When conducting an audit, professional standard must require auditors to consider the clients control environment. According to (www.aicpa.org) professional standards is the comprehensive source of auditing and attestation pronouncements issued by the AICPA, along with the AICPA Code of Professional Conduct and Bylaws .The control environment refers to the overall tone of an organization as it relates to issues such as financial checks and balances. The tone reflects the attitude, awareness, and actions of the board of directors, management, and owners who influence the control consciousness of its people.
There were some weaknesses that were evident in Lincoln’s control environment. One of the potential risks within the company was that when
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When dealing with a nonrecourse note, if the borrower of the note decides to default with the payments, the issuer of the note can seize the collateral but cannot seek out the borrower for any further compensation. If the collateral does not cover the amount of the default the issue of the note cannot go after the borrower. A recourse note is a debt that allows the lender to collect from the borrower and the borrower assets in the case of default as opposed to foreclosing on a particular property or asset as with a home loan or auto loan. In the case of Lincoln Savings, the company received nonrecourse notes rather than recourse notes, one of the reasons why they chose to receive nonrecourse notes rather than the recourse notes as payment or partial payment on many of the properties sold was because they wanted to inflate earnings. Lincoln wanted to show a gain on their books so that their financial would appear better. Since Lincoln accepted the nonrecourse notes as a form of payment for the properties that were sold, it significantly weakened the quality of the collateral backing its loan and it’s ability to recover should the loan holders …show more content…
This allowed Lincoln to show a large amount of paper gain in their books, which would eventually allow them to improve their financial statements. The professions auditing standards identify the principal “management assertions” that underline a set of financial statements. Some of the key assertions that Arthur Young, the auditor should have attempted to substantiate for the Hidden Valley transition are completeness, which is when the auditor should have realized if the transactions are completes and have they been correctly reported. Another assertion is the cutoff which means has the transactions been recorded in the correct time period. Another assertion that should have been used is accuracy, which means was the transitions recorded properly. Some procedures that the auditor should have done is to examine the Hidden Valley transaction and should have questioned it more. One of the questions they should have asked was if they buyer was qualified enough for this transaction. The auditors should have also questioned the size and amount of this transaction. Another procedure the auditor should have done to ensure this transaction was correct was to do sample testing. Some evidence that the auditors should have collected is the names of all the professionals that were involved within this transaction such as any advisors, or
Overall, the work performed to test the relevant financial statement assertions and the evidence gathered has led our audit team to conclude that the confirmation issues encountered may signify that a potential for material misstatement exists. For example, the existence of a line of credit in one of the Financial institutions indicates that we need to perform further investigation to assess the reliability of the findings.
However, it is expected that a good auditor would have tripped into some type of a red flag that would have brought them to the discovery of further more extreme
Auditors do not provide audit opinions for different levels of assurance. Therefore, auditors consider providing more or less assurance when modifying evidence for engagement risk to be unnecessary. However, auditors should be professionally responsible to accumulate additional evidence, assign more experienced personnel, and review the audit more thoroughly, particularly when a client poses a higher than normal degree of engagement risk. The auditor should also modify evidence for engagement risk when high legal exposure and other potential actions affecting the auditor
Thomas J. DiLorenzo is professor of economics at Loyola University Maryland. He is also a member of the senior faculty of the Mises Institute. DiLorenzo has also written Lincoln Unmasked; How Capitalism Saved America; and Hamilton 's Curse: How Jefferson’s Archenemy Betrayed the American Revolution — and What It Means for Americans Today. So DiLorenzo is a well known writer and an economics professor who is highly educated and qualified to write on the economic positions of the civil war. The purpose of this book The Real Lincoln is to prove that a lot of the good credited to Lincoln is merely “myth.”(DiLorenzo 1) The Author Thomas J. DiLorenzo attempts to do this by writing of Lincoln’s motives based upon quotes from Lincoln’s speeches and
This organization has been setting ethical standards and publishing the Code of Professional Conduct for the profession since the early 1900s. A Code of Professional Conduct is necessary for any profession to help maintain strict ethical standards. This organization is the basis of ethical reasoning in the accounting profession because of what the Code of Professional Conduct covers. The code is comprised of a preamble and six articles. The preamble and the six articles serve as a foundation to provide guidance and guidelines for accountants to overcome any emerging ethical issues with ease on a daily basis. The six articles’ purpose is to protect the public, investors, and creditors. The AICPA Code of Professional Conduct consists of: Responsibility, Public Interest, Integrity, Objectivity and Independence, Due Care, and Scope and Nature of
In his work, The Real Lincoln, economic historian Thomas J. DiLorenzo tells quite the different tale. Daring to criticize this beloved president, DiLorenzo defends his antithetical statements with several key points: Lincoln was more similar to a dictator than an American President. Arguing that the War Between the States was wholly unconstitutional, DiLorenzo corrects the popular misconception that Lincoln’s war was one of abolition. War was not necessary to end slavery, but it was necessary to fulfill Lincoln’s true agenda – to destroy the most significant check on the powers of the central government: the right of secession.1
Abraham Lincoln was born in 1809 on the Kentucky frontier. His parents were Thomas Lincoln and Nancy Hanks Lincoln. He and his parents were all southern born, even though his ancestors were born in Pennsylvania and New England. In 1816, when Lincoln was seven years old, he and his family moved to Indiana. Later on, close to his adulthood, they moved to Illinois. Lincoln’s mother, Nancy, died when he was only nine years old. In 1828-1831 he traveled in a flat boat down the great Mississippi River to New Orleans, Louisiana. When he got to New Orleans, he realized that Illinois was a better place to live in so he went back there. He went to a pioneer village to live at first, then on to Springfield, IL. He volunteered to fight the Indians as a “citizen’s soldier”, but never had to actually fight any Indians. He eventually decided to start studying law. “Later, he made fun of his military experience, removing it as far as possible from a real war experience, speaking of it as consisting of bloody struggles with mosquitoes and charges upon wild onions."
During the Civil War, Lincoln said he, "…never had a feeling politically that did not spring from the sentiment embodied in the Declaration of Independence". Lincoln saw the Declaration of Independence, or more appropriate the Declaration of Liberty, as the underlying basis of American government. The value of liberty inadvertently convened on every principle contrived by the delegates that came to Philadelphia that hot day in May. Lincoln made this statement in direct response to southern succession. He was justifying forcibly returning the Southern states back to the union.
Internal Risk Assessment Risks Description Management Conflicting interest Conflicting interest of the management Sub-optimization Lack of goal congruence Force majeure (ex. fire, robbery, etc.) Acts done by the employees of the company Loss of competitive advantage Tampered reputation Financial mismanagement Internal control breach Operations Employee mutiny Different interests between the management and the employees that can lead to boycott of their work G. Issues and Challenges Arising from Internal Analyses The analysis of the company's internal environment is based on the strength, weaknesses, and and the risks tied to it.
With every business activity come opportunities for fraudulent behavior which leads to a greater demand for auditors with unscathed ethics. Nowadays, auditors are faced with a multitude of ethical issues, and it is even more problematic when the auditors fail to adhere to the standards of professional conducts as prescribed by the American Institute of Certified Public Accountants (AICPA). The objective of this paper is to analyze the auditors’ compliance with the code of professional conduct in the way it relates to the effectiveness of their audits.
As per PCAOB standard 12 it is our responsibility to identify internal and external risks to the business and risks that could result in material misstatement. The Newham
This is a publicly traded company in the US that has been ding quite well in the recent years. The company’s 10k filing for the year 2014. From this statement, the risks facing the company will be identified classified and suggestions made on how best to mitigate them in the subsequent areas. There are various areas that the risks can arise based on the company’s 10k filling (Mertz, 1999).
Identify the potential risks which affect the company and manage these risks within its risk appetite;
When planning an audit, the auditor will set up a planned assessed level of control risk. The planned assessed level of control risk can be changed by the auditor. The assessed level is planed depend on the assumptions of the quality of internal control structure. The actual assessed level of control risk is set for each assertion depend on proof of the internal controls. In fact, the auditor cannot change the actual assessed level of control
The company recognizes that it is subject to both market and industry risks. We believe our risks are as follows, and we are addressing each as indicated.