If business breaks rules of accounting and ethics, it may be subject to legal sanctions against it. It can deliberately deceive lenders with their investors and their financial reports with false or misleading numbers. It is where audits come in. Auditing is one of the means to minimize misleading financial reports. Auditor of CPA is like a patrol officer on a highway that enforces traffic laws and issues tickets to maintain minimal speedup. I did not recognize the project to discover the problem in the examination of the audit.
After completing the audit review, the CPA has issued a short report indicating that the company has prepared the financial statements in accordance with generally accepted accounting principles (GAAP) or all companies that are listed are independent You must undergo an annual audit by a certified public accountant. The company lists shares, NYSE stock exchange Nasdaq audit, external audit. In the case of listed companies, the cost of implementing an annual audit is the cost of doing business; this is the price that the company pays for its capital to enter the open market for its shares to have trading in public places .
Federal law does not require auditing for private enterprises, but banks and other lenders to private companies may insist on audited financial statements. If the lender does not need an audit statement, the owner of the business needs to decide whether the audit is a good investment. Instead of an audit that they can not actually do, many small businesses look into accounting methods and even if CPA periodically comes in to give advice on financial reporting, however, the certified public accountant performs an audit Unless it is he or she should be very careful not to express an opinion on the external financial statements. Without careful consideration of the evidence supporting the amounts reported in the financial statements, the CPA shall state its opinion on the financial statements prepared from the business account
What is an accounting fraud?
Accounting fraud, corporate profit performance can constitute deliberate and fraudulent fraud of sales and / or expenses records, in order to ensure that it appears better than the actual How many companies do What is that:
- There is no mention of prepaid expenses or other supplementary assets
- does not indicate a specific classification of current assets and / or liabilities
- collapse short term and long term debt to one amount.
Recording excessive sales revenue is the most common method of accounting fraud. The business may ship the product to customers who did not order, knowing that their customers will return the product after the end of the year. Until returns are made, the business records the shipment as if it were actual sales. We will also fill in the channels involved in the business. It provides products to dealers and end customers what they do not really want, but the business returns to the products whose dealers and customers are against objecting to the early delivery of the product also the delay is recorded We accepted avoidance from customers who were made up for revenue from sales of these offsets until the end of consolidated fiscal year
Another way for a business to commit an accounting fraud is to record expenses such as not recording depreciation expenses. Or you can choose not to record all cost of sales of sales made during the project period. Although this will increase gross margin, the inventory assets of the business includes products that are not actually in stock because they were delivered to customers.
The business may also choose not to record the loss of assets that should be recognized as such uncollectible accounts receivable, or it may be that co-business is also responsible for making its own balance sheet discreet , You may not record the full responsibility for the cost. Therefore, its benefit will be exaggerated.
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