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Executive Memo week #6 - Executive Memo Memo To Senior...

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Executive Memo
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Memo To: Senior Auditor From:Emily Gonzalez,Lien Bach, Katie Terns, Rhonda DeLane CC: Date: 07:01:05 Re: Evaluation of shared- based payment reporting and Special Purpose Entities
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The purpose of financial audits is to ensure that information reported on the financial statements is relevant, reliable, honest and accurate. Financial statements are developed to communicate financial information of a company to its stakeholders and to identify a company's financial performance. The American Institute for Certified Public Accountants (AICPA) states that anyone who prepares financial statements is required to do so in accordance with GAAP. By complying with GAAP, auditors can assure appropriate internal controls are in place. A successful financial audit minimizes the chance of material misstatements that can help the manager or stockholders make a good decision in their business transactions. To have an accurate the financial information must be prepared based on the standards and guidelines set forth by GAAP. In order for the firm to ensure that the firm is consistent with the basic concepts of GAAP it will be analyzing the following criteria: The required information presents in the financial statements must base on the SFAC No.5. The financial statement must present the information about statement of financial position, statement of earnings and comprehensive income, statement of cash flows, and statement of investment by and distributions to owners. (Schroeder, Clark, & Cathey, 2005, p.543) The disclosure of segment information is reported based on the SFAS No.131 Accounting for Stock Based Compensation base on the SFAS No. 123 Accounting treatment of share-based payment “Share-based payment transactions are transactions in which entities receive goods or services as
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