clarence Delany, where they provided auditing, accounting and related services. But soon after Delany decided to go his own way so Anderson renamed the company. Arthur Anderson had a dilemma with a client of his, a freight company, before his issue of his audit report at the end of the client’s fiscal year, a ship sank. In 1915, there were no rules regarding companies to follow when preparing an annual financial statement and there was no rule about reporting “subsequent event” after the close of a fiscal year. Anderson insisted that his client disclose the loss of their ship, eventually after reasoning the client did. After two decades, Anderson faced a similar dilemma but with another client that was much larger and more prominent. He was the independent auditor of this company and when the audit neared completion some members of the audit engagement quarreled over how to define the operating income of the company. Anderson was brought in to arbitrate the dispute for which he sided with his...
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...article by adding reliable references. Unsourced material may be challenged and removed. (October 2010) Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Constant Item Purchasing Power Accounting · Cost of goods sold · Debits and credits · Double-entry system · Fair value accounting · FIFO & LIFO · GAAP / International Financial Reporting Standards · General ledger · Historical cost · Matching principle · Revenue recognition · Trial balance Fields of accounting Cost · Financial · Forensic · Fund · Management · Tax Financial statements Statement of Financial Position · Statement of cash flows · Statement of changes in equity · Statement of comprehensive income · Notes · MD&A · XBRL Auditing Auditor's report · Financial audit · GAAS / ISA · Internal audit · Sarbanes–Oxley Act Accounting qualifications CA · CCA · CGA · CMA · CPA · CGFM · APA This box: view · talk · edit The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and energy conservation. Contents [hide] 1 Audits in accounting 1.1 Integrated audits 1.2 Assessments 1.3 Types of auditors 2 Quality audits 3 In Project Management 4 Energy audits 5 See also 6 References [edit]Audits in accounting Audits are performed to ascertain the validity and reliability...
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...ACCY 415 – AUDITING FALL 2015 Required Reading Date Mon - 8/24 Wed – 8/26 Topic Introduction: What is auditing and the source of the demand for it? The demand for audits (cont.); Whittington & Pany Ch. 1 p. 1-12 (LOs 1-6) Wallace 1980 Monograph p. 13 – 29 (Ch. 1-5) Management Assertions and Audit Evidence Mon – 8/31 The accounting profession, its history & SOX 1933 & 1934 Acts Other Readings (These can be found on Compass2g) Case Assignments (D): Prepare for discussion; Read case and think (G): Graded; Be about questions prepared to turn in before class at start of class Ch. 1 p. 12-19 (LO 7) Ch. 4 p. 114-121 (LOs 4-5) Chow 1982 The Accounting Review p. 272-277 (Sections 1 & 2 only) AICPA Summary of SOX Oxley (2007): Restoring Investor Confidence (D) Enron Corporation and Andersen, LLP. (case 4.1 in Beasley, Buckless, Glower and Prawitt) Ciconte 2015 (Sections 1 & 2 only) Wed – 9/2 PAGE 1 OF 2 Ch. 2 p. 49-54 (LOs 7-8) The professional standards Mon – 9/7 Wed – 9/9 The accounting profession, its history & SOX (cont.) Ch. 2 p. 33-48 (LOs 1-6) Quality Control and Regulation of CPA Firms; Professional Ethics & Independence Ch. 3 p. 66-82 (LOs 1-5) Labor Day Holiday Ciconte, Knechel, and Mayberry 2015 CALENDAR PART ONE ACCY 415 – AUDITING FALL 2015 Mon – 9/14 Wed – 9/16 Mon – 9/21 Independence for Public Company Audits & Other AICPA...
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