财务会计概念与应用英文版Ltr 5.pptVIP

COPYRIGHT ? 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. * Chapter 5 Ensuring the Integrity of Financial Information Albrecht, Stice, Stice, Swain * Types of Problems Errors Unintentional mistakes. Disagreements Accounting judgments. Different incentives. Fraud Intentional errors. Management manipulates financial statements to deceive investors. * Accounting Errors Errors in transactions and journal entries. Amounts are incorrect. Incorrect accounts involved. Errors in accounts and ledgers. Posting to the wrong account. Posting the wrong amount. * Safeguards to Counter Problems Internal Controls Help to protect assets and increase reliability of accounting records. Internal Control Structure The control environment. Actions, policies, and procedures that reflect the attitude of management about controls. The accounting systems. The control procedures (activities). * Control Activities Preventative Controls Segregation of duties. Proper procedures for authorization. Physical control over assets and records. Detective Controls Adequate documents and records. Independent checks on performance. * Segregation of Duties Authorization Authorizing or approving the execution of the transaction. Record Keeping Recording the transaction in the account. Custody of Assets Having physical possession of or control over the assets involved. A RK C RK A C * Reasons for Earnings Management Meet internal targets. Meet external expectations. Income smoothing. Carefully timing the recognition of revenues and expenses to even out earnings from year to year. Window dressing for an initial public offering or loan. Making the earnings look as good as possible for investors and/or bankers. * Earnings Management Continuum Savvy Transaction Timing Aggressive Accounting Deceptive Accounting Fraudulent Reporting Fraud Strategic Matching Changes in Methods or Estimates with Full D