For the purpose of providing you with this letter, other than as set out herein, we have carried out the audit and review of the Company's financial information
Report
Based solely on the procedures set out in the engagement letter dated October 9, 20X5 (see Attachment 1) we confirm that the Company is in compliance with all of its restrictive debt covenants with the Lender.
Our report as set out herein is confidential to the addressees of this letter and should not be made available to any other party without our written consent.
Yours faithfully
Charles Adam
Partner cc Chairman of the Board of Directors, Keystone Computers & Networks, Inc.
Memo
To FILES
From Warren Love
Karren West
Date November 14, 20X5
Subject Keystone Computers & Networks, Inc.
Revenue recognition - Accounting for the sale of extended warranty contracts
ISSUE:
When to recognize revenue from sale of extended warranty contracts?
At what amount should revenue from sale of extended warranty contracts be recognized?
RESOLUTION:
FASB and IASB had a joint revenue recognition project wherein they...
Key decisions used as basis for this approach are enumerated below:
Revenue recognition should be based on changes in assets and liabilities
Contractual obligations arise when the customer is committed to pay for the deliverables
These contractual obligations should be measured at fair value.
EXAMPLE:
If KCN sells a microcomputer for $300 and also charges $100 for its extended warranty contracts, and related warranty servicing cost is at $30, what amount should be recorded as revenue when the full amount of the purchase price and warranty fee is collected in full?
The asset and liability approach measures the assets and liabilities incurred at fair values. KCN receives cash of $400 and has a liability for the warranty servicing of $30 (regardless if the warranty servicing will be outsourced or not). The excess of assets received over liabilities incurred represents revenue. Therefore, revenue of $370 would recognize.
Please change as applicable.
In other words, if the financial difficulties they encounter are the fault of the auditing firm, they will have protection from any legal ramifications they may have encountered from faulty accounting or auditing measures. Preventive measures are also part of the internal controls of the auditing firm itself, so that each person who works with that firm knows the measures that are to be taken to make sure auditing
Audit planning is the first step in establishing the basis of the nature, timing, and extent of the overall audit strategy to determine the validity of the financial statements. An efficient and effective audit plan provides for a thoroughly and properly planned audit (The Importance of Audit Planning). It helps to reduce audit risk to a low level. Audit planning ensures appropriate attention to critical areas and that potential problems
Auditing function has undergone several transformations from the periods when it was simply a function of giving opinion but also to an error where auditors are looked upon to offer advisory roles. The auditors should therefore advice the government on the impacts of their operations on the public and on other improvements that can be made to maximize on the service delivery. In pursuing their taxation policies and fiscal
The implementation of this standard will give auditors much more control over the audit process. This gives the auditors the tools they need to meet their responsibilities with respect to professional skepticism. Auditors are responsible for the quality of the financial statements, and this standard gives them the mandate to be sufficiently creative in the audit design so as to detect misstatement. The change benefits experienced auditors in particular, and
(Nicoll, 2005) IV. MIXED ECONOMY The work of Nicoll (2005) relates that the economy of Australia is one that is mixed "with separate audit legislation for the public and private sectors." The Auditor-General audits both private and public entities although there is separate legislation relating to their operation and establishment. There are however, different requirements of public and private sector auditing in that due to the legislative requirements of the Auditor-General
Planning Function of Management in an Information Technology Service When we speak of information technology, we usually associate it with advanced tools, systems, state-of-the-art, and automated devices. In developing such technologies, planning is an essential process to ensure the systems' and devices' success. This importance in development planning should be similarly set to management planning in an organization. This paper will discuss how management planning is set in a company, InfoServ,