ACCT 601 Financial Accounting and-or Reporting Draft

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Financial Accounting and/or Reporting Draft

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Financial Accounting and/or Reporting Draft

Financial accounting and reporting is a very field in accounting and investment. It highlights very many aspects of the company not limited to how it should be doing business and even change whenever needed. If company’s management find it necessary to involve stake holders in making decisions, they will always make reference to financial reports. Legal requirement by the government also necessitate this to help investors make their investment decisions. The legally mandated requirements are the 10Q, quarterly reports and 10K year’s reports. Financial reports are not only a legal requirement and investors reference guide. It is also needed by creditors who will need to know what and when to credit. This will protect them from losses that could if be incurred if the company winds up or delayed payment, (Abraham, 2014).

Misleading financial information normally occurs when the books of are edited to misrepresent the business. This normally results in figures that are either deflated due to theft of the business income or inflated to give false hope to creditors and investors. This activity is as expected illegal,(Justin, 2004). Detecting and preventing fraud should be dedicated to the a team especially audit firms that should regularly scrutinize books of accounts to keep this in check. People working with the company should also be aware so that they may report suspicious activities early on time. This helps save the company reputation and in the long run helps the employees retain their job considering that major fraud incidences lead the company being bankrupt and even winding up in the long run.

10Q and 10K unaudited reports are a legal requirement in the United States. They are reports that should be presented to the presented Quarterly and yearly to the United States federal Securities and Exchange Commission and majorly help financiers make informed decisions. Preparing 10Q and 10K reports follow a specifically stipulated procedure and format an following this is essential. It also has a time period to which they are being prepared. Filer Definition and Accelerated Deadlines for Filing Periodic Reports (Jay, 2018), the current 10-K and 10-Q deadlines for accelerated filers are as follows:

Category of Filer Revised Deadlines For Filing Periodic Reports
  Form 10-K Deadline Form 10-Q Deadline
Large Accelerated Filer($700MM or more) 60 days 40 days
Accelerated Filer($75MM or more and less than $700MM) 75 days 40 days
Non-accelerated Filer(less than $75MM) 90 days 45 days

According to the United States laws, there are very many consequences of committing fraud. The following items are first identified; Victim(s), fraudulent act, mechanism to identify and quantify a victim’s loss, suspect committing the crime, intent by the suspect committing fraud and evidence that the suspected benefitted from the crime. According to Daphne (2018), fraud indicators can be categorized into 3 main categories;

There are also methods of creating fraudulent financial statements and they include; Overstatement of assets, understatement of liabilities, overstatement of revenue, understatement of expenses, improper use of accounts meant for reserve, misinformation, failing to apply or applying wrongly GAAP rules (David, 2016). To address fraud, audits are normally done to identify and eliminate fraud and even form the basis of prosecution. Due to the extensive nature of businesses that exist nowadays, there are very many types of audits that can be done and includes; financial audits, Business system information audits, investigative audits, departmental review, business operations audit and investigative audit.

  1. Personal mistakes
  2. -Living way beyond their means
  3. -High turnover of employees or personnel
  4. -uncharacteristic pattern behaviors of employees.
  5. Financial shortfalls
  6. -Unexplained entries or financial record changes
  7. -unusually high amount of cash transactions
  8. -Evidence of altered, missing or stolen financial records.
  9. -Transactions that have taken place don’t have the proper transaction numbers or serial numbers
  10. Operational downfalls
  11. -Lac of accounting and process control
  12. -One person in control of the business with no separation of duties
  13. -Financial accounting and the inventory of the business is not reconciled.
  14. -One or more unauthorized transactions

In conclusion, financial accounting is a field that that is of great interest and beneficial to the company that adopts strict financial accounting and recording and principles. It puts the company ahead in the competition and always accountable for its financial, operational and investment revenue expenditure. It is profitable in the long run.

References

Adding Value as a Management Accountant – Business Partnering. (n.d.). Retrieved January 20, 2018, from http://linkup.imanet.org/blogs/abraham-kulangara/2014/08/25/adding-value-as-a-management-accountant-business-partnering?ssopc=1

Mock, J. M. (2004). Classic Case Studies in Accounting Fraud (Rep.). https://etd.ohiolink.edu/!etd.send_file%3Faccession%3Dmuhonors1111004894%26disposition%3Dinline

What Is the Importance of a Company’s Financial Statements? (n.d.). Retrieved January 20, 2018, from http://smallbusiness.chron.com/importance-companys-financial-statements-21332.html

What Is the Value of Accounting Functions in an Organization? (n.d.). Retrieved January 20, 2018, from http://smallbusiness.chron.com/value-accounting-functions-organization-24616.html

Young, H. D. (2016, June 20). Where Financial Reporting Still Falls Short. Retrieved January 20, 2018, from https://hbr.org/2016/07/where-financial-reporting-still-falls-short




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