Foamex International Inc. Essay

1331 WordsJun 3, 20136 Pages
1. The final responsibility for the integrity of an SEC registrant’s internal controls lies on the management team. U.S. companies need to refer to a comprehensive framework of internal control when assessing the quality of financial reporting to determine that financial statements are being presented under General Accepted Accounting Principles, GAAP. The widely used framework is referred as COSO, Committee of Sponsoring Organizations of the Treadway Commission, sponsored by the following organizations American Accounting Association, the American Institute of CPA’s, Financial Executives International, the Institute of Internal Auditors, and the Institute of Management Accountants. COSO’s defines internal control as: A process,…show more content…
Investigation and discipline of registered public accounting firms for violations of relevant laws or professional standards. For nonpublic companies auditing guidance are issued by the American Institute of Certified Public Accountants, AICPA. Prior to PCAOB, AICPA served as the primary governing body of public accounting profession. Since the roles have changed with PCAOB regarding the auditing standards for public companies, the AICPA is still developing standards for the nonpublic companies. The organization has developed four fundamental principles that govern an audit conducted in accordance with GAAP. The principles are: 1. Purpose of an Audit and Premise Upon Which an Audit Is Conducted a. The purpose of an audit is to enhance of confidence in the financial statements. An auditors opinion validates this purpose. b. An audit is based when management prepares the financial statements, maintain internal control over financial reporting, and provide relevant information and access to the auditor. 2. Responsibilities a. Auditors having the appropriate competence and capabilities to perform the audit, and follow ethical requirements, and maintain professional skepticism throughout the audit. 3. Performance a. Reasonable assurance that the financial statements are free from error or material misstatement. b. Obtaining assurances requires that the auditor to plan and

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