1. What is earnings management? The companies use earnings management as a strategy by which they can easily control and manipulate their earnings to reach their pre-determined earning target. 2. Why do companies employ earnings management techniques? Accountants cannot predict every business structure‚ every new and innovative transaction. Therefore‚ they build up principles that allow for flexibility so that they can adapt to changing circumstances. However‚ people make use of that flexibility
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The need for an external audit in the case of companies arises primarily from the existence of split-up of ownership from control. When control is shared an audit report will be needed in order to ensure that all the partners or be it shareholders are on the same page as the managers (the ones who will be controlling the company) and know what has been happening in the company‚ what is happening at present and what can be expected to happen in the future in order to increase returns in the company
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document. • A technique to verify the authenticity and authority of transactions recorded in the books on the basis of which the auditor submits a report‚ indicating that accounts are correct‚ free from errors or fraud and complete. • It is not only examining the documentary evidence but sometimes auditor has to go behind recorded evidence to eliminate any possibility of fraud. DEFINITION • “Vouching is the examination of the evidence offered in substantiation of entries in the book
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When you use this revision guide‚ please remember these following rules: 1. This is just a guideline. It only intends to improve your revision process. It certainly does not intend to cover everything in the exam. It is very possible that some questions‚ which are not covered in this revision guide‚ may appear in the exam. 2. You should refer primarily to other material‚ such as textbook‚ lecture notes and class exercises. 3. When you use this guideline‚ try to understand the fundamental
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INTERNAL CONTROLS IN AN EDP ENVIRONMENT The second standard of field work requires that we obtain a sufficient understanding of the client’s internal controls (I/C) to plan the audit and assess control risk. We hope that our assessment of control risk shows it to be low so that we can reduce substantive testing‚ thereby reducing audit costs. When EDP is used in significant accounting applications‚ then you must consider the effects the computer has when evaluating the internal controls. The auditor’s
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Introduction A Standard Operating Procedure (SOP) is a set of written instructions that provide individuals with the information to perform a task or job properly‚ and provides guidelines to maintain the quality and to acquire the results of the product. This essay would be covering the evaluation of the SOP in regard to its functions‚ and the aspects that specify whether the SOP is good or bad. Furthermore‚ the SOP of making a cup of tea would be considered and completely [presented in eth form
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Appendix 11B Illustrative Audit Case: Keystone Computers & Networks‚ Inc. Part III: Substantive Tests—Accounts Receivable and Revenue This part of the audit case illustrates the manner in which the auditors design substantive tests of balances. The substantive tests are illustrated for two accounts—receivables and revenue. This aspect of the audit is illustrated with the following audit documentation: • ABC’s risk assessment working paper that combines the auditors’ assessments of inherent and
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THE ARMY U.S. ARMY HEALTH CLINIC DUGWAY PROVING GROUND Dugway‚ UT 84022 MCXE-PMD-DPG STANDARD OPERATING PROCEDURE for OPTICAL SERVICES 9-0 1. PURPOSE: To establish policies and procedures for patients to obtain prescription eyewear. 2. SCOPE: This SOP is applicable to all personnel assigned or attached to the Optometry section and to all eligible patients seeking optical services
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3.2 Audit 3.3 Auditing 3.4 Auditee 3.5 Auditor 3.6 Audit client 3.7 Audit criteria 3.8 Audit findings 3.9 Audit plan | 8999991010 | 4.0 | Types of Auditing | 10 | 5.0 | Process of Auditing | 11 | 6.0 | Importance of Audit 6.1 For Business 6.2 For Owners 6.3 For Government 6.4 For General Public | 1313141617 | 7.0 | The Significance of Audit in Business | 18 | 8.0 | Qualification for being an Auditor in Bangladesh
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Professional and ethical issues c a S eS inc lu de d in t hiS Se ction 3 . . . . . . . . . . . . . . . . 3.1 A Day in the Life of Brent Dorsey Staff Auditor Professional Pressures 59 63 65 71 79 3.2 Nathan Johnson’s Rental Car Reimbursement Solving Ethical Dilemmas–Should He Pocket the Cash? Recognizing It’s a Fraud and Evaluating What to Do . . . . . . 3.3 The Anonymous Caller 3.4 WorldCom The Story of a Whistleblower . . . . . . . . . . . . . . . . . . . . . . . .
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