...EXTERNAL CORPORATE REPORTING ASSIGNMENT 1 2012 NAME: JYOTIKA RAJ S.I.D: 11015663 EXTERNAL CORPORATE REPORTING ASSIGNMENT 1 2012 NAME: JYOTIKA RAJ S.I.D: 11015663 http://www.xrb.govt.nz/Site/Financial_Reporting_Strategy/default.aspx In September 2011, the New Zealand Minister of Commerce announced a number of changes to the financial reporting framework. The Minister announced proposals to simplify the financial reporting framework for small and medium-sized businesses. The proposed reforms follow on from a review of the financial reporting framework which found that the framework was overly costly and not meeting users’ needs or expectations. The financial reporting obligations for small and medium- sized companies, that are non-issuers, have become over-complicated. The change will reduce the number of companies required to prepare general purpose financial reporting from 460,000 to less than 10,000, and is expected to cut business compliance costs by $90 million a year. This is a great opportunity to reduce the burden of compliance on the engine room of the New Zealand economy, whilst allowing accountants, managers and owners to focus more on business. However, the new framework will promote accountability of senior management and ensure people with an interest in the economic performance of a company can have confidence in the information they receive. The change will also be a welcome reduction in red tape for many businesses, but that it is important now...
Words: 1536 - Pages: 7
...be subject to external and independent oversight. As well as a “provision requiring auditors to evaluate the effectiveness of companies’ audit committees” (Sharp Paine & Eric Bettcher, 2006). On October 2002 there were four appointed members and two of them were Goelzer and Charles D. Niemeier who were both accountants that had served at the SEC (Sharp Paine & Eric Bettcher, 2006). Other two were Bill Gradison who was a former congressman, mayor, and businessman; and Gillan who was general counsel at California Public Employees’ Retirement System (CalPERS). All four of these new members have had extensive law experience. Identify Strengths and Weaknesses and Alternatives: The first thing that the board needed to do was set up offices and recruiting staff. Since there was no staff at first the board members took it among themselves to identify, interview, and hire new staff. A few of these new staff members included a director of registration and inspection as well as a director of human resources. In April of 2003 PCAOB received an official certification from SEC at which time there were about 30 employees with this organization. PCAOB was established by Congress in order to protect investors and the public interest by promoting accurate, informative, and independent audit reports. The PCAOB aims to improve audit quality, reduce the risks of auditing failures in the U.S. public securities market and promote public trust in both the financial reporting process and auditing...
Words: 1395 - Pages: 6
...Case Study 2: A Practical Guide to the New PCAOB Reporting Requirements Forensic Accounting: ACC-571 January 28, 2012 A Practical Guide to the New PCAOB Reporting Requirements Created by the Sarbanes-Oxley Act of 2002, the Public Company Accounting Oversight Board or PCAOB requires auditors of U.S. public companies be subject to external and independent oversight. Congress established the PCAOB in order to protect investors and the public interest by promoting accurate, informative, and independent audit reports. The PCAOB aims to improve audit quality, reduce the risks of auditing failures in the U.S. public securities market and promote public trust in both the financial reporting process and auditing profession. (PCAOB, 2012). During this case study I will justify how the reporting requirements of the PCAOB reduce the chance of financial fraud, illustrate the responsibilities of an auditing firm to detect fraud during the audit process, recommend alternatives to the PCAOB, and lastly prepare a sample timeline for PCAOB reporting. How the reporting requirements of the PCAOB reduce the chance of financial fraud: PCAOB necessitate senior financial managers to enforce a code of conduct (Advisory Report, 2003). The purpose of the code of conduct is to encourage honesty and ethical conduct, compliance to relevant regulations, and also promote full, accurate and timely disclosure in financial reports. As a result, the PCAOB reduces chances of financial fraud by ensuring...
Words: 1215 - Pages: 5
...replace CEO when appropriate Establish an overall compensation policy and monitor its implementation Identify the principal risks of the corporations business and ensure implementation and monitoring of systems to effectively manage these risks. Functions of the audit committee Suncor’s audit committee receives a score of 3. The reason for this is that their committee is composed of entirely independent auditors, they have a long list of standards to be followed specifically for internal and external controls, and lastly they also set out guidelines in which the audit committee should provide them with their Financial reports and public disclosure those guidelines are put in place in order for financial information set out to the public is accurate and timely and most importantly reliable. Imperial Oil also receives a score of 2. due to the fact that like Suncor they’re committee is composed of independent auditors. audit committee oversees the work of internal and external...
Words: 825 - Pages: 4
...1940's. In the 1940's, three guidelines to include General Standards, Standards of field work, and Standards of reporting. Each of these topics includes details as to the "flow" of the auditing process. After the Sarbanes-Oxley Act of 2002, (SOX), the regulations were increased with detail, and offered more insight as to the consequences of not following the "rules". The Public Company Accounting Oversight Board, (PCAOB), obtained more duties to assist in reviewing material relevant to auditing and auditors. One of the points one may find interesting is the importance of the regulations lack of required documentation. Rather than placing detailed requirements on included reports it lays a framework of guidelines of which to include, and what material needs to be disclosed. The main purpose for the regulations is to promote full disclosure and transparency, a common element which was missing prior. Commonly, many find the regulations to apply to for-profit and publicly traded organizations, however; many are inclusive for other organizations too. Island Ceremonies, is a non-profit outreach ministry, which has both internal and external audits. The difference is the requirements, some charitable non-profits based on size, and budget may not be required to have independent audits, however; internal audits are still required, and many, such as Island Ceremonies, have external or individual audits completed....
Words: 737 - Pages: 3
...Tyco. These companies were misrepresenting their financial reporting to investors and stakeholders to make themselves look more financially stable when in reality they were not. This misrepresentation resulted in huge financial losses and the mistrust of investors in the market. In order to better control financial reporting and restore investors trust, the SOX act was passed. Sarbanes-Oxley aims to enhance corporate governance and strengthen corporate accountability. It does that by: • formalizing and strengthening internal checks and balances within corporations • instituting various new levels of control and sign-off designed to • ensure that financial reporting exercises full disclosure • Corporate governance is transacted with full transparency. (Sarbanes-Oxley Essential Information) The Sarbanes-Oxley Act implemented new standards for financial reporting accountability in a way that CEOS could not pass on the blame to others. They cannot hide behind the “I was not aware of the company’s financial issues “reason anymore. Executives are now held responsible for any financial misrepresentation in their companies’ reporting. They are also held accountable for the design and implementation of new internal control to validate their financial records. Thus, they are responsible of making sure that an internal control report as well as an internal control assessment report is filed along their financial reporting. The SOX act contains 11 titles that describe specific...
Words: 849 - Pages: 4
...The auditing and accounting profession has various standards and regulations that must be followed. The standards and regulations were put into place to ensure that reports are unbiased and accurate. The Generally Accepted Auditing Standards create stipulations on the accuracy, consistency, and verifiability of the information. The Sarbanes-Oxley Act of 2002 and the Public Company Accounting Oversight Board has standards in place to regulate financial reporting and ensure accuracy. The Generally Accepted Auditing Standards is “a set of systematic guidelines used by auditors when conducting audits on companies’ finances, ensuring the accuracy, consistency and verifiability of auditors’ actions and reports” (Investopedia, 2012. p. 1). Following the guidlelines set forth by the Generally Accepted Auditing Standards allows auditors to reduce the chance of overlooking information. The Generally Accepted Auditing Standards are divided into three sections: general standards, standards of fieldwork, and standards of reporting. Each of these three sections has specific standards an auditor must follow for each step in the auditing process. The general standards address the auditor’s qualifications and the standards that are required. The general standards require that the audit must be performed by a qualified individual who has received the proper training. The auditor must be independent from the entity itself and must exercise due care. The field work standards give...
Words: 832 - Pages: 4
...audit is to ensure that the financial statements of the reporting entity give a true and fair view of the position of the entity’s affairs and to enable users of the financial statements to make relevant, economic decisions and understand the financial health of the company. The cost of performing audits is significantly high and that would be the advantage in hiring Uncle Ray as an auditor but the advantages are significantly lesser than the disadvantages. As a partner in the company, I would decline the proposal at it creates room for compromise in ethics due to the threat of familiarity. As the auditor would be related to one of the partners he may compromise on the completeness, accuracy and validity of the data leading to bad decisions and may also end up killing the company. An audit of a financial statement must be non-biased and should increase the degree of confidence of the intended users and hence must be carried by an external member who has no personal ties to any of the partners in the firm. Also, as the division of profits and losses depends on the financial statements it is necessary to ensure there is no deliberate misstatement of finances that benefits one of the three partners. 2. What would you strongly recommend? Give the basis of your recommendation. The purpose of the audit is to ensure that the firm’s accounts have been prepared in accordance with GAAP. It must be conducted by an impartial external auditor and the best case scenario would be to get an...
Words: 441 - Pages: 2
...1- What are the pressures that lead executives and managers to “cook the books?” In the 1990s, the telecommunication was rapidly growing which led WorldCom to adopt the strategy of purchasing small long distance firms with limited geographic service areas and consolidating carriers with large market shares. This was the company’s main key profit. Indeed, by adopting this strategy, WorldCom grew quickly by expanding internationally in South America, West America, Europe and Latin America. As a result of this, WorldCom became the leader in this industry. - The pressure that Ebbers put on his employees as he wanted by the number one stock in Wall Street by increasing the revenue. He demanded his employees to increase the revenues even if the long-term cost exceeds the short-term profit. As a result of this demand by Ebbers, executives and managers needed to show increasing in the revenues that they started cooking the books. - In July 2000, the U.S. Justice Department didn't allow WorldCom to merge with Sprint. Due to the refusal, the company was shocked and faced difficulties to find its way out. - Also, in 2000, the telecommunication industry began to fall apart as a result of the high competition along with the low demand. As new entrants began to enter the market, this led the prices to decrease further. Due to this, WorldCom faced a higher pressure to increase its revenues. Also. WorldCom struggled to maintain the same level of E/R ratio. - Moreover, WorldCom was faced...
Words: 1534 - Pages: 7
...Let first look at the definition of internal audits and external audits. Internal audit is a function that is performed by company employees; it is responsible for performing audits (both financial and non-financial) within a wide range of areas within a business, as directed by the annual audit plan. Internal audit look at key risks facing the business and what is being done to manage those risks effectively, to help the organization achieve its objectives. On the other hand External audit is an independent body which resides outside of the organization which it is auditing. Their main responsibility is to perform the annual statutory audit of the financial accounts, providing an opinion on whether they are a true and fair reflection of the company’s financial position. Audits are internal or external review of a company financial operation. Companies do not only require auditing to ensure accurate and reliable financial reporting, but also they are required by law to provide accurate and timely financial reports to their appropriate regulatory agency. Public corporations normally face more audits based on requirements from government regulatory agencies and stock exchanges. Also publicly held companies require more audits because investors and shareholders have a financial share in the company's financial returns. I think the federal laws should require internal audits to protect public because in publicly held corporations, the internal auditing function has been greatly...
Words: 487 - Pages: 2
...Abstract This research paper explores the creation of the Sarbanes-Oxley Act (SOX) and the role Enron played in its enactment. Specifically, this paper will explore and discuss the Enron crisis, emphasizing the legal and ethical accounting breaches committed by the company. The purpose of SOX and the methods used to address those breaches. A discussion of the major provisions of the act including: (1) Establishment of the Oversight Board commonly referred to as the Public Company Accounting Oversight Board (PCAOB) (2) Restrictions on non-audit services (3) Rotation of audit partners (4) Auditor reports to audit committees (5) conflicts of interests (6) CEO and CFO certification of annual and quarterly reports and (7) Internal control report and auditor attestation. The necessary requirements concerning internal control for public companies. A discussion of the types of services considered unlawful if provided to a publicly held company by its auditor. A discussion of the broader impact of the act on auditors. Lastly, a discussion from the legal and ethical viewpoint of the level of success the act has had in preventing cases such as Enron. The Sarbanes-Oxley Act and Enron In any contemporary discussion of corporate governance and the erosion of trust in business, one name is unavoidable: Enron. Enron has become an icon for corporate fraud on a massive scale going to the top of the corporate hierarchy. In any attempt to restore trust, two points will have to be acknowledged...
Words: 2205 - Pages: 9
...Exchange Commission. Barnes and Noble Inc., meet’s the SEC’s reporting requirements through the use of technology, internal disclosure controls, internal controls over financial reporting, and independent accounting auditors who verify that these controls are in place and working as intended. The SEC requires that Barnes & Noble posts all Interactive Data Files required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. After studying the proxy statement for Barnes & Noble, Inc., the filings show that historical SEC filings are listed by category for a variety of required reports, including forms 8-K, 10-Q, 10-K, and proxy statements. Barnes & Noble requires that SEC filings are signed by a senior management member like. In Barnes & Nobles case the 8-k SEC filing was signed by the Chief Financial Officer. This helps ensure that the filings are correct, comply with SEC reporting requirements, and are properly communicate to stakeholders in the management of Barnes & Noble, Inc. The organization uses internal auditing committee called the “Audit Committee “. The Audit Committee reviews the company’s financial reporting process on behalf of the Board of Directors. Barnes & Noble also uses and independent auditor that is responsible for expressing an opinion of conformity of the organizations audited financial statements to generally accepted accounting principles. The internal external auditors must review and discuss with senior management...
Words: 304 - Pages: 2
...1 Issues in Financial Reporting The path to knowledge cannot be found without visions and an overall picture. ± R. Mattessich oday's dynamic business environment is heralding a revolution in the need for, and the way in which, accounting data is utilized. This has resulted in talk of `an accounting revolution' (Beaver, 1998) and the possible `rede®nition of accountancy' (Elliott, 1998: 7). However, it is all too easy to become caught up in this stampede for change, but how far can accounting change and for it still to be called accounting? This chapter seeks to explore the major issues facing contemporary ®nancial reporting ± this will include its interrelationship with external auditing and the provision of assurance to those outside the reporting entity. After all, `[e]ffective reporting and accounting, and external scrutiny from auditors, are essential for effective corporate governance' (Company Law Review Steering Committee, 2001: para. 8.1). To understand the ®nancial statements, one needs to appreciate the auditors' work and opinion, and, conversely, to understand the auditors' work and opinion, it is necessary to appreciate the scope and limitations of the ®nancial statements. All too often, ®nancial reporting and external auditing are treated and discussed in isolation despite being inextricably linked. However, the ®nal ®gures in the ®nancial statements may come about as a result of negotiations between management and their auditors ± with the auditors examining...
Words: 6204 - Pages: 25
...Exchange Commission. Barnes and Noble Inc., meet’s the SEC’s reporting requirements through the use of technology, internal disclosure controls, internal controls over financial reporting, and independent accounting auditors who verify that these controls are in place and working as intended. The SEC requires that Barnes & Noble posts all Interactive Data Files required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. After studying the proxy statement for Barnes & Noble, Inc., the filings show that historical SEC filings are listed by category for a variety of required reports, including forms 8-K, 10-Q, 10-K, and proxy statements. Barnes & Noble requires that SEC filings are signed by a senior management member like. In Barnes & Nobles case the 8-k SEC filing was signed by the Chief Financial Officer. This helps ensure that the filings are correct, comply with SEC reporting requirements, and are properly communicate to stakeholders in the management of Barnes & Noble, Inc. The organization uses internal auditing committee called the “Audit Committee “. The Audit Committee reviews the company’s financial reporting process on behalf of the Board of Directors. Barnes & Noble also uses and independent auditor that is responsible for expressing an opinion of conformity of the organizations audited financial statements to generally accepted accounting principles. The internal external auditors must review and discuss with senior management...
Words: 340 - Pages: 2
...people have a chance to make investment decisions for the future. B. An audit of internal control is vital for the investing public because it assures them that there is no corruption and that their money is safer. Before 2002 auditors weren’t required to test internal controls, which lead to huge controversy over the collapse of several big time companies. Now, auditors serve somewhat as investigators to make sure internal controls are correctly doing their job. It is also management’s responsibility to assess and report the quality of its internal controls over financial reporting. C. An audit committee is responsible for hiring and firing an audit firm. The audit committee is established by a company as an independent subcommittee under the board of directors to provide oversight for audit functions. Because this committee is independent, it reduces any possible risk of bias when they elect the external audit. 1-40 A. I agree, auditors serve as investigators to detect any sort of fraud. B. Disagree, that would become an independent issue because nobody knows the relationship between the manager and auditor. C. Disagree, the Red Cross is not a publicly traded company. D. Disagree, although a difficult position, the requirements of the auditor can and most certainly...
Words: 1481 - Pages: 6