...3 KEY TAKEAWAYS * Basic data is created at the enterprise (client) level. General data is at the client level and is therefore the same for the entire enterprise. Purchasing data is created at the purchasing organization level. MRP’s are created at the plant level. * A company code is the smallest organizational unit for which accounting can be carried out. The balance sheet and income statement are generated at this level. With no cost center, there would be no accounting data. * The Organizational Structure for Financial Accounting (FI) consists of Client (entire enterprise), Company Code, and Credit Control Area. * The Material Management Organizational Structure consists of Client, Company Code, Plant, Valuation Area, Storage Locations, Purchasing Organization, and Purchasing Group. * Reconciliation Accounts are part of the General Ledger. Examples are Accounts Receivable (customers) and Accounts Payable (vendors). Entries to these accounts are system generated. * Account Groups include Balance Sheet Accounts, Reconciliation Accounts, and Income Statement/Profit and Loss Accounts. They are grouped by similar characteristics. * The Vendor Master can be created in accounting or in purchasing. The vendor master can also be created centrally, in which it will be created in both accounting and purchasing. * The Fiscal Year Variant determines the organization’s fiscal year. For example, K1 = Calendar year and one closing...
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...NOTE AUDIT REPORT AND WORKING PAPERS OF M/s Global Industries, 609-560/1 & 2, Jigani Industrial Area, Bangalore – 562 106 UNDER EA - 2000 (AUDIT PERIOD: Sept 2011 to Sept 2012 Auditors Shri S.P.Vasan, Superintendent (Audit) and Shri Bhanu Srinivas, Superintendent (Audit) SUPERVISION & GUIDANCE Shri Shrawan Kumar, Addl.Commissoner (Audit) Shri B.N.Ramesh, Asst.Commissioner(Audit) CENTRAL EXCISE BANGALORE – I COMMISSIONERATE WORKING PAPERS TO BE USED WITH STANDARD AUDIT PROGRAM FOR UNITS PAYING ANNUAL PLA REVENUE MORE THAN RS. 1 CRORE. (Approximate period of audit inclusive of preparation – 10 working days) INSTRUCTIONS FOR FILLING UP THE WORKING PAPERS 1. Each part of the Working Paper (starting from Part C) should be filled up on completion of the relevant audit step. The date on which such part is completed and Working Paper filled should be mentioned. Part A& B can be filled up at the end before submission of the Working Papers. 2. The completed Working Papers must be submitted by the audit team with the draft Audit Report (prepared as per proforma given in Annexure N in Part IV) forming the top sheet. 3. Copies of supporting documents/records/evidences referred to in the Working Papers must be annexed at the end. Each of the copy should be cross-reference to the relevant entry in the Working Paper. 4. The Working Papers form the basis...
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...About CGG The Centre for Good Governance (CGG) was established by the Government of Andhra Pradesh (GOAP) in October 2001 to help it achieve the goal of ‘Transforming Governance’. Besides supporting the design and implementation of GOAP’s Governance Reform Programme, CGG undertakes action research, renders professional advice, and conducts Change Management and Management Development Programmes for Government departments and public agencies to help them implement their reform agenda. The Finance Department, GOAP entrusted the project ‘Framework for Preparation of Asset Register’ to CGG under IDF grant for strengthening public financial management. The Team This Report on ʹAsset Register Framework for Government of Andhra Pradeshʹ has been prepared by Mr. A. Srinivas Kumar IA&AS., Deputy Executive Director, CGG with assistance from Mr A P H D Varma, ACA, Consultant and Ms. Vasantha Pratha, Knowledge Manager (PFM) CGG under the overall guidance of Dr. Rajiv Sharma, IAS, Director General & Executive Director, CGG. Acknowledgements The study team would like express its sincere gratitude to Mr C R Kamalanathan, IAS (Retd.), Consultant, CGG for his valuable guidance and support. We are also grateful to Ms Vasudha Mishra, IAS, Secretary (IF), Finance Department, GoAP for her involvement and active participation in the deliberations of the workshop, which helped clarify many points...
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...Introduction Accounting conservatism is traditionally defined by the adage “anticipate no profit, but anticipate all losses” (e.g., Bliss, 1924). Anticipating profits means recognizing profits before there is a verifiable legal claim to the revenues generating those profits. Conservatism does not imply that all revenue cash flows should be received before profits are recognized. Thus the issue is one of verifiability. In the empirical literature the adage is interpreted as representing “the accountant’s tendency to require a higher degree of verification to recognize good news as gains than to recognize bad news as losses” (Basu, 1997, p. 7). Conservatism is the asymmetry in the verification requirements for gains and losses. This interpretation allows for degrees of conservatism: the greater the difference in degree of verification required for gains versus losses, the greater the conservatism. It is this interpretation of conservatism that is adopted in this paper. An important consequence of conservatism’s asymmetric treatment of gains and losses is the persistent understatement of net asset values. Capital market regulators, standard-setters and academics criticize conservatism because this understatement in the current period can lead to overstatement of earnings in future periods by causing an understatement of future expenses. For example, Accounting Research Bulletin 2 (AICPA, 1939) states: “conservatism in the balance sheet is of dubious value if attained...
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...Procedures on the Administration of Information Disclosure of Listed Companies China Securities Regulatory Commission 01-30-2007 Order of the China Securities Regulatory Commission [2007] No. 40 The Procedures on the Administration of Information Disclosure of Listed Companies deliberated and adopted at the 196th Chairman Working Meeting of the China Securities Regulatory Commission are hereby promulgated and shall be effective as of the date of promulgation. Appendix: Procedures on the Administration of Information Disclosure of Listed Companies Chapter 1: General Provisions Article 1: These Procedures are formulated in accordance with the Company Law, the Securities Law and other laws and administrative regulations in order to regulate information disclosure of issuers, listed companies and other persons with information disclosure obligations, to strengthen the administration of information disclosure affairs and to protect the lawful rights and interests of investors. Article 2: Persons with information disclosure obligations shall disclose information truthfully, accurately, completely and timely and there shall be no falsehood, misleading representation or major omission. Persons with information disclosure obligations shall make public information disclosure to all investors at the same time. Where companies that issue and list securities and...
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...I: Explanations and Implications Paper Review ACCT 3040 Advanced Accounting Theory and Practice Mr Terry Harris Conservatism is one of the fundamental principles of accounting and its application in financial accounting has recently become a highly controversial issue involving a variety of views as there is a desire for financial accounting information to be neutral. Conservatism has lasted in the accounting practice for many years and has become more popular over the past 30 years. In addition, Basu (1997) and Sterling (1970) made statements that lead us to believe that conservatism’s influence on accounting practice has been long and significant. Sterling (1970) argued that conservatism is the most influential principle of valuation in accounting agreeing with Basu (1997) who argued that it has influenced the accounting practice for at least 500 years. Professor Ross L Watts wrote two papers on the conservatism in financial accounting. Paper I sought to examine alternative explanations for conservatism in accounting and their implications for accounting regulators while Paper II is aimed at looking at the empirical evidence on conservatism, its consistency with alternative explanations and opportunities for future research. The paper under review is Paper I and the objectives of this paper are to discuss the explanations for conservatism and draw implications for regulation and standard setting. In this paper, it can be seen that Watts tries to develop a general...
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...FORM BA RETURN OF NET WEALTH WEALTH-TAX ACT, 1957 [For individuals/Hindu undivided families/companies] Receipt No Date. [SEE RULE 3(1)(b)] ORIGINAL/REVISED U/S 16(4)(I)/17 ASSESSMENT YEAR 19 - VALUATION DATE 3 1 - 3 19 DATE OF FILING OF ORIGINAL RETURN PAN/GIR.NO./WARD/ CIRCLA/RANGE - 19 STATUS RECIDENTIAL STATUS NAME (SURNAME FIRST IN THE CASE OF INDIVIDUAL/ KARTA ONLY) (IN BLOCK LETTERS) RESIDENTIAL ADDRESS/REGISTERED OFFICE IN THE CASE OF COMPANY (IN BLOCK LETTERS) TELEPHON PIN OFFICE ADDRESS (IN BLOCK LETTERS) TELEPHON PIN Please indicate : (a) In the case of individual/karta, are you a citizen of India? Yes/No (b) Is this your first wealth –tax assessment? Yes/No (c) Are you assessed to income tax?...
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...Comment on valuation of Fixed Assets, Depreciation and Inventories of Asian Paints and Berger Paints: To comment on these we require the internal and external audit reports and the system and procedures adopted by the company to maintain its records. As per the Annual report given, both the companies are reasonably following all the accounting practices, physical verification and no qualifying remarks by the Auditors on these three items. Fixed Assets: Asian Paints: The Company is increasing Fixed Assets base on year on year basis. Net FA is increased from 707 crores to 2012 crores in five year term. The company wants to increase the capacity further in their Haryana Plant. So FA is likely to increase in a phased manner. Replacement of old assets with energy efficient equipment will further increase FA base. There is no revaluation of fixed assets during the period under review. Fixed assets of which values are below Rs.5000 are charged to revenue as per income tax guidelines. Research and Development assets can be debited to revenue according to Income tax provisions where as the company has chosen to capitalize and provide depreciation according to company law. Impairment assets provision in Profit and Loss account to the tune of about 15.30 crores is again a matter for dispute. Otherwise Fixed assets are valued as per norms, cost plus taxes and other erection charges and the other permissible expenses. Berger Paints: The company is also in to...
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...when it influences the economic decisions of users, Fair value reporting is more relevant as it will allow users of financial statements to obtain a truer and fairer view of the company's real financial situation since it reflects the prevailing economic conditions and the changes in them. In contrast, historical cost accounting shows the conditions that existed when the transaction took place and any possible changes in the price do not appear until the asset is realized. b) Reliability: This relates to the degree of assurance capable of being obtained through verification that information faithfully represents what it purports to represent. Historical cost is considered more reliable as fair value requires estimations. FASB has expand the disclosures and framework for all companies to enhance the reliability of fair value accounting. However the drawbacks of the FV accounting is still holds as many of the valuations incorporates many subjective input data and assumptions. c) Decision usefulness: In general, financial information is considered to be useful if it enhances one's ability to make investment and credit decisions. (i) For investors: Investors will need to broaden their knowledge of fair value measurement methodologies to effectively analyze a company's financial statements and make a sound comparison. Given that institutions may use different models with different assumptions, the fair value of the instruments may not be comparable. Moreover, financial users are...
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... FIFO: $1,410 150 units multiplied by $8 equals $1,200 30 units multiplied by $7 equals $210 $1,200 plus $210 equals $1,410 LIFO: $1,160 100 units multiplied by $6 equals $600 80 units multiplied by $7 equals $560 $600 plus $560 equals to $1,160 Therefore, the phantom profit would be $250 if the company were to use the FIFO rather than LIFO. Question 4. Compute the lower of cost or market valuation for O'Connor's inventory. 12,500(camera)+9,000(camcorders)+12,800(DVD’s)= $34,300 Question 5. Establishment of responsibilities: Only cashiers may operate registers. Segregation of duties: The duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals. Independent and internal verifications: Daily cash counts are made by cashier department supervisors. Human resource control: All cashiers are bonded Physical controls: All over-the-counter receipts are registers. Question 6. Segregation of duties: 3 Establishment of responsibilities: 1 Physical controls: 5 Independent and internal verifications: 4 Documental procedures:...
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...Impairment Of Fixed Assets 8 14. Capitalisation Criteria: Material Value 9 15. Capitalisation Criteria: Intangible Items 9 16. Capitalisation Criteria: Reinstatement, Maintenance And Other Expenses 9 17. Maintenance Plans 10 18. Deferred Maintenance 10 19. General Maintenance Of Fixed Assets 10 20. Depreciation Of Fixed Assets 11 21. Rate Of Depreciation 11 22. Method Of Depreciation 12 23. Amendment Of Asset Lives And Diminution In The Value Of Fixed Assets 12 24. Alternative Methods Of Depreciation In Specific Instances 12 25. Creation Of Non-Distributable Reserves For Future Depreciation 13 26. Carrying Values Of Fixed Assets 13 27. Revaluation Of Fixed Assets 14 28. Verification Of Fixed Assets 15 29. Disposal Of Fixed Assets 15 30. Other Write-Offs Of Fixed Assets 16 31. Replacement Norms 17 32. Insurance Of Fixed Assets 17 33. Biological Assets 17 34. Fixed Asset Lives 18 33.1 Infrastructure Assets 18 33.2 Community Assets 20 33.3 Heritage Assets 21 33.4 Investment Assets 21 33.5 Other Assets 22 35. Paraphrase Of Section 14 Of The Municipal Finance Management Act 2003 24 POLICY OBJECTIVES This policy is necessary to facilitate the effective management,...
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...|Sr. No. |Area |Sub-area |Bud. Time |Act. Time |Name |Remarks | |1 |Legal requirements |Acceptance of Appointment | | | | | | |as to appointment |Communication with previous auditors in case of 1st year of audit. | | | | | |2 |Briefing by PIC | | | | | | |3 |Review of last |Business process | | | | | | |year’s file |General observations | | | | | | | |Critical issues of PY | | | | | |4 |Review of EDP system|INTERNAL CONTROL & INTERNAL CHECKS | | | | | | | |Understand the accounting software ...
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...goods sold is $240 less under FIFO that is the amount of the phantom profit. It is referred to as “phantom profit” because FIFO matches current selling prices with old inventory costs. To replace the units sold the company will have to pay the current price of $8 per unit, rather than the $6 per unit which some of the units were priced at under FIFO. Profit under LIFO is more accurate of what the company can expect to earn in future periods. Brief Exercise 6-7 Inventory Categories Cost Market LCM Cameras $12,500 $13,400 $12,500 Camcorders 9,000 9,500 9,000 DVDs 13,000 12,200 12,200 Total valuation $33,700 The lower-of-cost-of-market value is $33,700. Brief Exercise 7-4 (a) Physical controls. (b) Human resource controls. (c) Independent internal verification. (d) Segregation of duties....
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...ATTACHMENT E THE FASB’S CONCEPTUAL FRAMEWORK: RELEVANCE AND RELIABILITY Financial Accounting Standards Advisory Council September 2004 INTRODUCTION At the March and June 2004 FASAC meetings, FASAC members discussed aspects of the Board’s conceptual framework, including the need to update, refine, and complete it, and issues relating to the liabilities definition. At today’s meeting, FASAC members will consider other issues relating to the conceptual framework, specifically issues related to the qualitative characteristics of relevance and reliability. Some FASAC members and other FASB constituents have questioned certain of the trade-offs between relevance and reliability that the Board has made in setting accounting standards. Specifically, they have questioned the appropriateness of the trade-offs that the Board has made in requiring financial statement measures that reflect fair values rather than historical costs. Their underlying presumption seems to be that historical costs, while perhaps not as relevant as fair values, are clearly more reliable. In those instances, they assert that the trade-off between relevance and reliability should favor historical costs rather than fair values. Some who question the Board’s trade-offs seemingly believe that reliability should be the dominant characteristic of financial statement measures. Others appear to interpret reliability as having a meaning that differs in at least certain respects from how that term is defined in the conceptual...
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...Acquisitions Substantive Tests of Transactions Occurrence Write the substantive audit procedure Completeness Write the substantive audit procedure 1. Segregation of the purchasing, receiving and cash payment functions Occurrence Recorded acquisitions are for goods and services actually received Recorded cash disbursements are for goods and services actually received Completeness Discuss segregation of duties with personnel and observe activities. Trace entries in the acquisitions journal to related vendor’s invoices, receiving reports and purchase orders Perform a search for unrecorded liabilities The auditor should also examine open vouchers, receiving reports, vendor’s invoices, and statements received for a period after year-end as part of the search for unrecorded liabilities 2. Independent reconciliation of the monthly bank statements Completeness Existence cash disbursements are recorded Accuracy Recorded cash disbursement transactions are stated at the correct amounts Proof of Cash Disbursement Examine file of completed bank reconciliation. The bank statement and bank reconciliation. Reconcile recorded cash disbursements with the cash disbursements on the bank statement 3. Use of prenumbered voucher packages, properly accounted for Completeness Existing acquisition transactions are recorded Account for a sequence of voucher packages. Trace from a file of vendor’s invoices to the acquisitions journal. Rights and Obligations ...
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