Often, analytical procedures are thought to be used during the planning and review stages of an audit. While using analytical procedures during this phase is helpful, utilizing them to supplement substantive testing during fieldwork can be even more effective.
The Securities and Exchange Commission (SEC) dictates that public companies have to present their financial statements in the eXtensible Business Reporting Language (XBRL) format as an exhibit to their regulatory filings. XBRL has more uses than just for reporting to the SEC. Public companies, as well as private companies and financial statement users, will find many compelling reasons to expand their use of XBRL data.
Before giving the green light on your financial statements, auditors have to prove the effectiveness of internal controls. However, because of time and budget constraints, trying to analyze every transaction posted to the general ledger is impractical and not remotely possible. Preferably, auditors pick out and analyze a representative sample of transactions in order to form assertions about the whole population.
Auditors regularly comment that the tone at the top of the company flows downward, seeping into every employee level. Would you consider the work atmosphere of your company to be ethical and open? Corporate culture assessments can assist in preventing and uncovering unethical and criminal behaviors, if not. To do a thorough job, however, your external auditors will typically need to work closely with people inside your company. Read on for ways you can facilitate this essential part of the audit process.
Those who have closely-held businesses will need to advance money to their companies at times, whether to bridge a temporary downturn or to supply additional cash flow for a major expense, an expansion or something else. Are these advances supposed to be classified as bona fide debt, additional paid-in capital or something in between? Your answer, under U.S. Generally Accepted Accounting Principles (GAAP), will be determined by the facts and conditions of the transaction.
Breakeven analysis can be helpful when analyzing the effects of a cost reduction plan, investing in new equipment, or launching a new product. Calculating the breakeven point is pretty straightforward as you apply basic information from your company’s income statement. Here are the fine points.
U.S. Generally Accepted Accounting Principles (GAAP) requires countless disclosures, much to the dismay of many business owners. However, the comprehensive financial statement footnotes that ensue are filled with useful information.
Inventory manipulations have played a key role in countless frauds. Back in the 1990s, executives at drugstore chain Phar-Mor manipulated the company’s financial statements in order to hide approximately $500 million in losses. Their strategy included overstating inventory balances at … Continued
Tax reform legislation that is currently in the works could potentially be enacted prior to the end of the year. If that happens, it will affect more than just your tax return. Companies that follow U.S. Generally Accepted Accounting Principles … Continued
ASU 2015-09 is about enhanced disclosure, and while it lays out certain requirements for presentation and provides examples of what the disclosure might look like, it also leaves a high degree of discretion to insurers to determine how and what information best meets with the spirit and intent of the standard.