ACCT 475 Lecture Notes - Lecture 22: General Ledger, Accounts Receivable, Crazy Eddie
16 Jan 2018
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Chapter 10: substantive testing and balance sheet accounts. Search for unrecorded liability (a part of all audit procedures for audit plan!!!!) Look for unusual and large transactions near year end: look at fixed asset register removal of asset registers, net book value question it! Unfortunately, we do not have the luxury of auditing ibm: trade-ins very common in vehicle industry concern is inflated value. Review of major asset retirements: audit standards violations. Representative faithfulness did(cid:374)"t show (cid:374)atu(cid:396)e of p(cid:396)ofit loss. Intentional manipulation of financial position of the company (off-balance accounting schemes, managing debt load, earnings overstatement/understatement, smoothing, big bath, etc. ) Extra discounts near year-end, this is ethical earnings management discretionary choices that are made. Discretionary expenditures r&d reduce r&d is not illegal, can help boost earnings: r&d can be argued not in long term best interest of shareholders as not investing in r&d can make you less competitive in the future.
