The reason for the change in auditors is that the predecessor auditor did not have enough resources to audit the company because of the continuous growth of WWW Company. Inventory was the main assets of the company and they needed to get it right. The predecessor auditors had some few concerns and also had few disagreement with the management. The disagreement between the management and the auditors were about how management was not aggressive enough in writing off obsolete inventory. When the auditors decide to write off inventory they had to do research to prove to Williams Jr that it was best for the company to write off.
This procedure can be an issue for the business, if failure to build a credit relationship with customers could result in a significant loss of business income. Many businesses fail when they have unpaid debt for long periods, could have a devastating effect on business’s cashflow. A recommendation for this situation is the business must take action to follow up on these overdue accounts. The type of action to be taken would be outlined in the business’s credit policy need to develop. It is very important that every business setting a comprehensive credit policy procedure.
In the first place, nowadays we know that the audit firm was heavily conflicted on some client accounts, receiving millions of dollars in fees in return for the compilation of better audit reports. In addition to this, the management of the audit firm was more focused on the generation of revenue rather than on the quality and independence of their audit work. Another flaw in Arthur Andersen’s governance procedures was the fact that the executives did not manage to control and address the behaviour of internal lawyers and senior audit partners, who showed signs of misconduct and failed to abide by professional and ethical matters. Another mistake that the audit firm made was that when faced with suspicious manoeuvres within some financial statements, no further actions and investigations took place, giving rise to further wrongdoings. Furthermore, some partners of the audit firm were allowed to claim superiority over specialists and auditors, leading to conflicts of interest.
This also explains not only accountant but also management also become unethical if there will be some gain. Analysis: Importance of ethics in management and accounting Each day accountant has to deal with the management just to show the false report of the certain organization. It is unethical to pressure accountant to produce the false report just to maintain the reputation of the business. And it is also unethical to deliberately falsifying its results to hide the cyclical nature if business. Conclusion: As a whole this source tries to explain about how the management is pressuring accountant to conduct the false information just for personal gain.
What is asset? Asset includes cash, cheque, and inventory which is important for the company to run the business. However, when there is a weak access control, the employees and clients are motivated to commit frauds. For instance, theft of the physical asset, misappropriation of petty cash if business processes and internal controls are not established and enforced. Some of the management employees may use the petty cash for operating purposes including the payment of invoices or miscellaneous amounts, to pay salaries or wages, or to make advances or loans to staff.
As a business owner, manager, administrator the risks are enormous because my personal credit and financial information are closely related to my business. My identity and the company one are only one, which results in everything that directly or indirectly affects the company. There is also the risk of identity theft, the business being a small business corporate identity theft can result in the inability to meet payroll, tax obligations or payable bills. There is also loss of business income, sometimes the company is unable to meet its personal and tax obligations and purchase the necessary supplies. The consequences is unpleasant and end up in the obligation to dismiss employees, make reductions and even pay commercial obligations from
The customers of Wells Fargo whose accounts were affected were massively impacted. So many customers stressed out when they got the notification that their bank accounts were now down to either $0 or a negative amount. This glitch had a “trickle down” effect which was definitely not good for the consumers. Like Cindy Alexander, she took money from another savings account to pay for the money that she “lost”. Taking the money out and putting it into her Wells Fargo account was not the hardest thing to do but then taking it out and putting it back could be quite a hassle.
Two concepts you discussed that this reply will expound upon further are, inventory turnover and maintaining top talent. From the example of Target alone we can see that it is not feasible to look at one metric or ratio alone. One must asses several metrics in order to get a clear picture of the financial stability of a given organization. According to Hançerlioğulları, Şen,& Aktunç (2016), “managing inventories is at the core of operational performance in many industries” (p. 681). Though Targets inventory turnover is low which may be thought to be a downfall of the corporation, Target CEO justifies the actions Target takes and use specific strategy in order to ensure the best use of space and products in order to keep cost lows and shelves
Professional scepticism is an important part of auditing as it necessitates the auditor exercising their qualified judgement in dealing with occurrences and circumstances of a countless number. (Auditing and Assurance Standard Board, 2012). Since the global financial crisis, there has been increasing importance placed on applying professional scepticism and many auditors have been criticised for not using scepticism in their valuation and assessments of factors like going concern issues, fair value judgements and related party transactions. (Association of Chartered Certified Accountants, 2015). Additionally, the importance of professional scepticism is essential in reducing the number errors found in financial statements.
It seams to be that corporations tend to take the easy route by claiming for bankruptcies leaving many creditors with losses. Although we cannot blame such corporates, in today’s time this is known as one of the hardest time to search for jobs and stay alive as a business. Looking at it form the economic view bankruptcies are not the best thing to do, especially in today’s economic many of these corporates and small businesses help contribute to our economy. Many of these bankruptcies occur due to government decisions such as drastic minimum wage increases from $11.45 to $14.00 and $15.00 by
In today’s world, a lot of companies are incorporating a credit score check in the application process. In some cases, this may actually be devastating. Not everyone is in debt due to carelessness, some are in debt because of not having healthcare and being unemployed. Yet a company is going to base this person 's approval on factors that they had no control over. For example, a person may have been laid off due to budget cuts and had to use their credit card to pay for their bills.