Essay about Who Signs Your Check Group Project 2

First and foremost, the accounting system used should be updated. The case stated that the system was 30 years old and that prior accounting period transactions could not be locked down, which enabled internal control processes to be bypassed. Enhancing internal

Edmonds, T., Tsay, B., & Olds, P. (2011). Fundamental Managerial Accounting Concepts (6th ed.). New York, NY: McGraw-Hill/Irwin.

The mission of the PCAOB is to oversee audits of public corporations to protect the interests of the investor and ensure the audits are conducted

AICPA Code of Professional Conduct principles prevents vises such as fraud that are experienced in accountancy field. Audit is the best measure of the effect of the fraud that are imposed to investors by accountants. The relationship of the investors and account holders are supposed to be affirmed through auditing to ensure accounting principles are upheld(Weirich, Pearson, & Churyk, 2010). Improper loss of the funds through propagation of the accountant officer should be treated as fraud and criminal activity that should lead to prosecution. Therefore, the paper seeks to relate two fraud cases that have been audited and presenting AICPA Code of

Anwer S. Ahmed Ernst & Young Professor of Accounting Texas A & M University Scott Duellman Assistant Professor of Accounting St. Louis University March 2012

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:

The Audit Committee of the Board of Directors hired an independent public accounting firm, KPMG LLP, to audit PepsiCo’s internal control over financial reporting, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). PepsiCo’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s

The auditor’s responsibilities are to audit annual financial statements and internal controls over financial reporting, and reports from the 10-Q quarterly reports. The auditor must also advice on new accounting pronouncements, and consolidating financial statements. (Intel Proxy Statement 2011, 48)

Gilbertson, C. B., & Lehman, M. W. (2011). Century 21 accounting: General journal, 2012 copyright update. Mason, Ohio: South-Western.

The revenue recognition principle according to Weygandt, Kimmel and Kieso (2009), "dictates that companies recognize revenue in the accounting period in which it is earned." The reporting of revenue generally affects not only the results of the operations of a given entity but also its financial position. In that regard, the relevance of understanding both the concepts as well as practices of revenue recognition cannot be overstated. In the words of Nikolai, Bazley and Jones (2009), "revenues should be recognized when (1) realization has taken place, and (2) they have been earned."

Stallworth and Degregorio (2004) indicated the role of internal auditors to fully understand the revenue management practice to

• Chapters 10 and 11 from Advanced Accounting, 11th edition Fischer, Taylor and Cheng. You can purchase these chapters as PDFs from:

Revenue is very important because it is used by investors in assessing a company’s financial performance of the company and to see if that investor

External and internal auditor had different objective this is the external auditor seeks to test the underlying transaction that form the basis of the financial statements whereby the internal auditor seek to advice management on whether its major operations have sound system of risk management and internal controls or in the other words, internal auditor verify corporate operational activity based on documented policies and procedures to determine whether business objective (profitability and regulatory compliance) will achieve and the answer to the entity’s’ governing board or management and external auditors provide reasonable assurance that managements’ assertions over the subject matter (financial statement, compliance) is fairly stated in all material aspects by either error or fraud and they must be independent.

The role of internal audit is to provide independent declaration that an organization’s threatadministration, governance and internal control processes are functioning effectively. Internal auditors deal with concerns that are essentially important to the existence and success of any organization. Unlike external auditors, they aspect beyond financial possibilities and statements to reflect wider problems such as the organization’s reputation, development, its power on the location and the approach it treats its organizations.In summary, internal accountantssupport organizations to thrive.