Accounting Best Practices

¶ … Yost directly aware of the fact that counting different locations on the same day was not the best idea if accuracy was demanded. However, Yost shot down the idea of doing all locations on the same day and even went to so far as to sign off on the fact that doing all locations on the same day was not practical due to manpower/locational issues. B) To defend themselves against the bank, the CPA firm could simply point to the details enumerated in the prior part of this question.

Yost specifically and explicitly brought up the fact that doing counts on different days was less than wise. This was surely because even if no subterfuge was going on (and it was), it would give the appearance of impropriety, or at least bad procedure. C) Yes, they would probably prevail.

Yost specifically noticed and advised their client that they were unwise to do the counts on separate days and they asked for (and got) a waiver from the client by having them vouch in writing that the same-day counting method would not work. Since it is in writing, and not a verbal he said/she said proposition, Yost will almost certainly prevail. D) No…it should not have any effect. There is a section in the law that specifically refers to deception and manipulation.

However, Yost did not engage in subterfuge and they specifically found and brought forth the fact that separate inventories were not a wise idea. However, their client resisted and Yost instead had them sign a waiver. For Stuart Supply to then turn around is the height of hypocrisy and the bank is actually suing the wrong company. The only way one could fault Yost is that Yost shouldn't have allowed the waiver and insisted that the multi-day inventory thing not be done.

However, Yost could not force their hand if they wanted to which would have left them with the choice to part ways with Stuart on ethical grounds. Chapter 5 -- Chapter 19 Probably…and it would be because they did not adequately supervise their employee who is an agent and representative of their firm. The accounting firm could then turn around and punish (or sue) Small. However, it is ultimately the responsibility of management to ensure the quality of employees' work before it is made public and put in print.

Small definitely did wrong and indeed broke ethical and legal laws and standards. However, since he is not in charge, his managers (at a minimum) would be liable for his malfeasance on a vicarious basis. Chapter 6 -- Question 21 A) The purpose of the internal controls report is a review and summary of the internal protections and frameworks that prevent incompetence and/or malfeasance as it relates to reporting.

For example, giving someone the ability to key the data for as well as print a paycheck is less than wise as one person should do one and a different person should do the other. The other part relates to the display, manifestation and rendering of reports in a way that is accurate and is readable.

B) It is the auditor's responsibility to ensure that the report is complete, accurate and that the lead-up to these reports being completed is done in a way where internal controls are effective and complete. The auditor is a stop-gap person that prevents data from being lied about or at least omitted. Chapter 6 - Question 25 A) Assertions about transaction classes would relate to what is classified a given way and why. It would explain how the partitioning between expenses, assets, liabilities and so forth is created and updated as needed.

Assertions about balances would pertain instead to what the balance is and how the balance was arrived at. If there was any atypical handling or updates made, that would need to be mentioned somewhere in the report in the name of transparency, completeness and honesty. Regarding presentation and disclosure, this dovetails with the last part of the one just mentioned, as the way something is portrayed can lead to people making certain conclusions so assertions about how things are listed and why is important for the sake of honesty.

B) The transactions and events would include A, D, E and L. Account balances would include C, G, and K. Presentation and display would include B, F, H, I and M. Chapter 8 - Question 30 There are a few red flag and issues that should be discussed about the two sets of meeting minutes. First, the talk about the IRS audit was a little incomplete and there was not a lot of good news to glean from it.

Related to this is the handling of the computer equipment and this neatly dovetails with the timeline of the computer switchovers. They dispensed.