Accounting Standards and Auditing Techniques

601 Words Jan 13th, 2018 2 Pages
A comparison of two companies in the same industry can illuminate the importance of this tool while also producing other relevant and practical information. The purpose of this paper is to compare two pharmaceutical giants within the industry, Merck and Novartis, to demonstrate the applicability of accounting and auditing standards. Merck is, according to their website, " Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products worldwide." This company is part of the pharmaceutical industry which is a very strong and influential industry. Novartis is also in this industry and is a competitor of Merck. Both Novartis and Merck's accounting standards arise from the Generally Accepted Accounting Principles (GAAP). These principles are a set of rules and practices having substantial authoritative support. GAAP is the standards that companies use to compile their financial statements such as the income statement, balance sheet, and statement of cash flows. GAAP is composed of many small rules, covering many types of accounting transactions, issued over a long period of time. FASB, the Financial Accounting Standards Board, issues new GAAP rules called Statements of the Financial Accounting Standards (SFAS). GAAP rules are quite powerful over business transactions…