Evidence from Auditors About Managers’ and Auditors’ Earnings Management Decisions

Is earnings management good or bad? Who (or which part of corporate governance mechanisms) is responsible to constrain earnings management? To what extent can the auditor constrain earnings management? Propose some methods for the auditors to detect and constrain earnings management. Does market react to firm's earnings management behavior? In order to discuss earnings management and what its affects are on business and whether or not it's a good thing, one must first understand what earnings management

and will obtain their information from asking the management a variety of questions rather than obtaining an understanding of the internal control structures and obtaining evidential matter throughout inspection, observation or confirmation as an audit process requires. Upon completion of the process the accountants will issue an opinion providing limited assurances on the fair presentation of the financial statements. This limited assurance opinion is different from

tools to inform investors and other stakeholders about management’s performance. However, accounting standards permits management to use judgment in financial reporting methods for some accounts as they have best knowledge of its business so it can choose accounting alternatives that suit their business. With ability to choose its preferable reporting methods, estimates and disclosure, this flexibility creates opportunity for managers to distort earnings in which they adopt accounting methods that do

Accounting Horizons Vol. 21, No. 2 June 2007 pp. 165–187 Auditor Communications with the Audit Committee and the Board of Directors: Policy Recommendations and Opportunities for Future Research Jeffrey Cohen, Lisa Milici Gaynor, Ganesh Krishnamoorthy, and Arnold M. Wright SYNOPSIS: To contribute to the Public Company Accounting Oversight Board (PCAOB) project on auditor communications with audit committees and boards of directors, we present in this paper a review of relevant academic literature

Matter? Janice Rhodora P. Carpentero La Salle University and Eljoy Delos Santos La Salle University May 22, 2013 Does Auditing Matter? SUMMARY: The scrutiny auditing has received post-Enron provides compelling evidence that auditing does matter, to answer the rhetorical question posed by the paper’s title. What is unclear, however, is whether auditing was sufficiently “broken” in the first place to warrant the radical reforms and changes effected by the Sarbanes-Oxley

The purpose of the memo is to describe the auditor 's responsibility to consider fraud in financial statements by following eight steps to make sure the financial statements are free of material misstatement. The memo begins with an elaboration of fraud and the concepts related to it. A list of the steps is then provided before finally giving an outline of the various generic red flags of fraud that can act as a lead to the auditor in identifying fraud. Fraud is misappropriation and misuse of the

1.0 Introduction This assessment required students to take the role of an audit manager that is currently employed with Deep Breath LCC, a medium sized national accounting firm. This particular firm offers auditing services as well as tax services. The main purpose of my role as the audit manager is to decide and justify reasons on a new audit client acceptance. The process of accepting a new client is not a simple procedure especially during this phase where the public accounting environment is

In any business operations, full financial disclosure refers to the provision of the necessary information about a company for better decision making by the people accustomed. It is the financial revelation of a given company. There are some financial disclosures in any business that ensure proper understanding of financial statements to the financial readers, or potential auditors. Examples are the annual financial reports and the financial declarations of the company. The annual financial reports

Amortization Versus Impairment of Goodwill: Impact on Accounting Quality, Financial Statements’ Economic Value, Investors, and Auditors Accounting Standards Codification (ASC) replaced all U.S. financial accounting standards in July 2009. Consequently, ASC 350, Intangibles – Goodwill and Other, replaced SFAS 142, Goodwill and Other Intangible Assets in September 2011. Under ASC 350, goodwill must be periodically tested for impairment. Goodwill impairment is determined through a two-step process

that SAS (Statement on Auditing Standards) No. 82 and SAS No. 99 had on audit programs and the analysis from external auditors. Thirteen scholarly journals were