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Accounting Exam 2

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adequate documents and records adequate segregation of duties analytical procedures e authorization change in methods or estimates with full disclosure change in methods or estimates with no discloser confirmation e constraints on auditors constraints on management custody of assets disagreements in judgements earnings management continuum errors fectitous transactions fraudulent financial reporting income smoothing independent checks on performance internal control

documents, easily understood, formated to be handled quickly and effectivly authorization, record keeping, custody of assets, not one individual give you ratios from one period to the next. give clue were to investegate. approving the sale of a building or land change estimates on bad debts

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interviews

interview employees to see procedures are understood, proper documentation is made, proper authorization is obtained. fraudulent reporting, accounting practices not allowed by GAAP ensure accounting records agree with physical records the use of physical safegaurds. Protecting assets in fireproof, guards, fences, remote control cameras only certain, higher level, people are authorized to enter data into accounting records and prepare accounting reports established to oversee the certification of auditors recording the transactions in the accounting records select random transactions and see if they are reliable public company accounting oversight board, constraints on auditors, constraints on management SEC oversight responsibility and control over companies issuing financial statements and their external auditors key transaction completed quickly or delayed, depending on what quarter its needed in

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non-GAAP acounting observation physical control over assets and records proper procedures for authorization public company accounting oversight board record keeping sampling Sarbanes-oxley act sarbanes-oxley act strategic matching

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change interst rates without explaining in notes, leads rewaders of finicial reports to be mislead banks are contacted to get loan amounts then contact customers to see if they match strictor rulers to insure external auditors maintain independence provisions to make CEOs and CFOs personally resnoable for reliable finacial statementss having control of assets, having the key to a safe. ...

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strategic matching, change in methods or estimates with full disclosure, change in methods or estimates with no discloser, non-GAAP acounting, fectitous transactions ... outright fraud. making up transactions and customers ...

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timing recognition of revenures and expenses to even out the amount of reported earnings from one year to the next checking on the other controls, aduitors, Ex: having someone go on vacation and someone else take job, random rotations. policies and procedures established to provide reasonable assurance that specfic entity objectives will be achieved

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