Professional Documents
Culture Documents
Accounting
Principles and More
Helen Winton, Marteca Soler-Bodden & Michael Sanford
Intro to Accounting ICCI
30 November 2016
Introduction
Group project for our
Intro to Accounting
class
Reason why we chose
to present on GAAP
Our goals for this
presentation
Contents of this
presentation
they portray
All 50 states prepare their financial statements under GAAP (The Comprehensive
Guide to Understanding GAAP)
Before the GAAP, the FASB and IASB coordinated to create universal framework
(Lugo, 2008)
Investors became concerned with reporting for consolidation of business
organizations (Levy, 2015)
The businesses affected were limited partnerships and related legal
organizations such as limited liability companies (PricewaterhouseCoopers LLP,
2015)
Accounting
Principles
The
13 different types
Consistency Principle
of accounting
principles are: Accrual,
Conservatism,
Full Disclosure Principle
Consistency, Cost,
Economic entity, Full Requires a company to provide the necessary
information so that people who are accustomed
disclosure, Going
to reading financial information can make
concern, Matching,
informed decisions (Basic Accounting Principles,
nd)
Materiality, Monetary
unit, Reliability,
Revenue recognition
and time period
principle (Basic
Accounting Principles,
nd)
All public companies must disclose information about their financial performance yearly.
The role of GAAP auditors is to ensure that these disclosures are accurate (Mullin, n.d)
Internal Auditors
External Auditors
Ethical Considerations
Misappropriation of
assets
Otherwise known as
stealing or
embezzlement
Can happen at any
level of the company
(Freedman, n.d)
Ex: The CEO might
charge a family dinner
to the company instead
of paying for it
Ex: The receptionist
could take home office
supplies for school
Disclosure
Otherwise known as
ethical omission
Just like how
intentionally recording
transactions wrongfully
is considered financial
reporting, so is failing to
disclose information to
investors (Freedman,
n.d)
If the information
withheld is significant in
the investors decisions,
Summary Slides
Summary Points
History of
Governance in
Accounting
SEC assigned
FASB to create
the GAAP
GAAP was
created to
ensure that
companies do
not mislead
investors
All 50 states
prepare their
financial
statements
under GAAP
limited
partnerships
and related
legal
organizations
Companies
who have
Violated GAAP
SEC indicated
that E&Y was
assisting
Lehman in
criminal
activities
In 2013 E&Y
agreed to pay
investors $99
million to settle
issues
The court
accused E&Y of
being reckless by
not examining
the investment
In 2015, E&Y paid
$10 million in
fines and
settlement to the
government
Accounting
Principles
There are 13
different types of
accounting
principles
Accrual,
Conservatism,
Consistency, Cost,
Economic entity, Full
disclosure, Going
concern, Matching,
Materiality, Monetary
unit, Reliability,
Revenue recognition
and time period
The principle
consistency
principle states
that once you
adopt an
accounting
principle you must
continue to follow
it
The full-disclosure
principle renquires
a company to
provide the
necessary
information
Ethical
Consideration
s
Outline of
Auditors Roles
The role of GAAP
auditors is to
Misappropriation of
ensure that
company financial assets is also known
as stealing or
disclosures are
embezzlement
accurate
Internal
and External
auditors have
different roles
Primary role is to
review activities
related to risk
management,
internal controls,
and corporate
governance to
ensure overall
efficiency
Primary role is to
review balancesheets, financial
statements and
financial reporting.
Misappropriation of
assets can happen
at any level of the
company
Disclosure is also
known as ethical
omission
If the information
withheld is
significant in the
investors decisions,
it must be disclosed
Text References
Basic Accounting Principles (n.d.). InCPEs for CPAs. Retrieved from http://www.accountingtools.com/basic
accounting-principles
BBC NEWS | Business | Lehman Bros files for bankruptcy. (2008). Retrieved November 26, 2016, from
http://news.bbc.co.uk/2/hi/7615931.stm
Freedman, J. (n.d.). What is an "Ethical Issue" in Financial accounting?. InSmallbusiness. Retrieved from
http://smallbusiness.chron.com/ethical-issue-financial-accounting-57889.html
Internal and External Audits Comptrollers Handbook (2003). Retrieved from
https://www.occ.gov/publications/publications- by-type/comptrollers-handbook/2003AuditHB.pdf
Levy, H. B. (2015). Was GAAP ever 'generally accepted'? The CPA Journal, 85(5), 12-13. Retrieved from
http://search.proquest.com/docview/1685924427?accountid=158672
Lugo, D. (2008). FASB issues accounting standards hierarchy identifying sources of accounting principles.
Accounting Policy
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