Company (GMCC). Mead pays no funds to Generous Motors or GMCC until it sells the automobile. Mead must then repay the balance of the loan plus interest to GMCC. How should Mead report the acquisition and repayment transactions in its Statement of Cash Flows? Sample Case 1 Solution: Problem Identification: How should a company report‚ if at all‚ cash and non-cash transactions owed to an entity’s financial subsidiary? Keywords: Cash flows; financ* subsidiaries; operating income. Conclusion: Per ASC 230-10-50-5)
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barter transaction that passed materiality by auditors. This mistake however shouldn’t have passed and was a scheme operated by the CFO who knew the materiality of the testing. Todd Katz [VP of Sales]: Creates phoney sales transactions that would soon be investigated by the SEC. Without these two fraudulent representations‚ The North Face would have reported a net loss for the first quarter of fiscal 1998. The cumulative overstatement found by auditors and the SEC was $1.3 million in gross profit
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What is Fraud? Fraud occurs when individuals purposely materially misstate facts with the intent of coercing someone to believe these misrepresentations. Upon believing the misrepresentation‚ individuals will act upon them and suffer a loss or damages. Fraud occurs in various forms: 1. Misappropriation of assets 2. Fraudulent financial reporting 3. Employee fraud 4. Management fraud The Fraud Triangle * Motive/Incentive: a reason to commit the fraud * Opportunity:
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The speaker for class a CPA with a senior living facility called Senior Star Management. She is an analyst who does financial statement audits and has 6 ½ years of previous experience as a healthcare auditor. Haley’s stated education is a BS in Accounting and a BA in Finance. Several different topics were discussed relating to healthcare audits. One question that was asked was ‘what are the main reasons a healthcare facility is audited?’ It depends on the type of the audit and typically a
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controversy over the role of the auditor with respect to the detection of fraud. There are different perceptions to the auditor’s duty regarding fraud. In today’s technological age‚ fraud has become very complicated‚ and increasingly difficult to detect‚ especially when it is collusive in nature and committed by top management who are capable of concealing it. Consequently‚ auditors have argued that the detection of fraud should not be their responsibility rather the auditor sees his duty as the independent
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someone uses information or facts that go along with their original thought‚ to “confirm” that they are right. This tendency could result in a lack of audit effectiveness because an auditor may only try to use evidence to support what they think the answer is‚ and not look for evidence that would go against their case. The auditor might be
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As the convergence of IFRS and GAAP continues to impose new personal and professional challenges on U.S. auditors‚ it also presents new career opportunities for those who embrace the continuous‚ accelerating change that characterizes globalization. U.S. auditors who recognize the opportunities and prepare to take advantage of them have little to fear from the convergence. In contrast‚ auditors who are in denial about the convergence’s inevitable effects face a very different future.
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Summary Phar-Mor‚ Inc. was a deep-discount store that had substantial growth in a short period of time. It started with 15 stores and grew to over 310 stores in thirty two states between 1985 and 1992. At first Phar-Mor was seen as a major prospect in the retail market. With sales of over $3 billion and growing‚ Phar-Mor’s success even worried some of the biggest retail giant‚ including Wal-mart. The president‚ founder‚ and COO of Phar-Mor was Mickey Monus‚ who became quite extravagant with
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unethical accounting practices. One example of such practices included faking product shipments so that sales could be booked. By midsummer 1994‚ as much as 70% of quarterly revenue was false. The company had ignored early warnings‚ such as their auditor Price Waterhouse LLP telling them they had weak internal controls. After announcing their 1994 write off another audit took place by Coopers & Lybrand. While Coopers feels that their audit followed best practice‚ the SEC argued they missed many
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Client Considerations With this particular case study I will discuss several questions and facts regarding audit client considerations. 1) A brief summary of the case. 2) Identify key behaviors‚ attitudes and ethical dilemmas (if any) faced by the auditors. 3) Assess the philosophical and practical alternatives summarized in the case questions and evaluations of those solutions. 4) Briefly summarize what I would do faced with this situation in real life. The case is that of a CPA firm‚ Cardinal
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