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

Bank - cash and bank balances, Bank - Cash and Bank Balances The major...

Bank - Cash and Bank Balances The major concern in this area is to establish the existence of the balances and more currently due to failures in some financial institutions in

Beneficial ownership - audit process, Beneficial Ownership - Audit Process ...

Beneficial Ownership - Audit Process We have to examine documents of title as e.g. title motor vehicles, deeds and log books.  Whether there are no implied ownership can suffi

Forms of evidence, Forms of Evidence Observation , is mostly witn...

Forms of Evidence Observation , is mostly witnessing internal book-keeping procedures and system control. It involves attendance at wages pay out. Observation of stock-ta

Prepayments - audit process, Prepayments - Audit Process Prepayments s...

Prepayments - Audit Process Prepayments similar to accruals are not mostly checked through the double entry system. This creates them susceptible to mistake. The auditor's pro

Advantages and disadvantages of joint audits, Advantages and Disadvantages ...

Advantages and Disadvantages of Joint Audits The general disadvantages and advantages of joint audits as: Advantages 1. All fees and work are welcome to audit firms. 2. A

Counter - indications, Counter - Indications That the auditor has foun...

Counter - Indications That the auditor has found indications of going related to non-applicability does not of itself justify instantly conclusion that the entity is not a goi

Statutory Auditing - Newspaper agencies, Provide the data regarding all abo...

Provide the data regarding all about auditing of Newspaper agencies

Internal controls, Ask Describe the weaknesses in internal control and reco...

Ask Describe the weaknesses in internal control and recommend improvements in Swan’s procedures for the purchase, receipt, storage and issue of raw materials. Organize your answer

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