...MEMORANDUM TO: Accounting Staff FROM: Junior Accountant DATE: September 23, 2013 SUBJECT: Replacement of SAS 112 with SAS 115 The American Institute of CPAs (AICPA) Statement on Auditing Standards (SAS) Number 115 supersedes SAS Number 112. Going forward, auditors are to use rule SAS 115 when performing internal control audits. The rules have some similarities. However, the key differences in the rules are the definitions for control deficiency, significant deficiency, and material weaknesses. The change in rules also creates more opportunities for accounting firms to offer services. Similarities between SAS 112 and SAS 115: Similarities exist between SAS 115 and SAS 112. The rules require auditors to look at deficiencies found during an audit. The auditor must continue to identify the deficiencies found as significant deficiencies or material weaknesses.1 SAS 112 and SAS 115 require auditors to determine if internal controls can prevent and detect errors. Management receives written communication of the findings, as before. Both rules require management to become more aware of the weaknesses in the organizational internal controls. The differences in rules SAS 112 and SAS 115 are as significant as the similarities. Differences between SAS 112 and SAS 115: The differences between SAS 112 and SAS 115 are subtle but important. The major difference between the two rules is the definition of control deficiency, significant deficiency, and material weakness...
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...Learning Team A Accounting Firm Memo To: Accountants From: Date: 1/28/2013 Re: New SAS 115 Rules New SAS 115 Rules The purpose of this memo is to inform you of the new auditing rules described by SAS 115. The Accounting Standards Board issued Statement on Accounting Standards (SAS) 115. This regulation is an amendment to and replaces SAS 112. The new regulation kept the same name as the previous regulation. The name of the regulation is Communicating Internal Control Related Matters Identified in an Audit. Per the American Institute of CPAs website, “SAS 115 requires the auditor to make communications, in writing, to management and those charged with governance regarding significant deficiencies and material weaknesses in internal controls that you note in your audits.” What changed? SAS 115 amends and replaces SAS 112. Noteworthy changes in SAS 115 include new definitions of material weaknesses and significant deficiency. The new definitions as described in SAS 115 are listed below. Material Weaknesses: “A deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.” In SAS No.112 material weakness’ definition stated “more than a remote likelihood” that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis...
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...Memorandum To: Accounting department From: Juanita Mendoza – Junior Accountant Date: September 03, 2012 Subject: SAS 115 - Statement on Accounting Standards CC: Learning Team B SAS No. 115 was issued by the Auditing Standards Board to provide guidance to auditors with respect to what should be communicated to management and those charged with governance in an organization. SAS No. 115 requires the auditor make communications, in writing, to management regarding significant deficiencies and material weaknesses in internal controls that you note in your audits SAS No. 115 supersedes SAS No. 112 because it clarifies standards and provides guidance on communicating matters related to an entity’s internal control over financial reporting (internal control) identified in an audit of financial statements. The new SAS No. 115 is going to affect us in three different ways: 1. It defines three categories of control deficiencies that may be identified during the external audit of the financial statements: control deficiencies, significant deficiencies and material weakness. 2. It provides guidance on evaluating the severity of the deficiencies identified 3. It requires the auditor to communicate in writing to managements and those charged with governance any significant deficiencies or material weaknesses that were identified SAS No. 115 includes much of what was outlined in SAS No. 112 as it provides guidance to enhance the auditor's ability to evaluate deficiencies...
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...CPA’s Date: Re: SAS 112- Statement of Accounting Standards In May of 2006, the AICPA Auditing Stands Board published the SAS-112 in previous years there where changes made to the auditing standards that had an effect on the auditing procedures performed on financial statements. The new standards of changes are described in SAS-112. This memo will clarify the requirements of the new standards and how it will affect your business. The terms below are defined in SAS-112 and explain how they affect the auditing standards: * A control deficiency exists when the design or procedure of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. * A deficiency in design exists when a control necessary to meet the control objective is missing, or the control is not properly designed so that even if it operates as designed, the control objective is not always met. * A deficiency in operation exists when a properly designed control does not operate as designed or the person performing the control does not possess the necessary authority or qualifications to perform the control effectively. * A significant deficiency is a control shortage or a combination of control shortages that adversely affects the entity’s ability to initiate, authorize, record, process or report financial data reliably in accordance with generally accepted accounting principles such...
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...Memorandum To: Accountants From: junior accountant Date: October 22, 2012 Subject: SAS 115-Statement on Accounting Standards SAS 115 was issued by the Auditing Standards Board to provide guidance to auditors on what should be communicated to management and those in charge of governance within an organization. The SAS 115 requires the auditor to make communications, in writing, to management regarding imperative deficiencies and material weakness in internal controls that are noted in audit reports. It clarifies standards and provides guidance on communicating matters related to an entity’s internal control over financial reporting identified in an audit of financial statements. The new SAS No. 115 is going to affect this department in three different ways: 1. It defines three categories of control deficiencies that may be identified during the external audit of the financial statements: control deficiencies, significant deficiencies and material weakness. 2. It provides guidance on evaluating the severity of the deficiencies identified. 3. It requires the auditor to communicate in writing to managements and those charged with governance any significant deficiencies or material weaknesses that were identified. SAS No. 115 includes much of what was outlined in SAS No. 112 as it provides guidance to enhance the auditor's ability to evaluate deficiencies in internal control identified during an audit, and then communicate those deficiencies that the auditor believes...
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...Accountants From: Team B Subject: Statement on Auditing Standards (SAS) 112 and 115 Notification Changes have been made regarding the rules that must be followed by auditors. The purpose of this memo is to provide an outline of the changes and explanation on how the changes will impact our valued clients. As accountants, understanding the Statement of Auditing Standards (SAS) No. 112 and the superseding SAS No. 115 is extremely important as they may affect our audit results and findings. This internal memo is being distributed to all accountants in our office to provide information related to the new changes in standards and to show how the changes my affect you (AICPA, 2009). SAS No. 115 has replaced SAS No. 112 effective on or after December 15, 2009. SAS No. 115 was designed to bring awareness of deficiencies in internal controls and to assist in reducing the risks of financial statement misstatements. SAS No. 115 also provides guidance on how to assess whether a deficiency in internal controls is a compelling deficiency or materials weakness. The auditor will evaluate the identified controlled deficiencies and decide if the deficiencies are significant or material. The main difference between SAS No. 112 and SAS No. 115 are the definitions of significant deficiency and material weakness (AICPA, 2009). SAS No. 112 defined significant deficiencies as "more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential...
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...Group Learning Team A Date: 10/13/2014 Re: Challenges Communicating Accounting Changes The issuance of SAS No. 112 in 2006 and SAS No. 115 in 2009 by the AICPA created the need to communicate significant audit procedure changes to our clients, as well as to our own firm accountants. SAS No. 115 supersedes SAS No. 112. Due to SAS No. 115, significant changes need to take place in order to comply with the new accounting principles. Specifically, internal company controls have become a major focus of the standard audit procedures. Each of the three groups experienced certain challenges regarding the requirements of the new directive. Specifically: 1- Firm Accountants - The new audit requirements has compelled our audit staff to redesign our traditional procedures on issues outside the financial statements. Our staff maintains a high competency regarding the financial statements themselves, but the requirement to review company financial controls and procedures has significantly changes and requires us to reinforce our staff training as many of the younger staff are confused. The younger staff has little experience with how companies run operationally, and they are now being required to judge the quality of these operations. A series of training regarding best practice financial controls is recommended to bolster the staff's ability to complete the audits per the new directive. 2- Clients - The new requirements force companies to spend time in interviews with clients...
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...The recent release of the Statement of Accounting Standards No. 112 regulation made it necessary to communicate the standard and its impacts to the accountants within the firm. It was also imperative to make our key clients aware of the regulation and how it might affect their business. Finally, to ensure seamless compliance with the regulation, we are educating our clients’ bookkeepers of the regulation and its ramifications on their duties. When accounting standards are updated, the changes often must be communicated to several different audiences, as demonstrated by this change. Communicating this information to different audiences presents several challenges that need to be carefully navigated. One challenge that exists when communicating to different audiences is that they have a need of different levels of information. In the example here, our client’s senior leaders need to possess a high level understanding of the change so that they can properly manage the new expectations that their staff will need to follow. The bookkeepers will need to understand the implications to their job functions. The firm’s accountants, however, will need to understand the full breadth of the regulation to ensure compliance to the new standard. A second challenge is the need to understand the knowledge base of audiences that are being addressed. Not every audience will possess the same understanding of accounting. As a result, the materials delivered to different groups must be tailored...
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...Case 11.1: The Runners Shop Relevant Guidance • AU 339 (SAS 103): Audit Documentation • Auditing Standard No. 3: Audit Documentation • International Standard on Auditing 230’ (Revised) (Site -http://irba.co.za/documents/doc_00535.pdf ) Questions 1] Describe the purposes of audit documentation and explain why each purpose is important. According to AU 339.03, “audit documentation provides the principal support for the”: (a) “representation in the auditor’s report that the auditor performed the audit in accordance with GAAS”, and (b) “opinion expressed regarding the financial information or the assertion to the effect that an opinion cannot be expressed”. AU 339.04 goes on to state that this “audit documentation is an essential element of audit quality” and AU 339.05 further states that “audit documentation is the record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached”. Thus individuals can review the audit documentation to see that the audit was performed in accordance with GAAS, they can identify the reasons for the auditor’s opinion, and they can evaluate the quality of the audit. Paragraph 8 of AU 339 provides a list of additional purposes of audit documentation: • The audit team will use audit documentation to help plan and perform the audit. It is necessary to plan the audit so that the audit team is aware of the work that needs completed and they have a better idea of how long the engagement...
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...year because of employee fraud. Every organization needs to have a plan in places for fraud detention. In preventing fraud in the work place, a good strategy for any organization is to implement internal control. These are plans; programs and procedures put in place to safe guard the company assets, and ensure the integrity of its accounting records. As prevention fraud is much easier than recovering losses after a fraud has been committed. This study will focus on the case of Stanford Financial Group Company fraud in which Robert Allen Stanford, chairman of Stanford International Bank (SIB), was involved in a Ponzi scheme. Stanford was convicted of orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion form SIB to finance his personal businesses. The Stanford Financial Group claimed to have pulled in retail, wealthy and commercial investors from 136 countries on six continents. Lopez and Kuhrt was aware of what Stanford was doing but kept the information hidden from the public and from almost all of Stanford’s employees for they would not be able to discovery what was going on. The chief accounting Officer Gilbert T. Lopez Jr., were also involved in the fraud. Both Gilbert T. Lopez Jr., and Kuhrt was aware of the scheme and neither one of them came forward with the information. Doing the trail, more...
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... AU Section 325 Communicating Internal Control Related Matters Identified in an Audit (Supersedes SAS No. 112.) Source: SAS No. 115. Effective for audits of financial statements for periods ending on or after December 15, 2009. Earlier implementation is permitted. Applicability .01 This section establishes standards and provides guidance on communicating matters related to an entity's internal control over financial reporting identified in an audit of financial statements. It is applicable whenever an auditor expresses or disclaims an opinion on financial statements. In particular, this section • • • defines the terms deficiency in internal control, significant deficiency, and material weakness. provides guidance on evaluating the severity of deficiencies in internal control identified in an audit of financial statements. requires the auditor to communicate, in writing, to management and those charged with governance,1 significant deficiencies and material weaknesses identified in an audit. .02 This section is not applicable if the auditor is engaged to examine the design and operating effectiveness of an entity's internal control over financial reporting that is integrated with an audit of the entity's financial statements under AT section 501, An Examination of an Entity's Internal Control Over Financial Reporting That Is Integrated With an Audit of Its Financial Statements. Introduction .03 Internal control is a process—effected by those charged with governance, management...
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...Economy Series, Issue 2/2013 IMPROVING MANAGEMENT ACCOUNTING AND COST CALCULATION IN DAIRY INDUSTRY USING STANDARD COST METHOD Bogdănoiu, Cristiana-Luminiţa Assistant, Ph.D. Student Spiru Haret University, Faculty of Financial Accounting Management Craiova and University of Craiova, Faculty of Economics and Business Administration, Craiova e-mail: cristiana.bogdanoiu@yahoo.com Abstract This paper aims to discuss issues related to the improvement of management accounting in the dairy industry by implementing standard cost method. The methods used today do not provide informational satisfaction to managers in order to conduct effectively production activities, which is why we attempted the standard cost method, it responding to the managers needs to obtain the efficiency of production, and all economic entities. The method allows an operative control of how they consume manpower and material resources by pursuing distinct, permanent and complete deviations during the activity and not at the end of the reporting period. Successful implementation of the standard method depends on the accuracy by which standards are developed and promotes consistently anticipated calculation of production costs as well as determination, tracking and controlling deviations from them, leads to increased practical value of accounting information and business improvement. Key words: standard cost method, calculation, deviations, effective costs, standard costs. JEL Classification: M40, M41 Introduction...
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...A GUIDE TO FORENSIC ACCOUNTING INVESTIGATION THOMAS W. GOLDEN, STEVEN L. SKALAK, AND MONA M. CLAYTON JOHN WILEY & SONS, INC. A GUIDE TO FORENSIC ACCOUNTING INVESTIGATION THOMAS W. GOLDEN, STEVEN L. SKALAK, AND MONA M. CLAYTON JOHN WILEY & SONS, INC. This book is printed on acid-free paper. Copyright © 2006 by PricewaterhouseCoopers LLP. PricewaterhouseCoopers refers to the individual member firms of the worldwide PricewaterhouseCoopers organization. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this...
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...methodology for risk quantification 71 CHAPTER 9- Assessment methodology for assignment of exposures to exposure classes 90 CHAPTER 10- Assessment methodology for stress test used in assessment of capital adequacy 93 CHAPTER 11- Assessment methodology of own funds requirements calculation 96 CHAPTER 12- Assessment methodology of data maintenance 102 CHAPTER 13- Assessment methodology of internal models for equity exposures 106 CHAPTER 14- Assessment methodology for management of changes to rating systems 111 CHAPTER 15- Final provision 112 1. General Rules * Proportionality Principle: Competent authorities, to the extent appropriate, shall apply additional methods which are relevant to the nature, size and degree of complexity of the institution´s business and organizational structure. * Quality: * Is it approved at the appropriate management level? * Are there policies in place outlining specific standards to ensure high quality of internal documentation?...
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...UNIVERSITY Use of Theses This copy is the property of the Edith Cowan University. However the literary rights of the author must also be respected. If any passage from this thesis is quoted or closely paraphrased in a paper or written work prepared by the user, the source of the passage must be acknowledged in the work. If the use desires to publish a paper or written work containing passages copied or closely paraphrased from this thesis, which passages would in total constitute an infringing copy for the purposes of the Copyright Act, he or she must first obtain the written permission of the author to do so. USERS AND ACCOUNTING INFORMATION PREFERENCES OF GOVERNMENT DEPARTMENT FINANCIAL REPORTS by Helen R Mignot B (Bus) A thesis submitted in partial fulfilment of the requirements for the award of Master of Business (Accounting) at the Faculty of Business Edith Cowan University Date of Submission: 05 February 1996 ACKNOWLEDGMENTS AND DEDICATION I wish to thank all those who provided...
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