Chapter 4 Flashcards
(11 cards)
Subjective judgements made by accountants on how to apply GAAP
- Judgements on Account Measurement
- Judgements on quality of accounting information
- Judgements on if accounting information is verifiable, compatible, understandable
Two additional documents attached to financial statements
- Auditors Report
2. Managements Responsibility for Financial Statements
Non-current assets
PPE
Long-term investments
Intangible Assets
Account form balance sheet
Assets next to Liabilities and Equity
Report form
Assets above liabilities and equity
Auditors Report
Report written by an auditor
- Indépendant auditors Report
- Addresses the board with date
- Summary of information reviewed in audit
- Summarizes managements responsibilities and standards
- Summarizes auditors responsibilities and standards
- Summarizes his methods/procédures for audit
- Says if adequate financial information given for audit
- Declares if he feels financial statements are accurate and truthful and if the uphold GAAP standards
- Signs and dates
Audit
External analysis of companies financial information and its system of internal controls
Internal controls
Processes implemented by company to direct, monitor and measure if their objectives are being met
Unqualified auditors Report
Financial statements are truthful
QualifiedAuditors Report
Financial documents not truthful
Managements Responsibility for financial statements
- Title
- Management states their responsibility for statements and disclosure
- Management states responsibility for estimates and internal controls
- Board of director and auditors roles explained
- Management states their resp. to oversee the management of the company in a legal and ethical way.
- Officer responsible for financial affairs dates and signs
