- SYLLABUS:
- Students learn to: Examine ethical financial reporting practices
Audited accounts
- Audits are :: independent checks of the accuracy of financial records and accounting procedures.
- important part of the control process as it examines the financial affairs of a business
- The three main types of audits are:
? - Internal audits:
- conducted internally by employees to check accounting
- accounting with respect to;
- accounting procedures
- accuracy
- Management audits:
- conducted internally by upper management
- to review the firm’s ==strategic plan== and determine any changes
- conducted internally by upper management
- External audits:
- requirement of the Corporations Act 2001 (Cth)
- necessary for large companies to have their annual financial reports audited
- or small businesses that are being evaluated (& sold)
Record keeping
?
- Businesses must create source documents for every transaction that is conducted with the business, ==including cash payments==
- For cash payments, businesses may be tempted to not record transactions to pay lower taxes
- (as it is not counted towards revenue) - ^^ bad idea, as The Australian Taxation Office (ATO) regularly monitors business operations
Reporting practices
?
- Stakeholders in a ==private company== are legally entitled to receive financial reports annually.
- Businesses who pretend their profits are lower, will be prosecuted by the (ATO)
- loses trust with customers and investors
- making it harder to obtain future external finance.
- loses trust with customers and investors