Accounting concept and records-consistency, Auditing

Assignment Help:

What fundamental accounting concepts must you keep in mind in preparing to carry out your audit?

Accounting Concept and Records

Fundamental Accounting concepts are covered in IAS-1 Presentation of Financial Statements.

Matching Concepts

There is basic assumption that all costs have been matched to the revenues they helped to produce from balance sheet point of view this means that accrual, prepayments will be necessary to ensure that costs and revenues are matched correctly.

Going Concern

The financial statements of the business should have been prepared on going concern basis. This primarily affects the value of the assets in statement of financial position of valuation on a breaking basis, where assets are sold individually for guide return would be much lower than their going concern valuation.

Consistency

Accounting Policies and procedures should be applied consistently from year to year and in relation to similar items with in financial statements. This mean that is expected that one say 2 similar fixed assets are accounted in same way in financial statements.

Prudence

The financial statements should have beet prepared on prudent basis, with all anticipated losses provided for but no profits anticipates. Where the prudence and matching concepts come into conflict then the prudence concept should prevail.

Materiality

Financial statements should disclose all material items. An item is material if its non disclosure, misstatement or omission would be likely to affect evaluation on decision of users.

Substance Overform

It requires that assets acquired but business under finance lease arrangement should be recorded in its books along with obligations there against.


Related Discussions:- Accounting concept and records-consistency

Relevance, Relevance The auditor obtains evidence either through compli...

Relevance The auditor obtains evidence either through compliance testing of the internal controls or through substantive tests of the information contained in the financial sta

Standardization of working papers - auditing, Standardization of Working Pa...

Standardization of Working Papers - Auditing The ICPAK guideline states that the needs of standardized working papers may improve the effectiveness along with that they are re

Audit approach, Audit Approach The auditor: 1) Must get the coopera...

Audit Approach The auditor: 1) Must get the cooperation of the client, as simply the client can authorise third parties that communicate along with the auditor. 2) Choos

Audit, The auditors for Weston University are conducting their audit for th...

The auditors for Weston University are conducting their audit for the fiscal year ended December 31, 2011. Specifically, the audit firm is now focusing on the audit of revenue from

Code of ethics for auditor, Fitri, a sole proprietor in pulic practice, pla...

Fitri, a sole proprietor in pulic practice, plans to establish a separate department that will provide internal audit service to his audit clients.

Key audit areas, Key Audit Areas Key audit areas in detail (a) Asc...

Key Audit Areas Key audit areas in detail (a) Ascertainment of creditors and debtors:   Insurance companies do not keep their personal ledgers in such a way as to prod

Duties of an auditor in the stocktaking process, Problem: (a) Your cli...

Problem: (a) Your client has sought your advise on the procedures to be adopted for carrying out the stocktaking which is based on a year-end count. You are required to prepa

Auditing, State the FIVE threats contained within Auditor''s Code of Ethics...

State the FIVE threats contained within Auditor''s Code of Ethics and Conduct and for each threat list ONE example of a circumstance that may create the threat.

Goodwill and fair value, Goodwill and Fair Value The main points the a...

Goodwill and Fair Value The main points the auditor needs to verify for any goodwill arising in the accounting period are as follows: (i) Examine the procedure used to find

Write Your Message!

Captcha
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