Discuss the meaning of earnings management

Assignment Help Auditing
Reference no: EM131043963 , Length: word count:1500

Task: The student is required to answer two questions about earnings management and audit.

Assignment details:

Earnings management is now a very common term in financial reporting. It refers to some of the management practices whereby accounting items are presented in a manner to achieve a certain economic outcome. The treatment of such accounts may or may not be in accordance with all relevant accounting principles and standards. It is believed that the auditor should have a role in detecting earnings management and in determining the extent of the ‘manipulation' in arriving at an appropriate audit conclusion.

Required

1. Discuss the meaning of earnings management and how it affects the final stages of a financial report audit.

2. Identify means whereby the auditor may reduce earnings management.

Reference no: EM131043963

Questions Cloud

The dividend strategy is part of the larger process : The dividend strategy is part of the larger process of trying to keep the shareholders satisfied. A good thing for job security… Clearly, senior managers need to be strategic, but still be aware of the short-term consequences. However, decisions that..
What was the amount of his withdrawal : Uriah Heep celebrated his 18th birthday by opening a savings account at the Thames River Bank and depositing $1900. He continued to deposit the same amount on every subsequent birthday until he was 31 years old. The bank paid an interest rate of 3%. ..
Statements about project evaluation : Which of the following statements about project evaluation is (are) true?
Invest in a portfolio containing stock : You have $138,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 17.4 percent. Stock X has an expected return of 15.6 percent and a beta of 1.40, and Stock Y has an expected ..
Discuss the meaning of earnings management : ACT303 Principles of Auditing. Discuss the meaning of earnings management and how it affects the final stages of a financial report audit. Identify means whereby the auditor may reduce earnings management
Short-term versus long-term debt : How could two companies with similar gross profit figures end up with dramatically different net operating income? Why do analysts need to consider different factors when evaluating a company's ability to repay short-term versus long-term debt?
Which tab contains the header and footer group : Using Microsoft Word, which tab contains the Header and Footer group? Provide four of the buttons located in the Charm bar. To create a blank line after a paragraph, which key do you press on the keyboard?
Realize an economic profit in the long : If a monopolistically competitive firm has some control over pricing, give one reason why it cannot set their price above average total cost so that they will realize an economic profit in the long run?
Explanations that supports ho-theorem consistency : Econ 3700 - International Trade. Project - Comparative Advantage. Can you come up with explanations that supports HO-Theorem consistency? Alternative explanations for HO-Theorem inconsistency

Reviews

Write a Review

 

Auditing Questions & Answers

  Users of financial statements

1.Explain why auditors reports are important to users of financial statements and why it is desirable to have standard working.

  Implementation of environmental sustainability

It will be a comprehensive review of the organisation's strategy, objectives, actions and achievements in planning for and implementation of environmental sustainability.

  Prepare essay which examines one of auditing issues in china

Prepare an essay which examines one of the following auditing issues in China, within the relevant theoretical framework and on the basis of your literature review.

  Audit of tno limited

Prepare an additional report for John that outlines - the internal controls in the system that are potentially effective, the risk that the control could mitigate and one ‘test of control' for each of the identified potentially effective controls.

  List inherent control and fraud risk factor relevant to case

List the inherent, control, and fraud risk factors relevant to this case. State plausible reasons that KPMG audit personnel may have lacked professional skepticism in their audits of Ace Hardware.

  Why is professional skepticism necessary to detecting fraud

Why is professional skepticism necessary to detecting fraud? What are the key behaviors needed to successfully exercise pro- fessional skepticism during the performance of the audit?

  Why is internal control important to an organization

Why is internal control important to an organization? How does internal control help an organization achieve reliable financial reporting?

  Prepare the stockholders equity section of the balance sheet

Prepare the stockholders' equity section of the balance sheet, for Penn Company as of June 30, 2015, as it should appear in its annual report to the shareholders

  Strengths and weaknesses in the internal control system

Identify the strengths and weaknesses in the internal control system described above. For each control weakness, identify the financial report assertions that may not be met. Suggest a control to correct any of the deficiencies identified. Identif..

  Internal control-not-for-profit organization

A not-for-profit organization periodically conducts focus groups of employees, service beneficiaries and governance board members to reevaluate its mission, vision, and values to determine the accuracy of the strategic statements to refine them wh..

  List the steps involved in attribute sampling

List the steps involved in attribute sampling and what is meant by "sampling risks" and what is its impact on audit findings?

  Problem on audit planning and analytical procedure

Based on the analytical procedures calculated in parts a and b, summarize your observations about Pinnacle's business, including your assessment of the client's business risk.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd