189_ch23

189_ch23 - Accountants Liability 1. Introduction a. Audits...

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Accountants Liability 1. Introduction a. Audits i. Accountants serve two masters—company management and the investing public ii. Auditors use a sample of transactions iii. Vouching—auditors choose transaction and go backwards iv. Tracing—auditors choose an item and track it forward v. GAAP—generally accepted accounting principles, GAAS— generally accepted auditing standards, IFRS—international financial reporting standards (more universal for global economy, but weaker standards—6-8% higher earnings) b. Opinions i. Unqualified opinion—also known as a clean opinion, financial statements are in accordance with GAAP ii. Qualified Opinion—indicates that although the financial statements are generally accurate, there is an outstanding unresolved issue iii. Adverse Opinion—the companies financial statements do not accurately reflect its financial position iv. Disclaimer of Opinion—does not have enough information to forma an opinion 2. Response to Enron: Sarbanes-Oxley a. The Public company accounting oversight board (PCAOB) i. Regulates all public accounting firms. No more than 2/5 PCAOB board members may be accountants b. Report to the Audit Committee
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This note was uploaded on 03/17/2010 for the course ECON 100B taught by Professor Kilenthong during the Spring '08 term at UCSB.

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189_ch23 - Accountants Liability 1. Introduction a. Audits...

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