Financial accountants and independent auditors commonly face challenges Abstract Financial accountants and independent auditors commonly face challenging technical and ethical dilemmas while carrying out their professional responsibilities. This case profiles an accounting and financial reporting fraud orchestrated by the chief financial officer (CFO) of a major public company and his subordinates. The CFO‚ who was a CPA‚ took extreme measures to conceal the fraud from his company’s audit
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determined that the standalone relative selling price of the training services and additional PCS were $3‚000 and $2‚000‚ respectively. At the time of execution of this agreement‚ the customer management system had been delivered and all other revenue recognition criteria related to the system were met. The training services are scheduled to begin on June 1‚ 2012. Required: 1. Is Coconut’s February 1‚ 2012‚ arrangement with Buffett within
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Case 06-12 Outsourcing Services‚ Inc. Outsourcing Services‚ Inc. (OSI)‚ a SEC registrant‚ provides a variety of EDP and payroll processing services to third parties. OSI recently has introduced a new service line to provide product help-line support services through customer service representatives (CSRs) who are employees of OSI. On January 1‚ 2004‚ OSI entered into a service contract with Company X. Pursuant to the terms of the contract‚ OSI’s CSRs will provide technical support for Company X’s
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time of sale‚ Essential should record as additional cost of goods sold‚ not as a reduction in revenue‚ because the free product does not represent a return‚ refund‚ or rebate of a portion of the sales price paid by the customer. Point and Loyalty Programs Customers can redeem specified quantities of points for awards such as free or discounted products. For this situation‚ Essential should not deferred revenue related to points awarded to customers. Part Two: Development cost Application Development
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goals set by management. In the mid-90s a goal was set to hit revenues of $1 billion. This goal was deemed manageable based on their operating profit that they had shown over the years. As time passed‚ the goal became more difficult and the sense of urgency to claim revenue became a must. Several situations led to fines that would later be placed on the company’s executives including: Christopher Crawford [CFO‚ CPA]: Claimed revenue from a barter transaction that passed materiality by auditors
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000 59.52% 2013 4‚250‚000 0 4‚250‚000 100.00% 1‚619‚200 1‚669‚200 -50‚000 Cost Incurred to Date Estimated Costs Total Estimated Costs % Completed Revenue Expense Gross Profit 400‚000 1‚980‚800 350‚000 2‚230‚800 50‚000 -250‚000 2011 Account 1) Record Construction Costs CIP Various Accounts 2) Record Revenue Construction Expense CIP Revenue 3) Billings A/R Billings on CIP Dr 350‚000 350‚000 Cr 2012 Dr 2‚150‚000 Cr 2013 Dr 1‚750‚000 Cr 2‚150‚000 1‚750‚000 350‚000 50‚000
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Overlook Video Stores Inc. (OVS) To: Ms. Alice Hartford‚ Partner From: CA‚ Audit Senior Re: Planning for the year end 2009 of OVS and requested control deficiency information Engagement Overview The purpose of this memo is to document the planning of the financial statement audit st engagement of our client Overlook Video Stores Inc. (OVS) for the year ended December 31 ‚ 2009. OVS has been our client since its inception in 1998. This year’s audit will commence January‚ 2010‚ th
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a) -Revenues are inflows of assets or settlements of liabilities or both. Revenues come from activities of the entity’s central operations. -Gains are increases in net assets and from peripheral or incidental transactions of an entity. -The difference between gains and revenues depend to a great extent on the typical activities of a company. For example‚ when McDonald’s sells a hamburger‚ it records the selling price as revenue. However‚ when Mc Donald’s sells land‚ it records any excess of
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of HKFRS 15 Revenue is the gross inflow of economic benefits during the period arising in the course of business of the ordinary activities of the entity‚ other than increases relating to contributions from equity participants. It is of most significance of both the creditors and the shareholders for decision-making‚ and therefor it is attached great importance of it’s reliable and accuracy. The most crucial element of revenue‚ the criteria of Revenue Recognition Principles‚ has been the
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profits through call revenue‚ therefore we could say the costs associated with the contract are part of revenue generating arrangement. This arrangement could be consider as an asset because revenue (Set-up and Call revenue) provides a future economic benefit‚ and this arrangement is controlled by Outsourcing Services‚ Inc. • Question 2: If the accounting policy to defer costs is appropriate‚ what costs‚ if any‚ would be eligible? Any cost directly relate to the revenue arrangement are considered
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