Relevance of Accounting Standards to Auditing
- Submitted by: sarbequette
- Views: 627
- Category: Politics: Economics
- Date Submitted: 06/25/2012 02:27 AM
- Pages: 6
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* Significant changes in the company's accounting principles, financial reporting policies, or disclosures and the reasons for such changes;
* The financial reporting competencies of personnel involved in selecting and applying significant new or complex accounting principles;
* The accounts or disclosures for which judgment is used in the application of significant accounting principles, especially in determining management's estimates and assumptions;
* The effect of significant accounting principles in controversial or emerging areas for which there is a lack of authoritative guidance or consensus;
* The methods the company uses to account for significant and unusual transactions; and
* Financial reporting standards and laws and regulations that are new to the company, including when and how the company will adopt such requirements
STANDARDS
* Principle of consistency: This principle states that when a business has once fixed a method for the accounting treatment of an item, it will enter all similar items that follow in exactly the same way.
* Principle of regularity: Regularity can be defined as conformity to enforced rules and laws.
* Principle of sincerity: According to this principle, the accounting unit should reflect in good faith the reality of the company's financial status.
* Principle of the permanence of methods: This principle aims at allowing the coherence and comparison of the financial information published by the company.
* Principle of non-compensation: One should show the full details of the financial information and not seek to compensate a debt with an asset, revenue with an expense, etc. (see convention of conservatism)
* Principle of prudence: This principle aims at showing the reality "as is": one should not try to make things look prettier than they are. Typically, revenue should be recorded only when it is certain and a provision should be entered for an expense which is probable.
*...
* The financial reporting competencies of personnel involved in selecting and applying significant new or complex accounting principles;
* The accounts or disclosures for which judgment is used in the application of significant accounting principles, especially in determining management's estimates and assumptions;
* The effect of significant accounting principles in controversial or emerging areas for which there is a lack of authoritative guidance or consensus;
* The methods the company uses to account for significant and unusual transactions; and
* Financial reporting standards and laws and regulations that are new to the company, including when and how the company will adopt such requirements
STANDARDS
* Principle of consistency: This principle states that when a business has once fixed a method for the accounting treatment of an item, it will enter all similar items that follow in exactly the same way.
* Principle of regularity: Regularity can be defined as conformity to enforced rules and laws.
* Principle of sincerity: According to this principle, the accounting unit should reflect in good faith the reality of the company's financial status.
* Principle of the permanence of methods: This principle aims at allowing the coherence and comparison of the financial information published by the company.
* Principle of non-compensation: One should show the full details of the financial information and not seek to compensate a debt with an asset, revenue with an expense, etc. (see convention of conservatism)
* Principle of prudence: This principle aims at showing the reality "as is": one should not try to make things look prettier than they are. Typically, revenue should be recorded only when it is certain and a provision should be entered for an expense which is probable.
*...