Auditing a Publicly Traded Company
University of Phoenix
| |ABC Auditing Firm |
To: John Smith, Supervisor
From: Arlette Varela, Joseph Angell, Kristine Walsh, Ozair Osman, and Tricia Russo
Date: November 10, 2008
Re: Evaluation of Generally Accepted Accounting Principles (GAAP), Share-Based Payment Reporting and Special Purpose Entities (SPE)
ABC Auditing Firm will be auditing Company XYZ (the Company), a publicly traded company. During this audit the fieldwork team will be evaluating the Company to confirm compliance with Generally Accepted Accounting Principals (GAAP). As a Staff I assigned to work on the Company’s audit, I have provided an overview on what the team should be looking for to confirm that the Company is in compliance with GAAP while paying particular attention to share-based payment reporting and special purpose entities (SPE).
Compliance with GAAP
Financial information presented by a company must be relevant, reliable, comparable and reported objectively. Independent readers, such as investors, creditors, and employees must be able have confidence that the information being disclosed is unbiased and consistent. In order to ensure that accurate and objective financial information is provided the accounting industry relies on standards and guidelines set forth by GAAP. GAAP is a set of accounting guidelines that are used by private companies, publicly traded companies, and governmental agencies to aid in the preparation and reporting of financial statements. In order for the firm to ensure that the Company is consistent with the basic concepts of GAAP it will be analyzing the following criteria:
• The information presented in the financial statements must be...