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• Financial accounting is designed to supply information in the form of profit and loss account and balance sheet to external parties like shareholders, creditors, banks and investors while. Management Accounting is designed principally for providing accounting information for internal use of the management. Thus, financial accounting is primarily an external reporting process while management accounting is primarily an internal reporting process.
• In financial accounting only such economic events find place, which can be described in money. However, the management is equally interested in non-monetary economic events, viz., technical innovations, personnel in the organization, changes in the value of money, etc. These events affect management's decision and, therefore, management accounting cannot afford to ignore them.
• Financial accounting portrays the position of business as a whole. The financial statements like income statement and balance sheet report on overall performance or statues of the business while management accounting directs its attention to the various divisions, departments of the business and reports about the profitability, performance, etc., of each of them. Financial accounting cannot reveal what part of the management action is going wrong and why. Management accounting provides detailed analytical data for these purposes.
• Financial accounting is concerned with the monetary record of past events while Management accounting is accounting for future and, therefore, it supplies data both for present and future duly analyzed in detail in the 'management language' so that it becomes a base for management action.
• The period of reporting is much longer in financial accounting as compared to management accounting.
• Financial accounting is more objective while management accounting is more subjective. This is because management accounting is fundamentally based on judgment rather than on measurement
• There is less emphasis on precision in case of management accounting as compared to financial accounting since the information is meant for internal consumption.
skilled writter answered the question on April 24, 2018 at 18:42
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(a) Internal controls over non-current assets are designed to ensure the
orderly and efficient running of the business, adherence to management
policies, safeguarding of assets, the prevention of fraud and error and
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Required:
List the internal controls that a small printing company with office
equipment, motor vehicles and plant and machinery should have in place
to achieve the objectives described above.
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Internal and external auditors use it for both tests of controls, and
substantive testing.
Required:
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Date posted: April 3, 2018. Answers (1)
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and...(Solved)
Your firm is the newly appointed external auditor to a large company that
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and you have been asked to co-operate with internal audit to keep total
audit costs down. The company wants the external auditors to rely on
some of the work already performed by internal audit.
The internal auditors provide the following services to the company:
(i) A cyclical audit of the operation of internal controls in the company’s
major functions (operations, finance, customer support and
information services);
(ii) A review of the structure of internal controls in each major function
every four years;
(iii) An annual review of the effectiveness of measures put in place by
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During the current year, the company has gone through a major internal
restructuring in its information services function and the internal auditors
have been closely involved in the preparation of plans for restructuring,
and in the related post-implementation review.
Required:
a) Explain the extent to which your firm will seek to rely on the work of
the internal auditors in each of the areas noted above.
b) Describe the information your firm will seek from the internal auditors
in order for you to determine the extent of your reliance.
c) Describe the circumstances in which it would not be possible to rely on
the work of the internal auditors.
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in certain audit areas in addition to relying on the work performed by
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„Checking sales ledger cash received after the year-end to determine the realisability of debtors at the year-end and highlight doubtful debts.‟
The detailed audit work was completed on Friday 5 December 1997. It is proposed that:
a) The audit report will be signed on Friday 19 December;
b) The financial statements will be sent to shareholders on Monday 5 January 1998; and
c) The company‟s annual general meeting will be held on Wednesday 28 January 1998.
Required:
a) Consider the auditor‟s responsibilities for detecting material subsequent events in the periods:
i) 31 October to 5 December 1997 ii) 5 December to 19 December 1997 iii) 19 December 1997 to 5 January 1998
iv) 5 January 1998 to 28 January 1998
v) After 28 January 1998
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c) Describe the audit work you will carry out in period (a) (ii) above.
Date posted: March 28, 2018. Answers (1)
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(a) What is meant by the term "fraud"? Give four examples of fraudulent activities.
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Required:
a) Briefly, explain how Smith & Co. Associates may resign from its appointment before the next annual general meting.
b) How any a casual vacancy arising from the resignation of present auditors be filled and what procedures are necessary before the company‟s next annual general meeting at which the appointment will be presented for ratification?
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Date posted: March 28, 2018. Answers (1)
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(a) Explain why auditors carry out circularisation of debtors.
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(c) Describe in detail the work you would carry out in scrutinizing the replies to the debtors circularisation and in confirming whether the debtors balances are collectable in the following situations:
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iii. where no reply is received from the debtor
Date posted: March 28, 2018. Answers (1)
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Required:
a)Define materiality.
b) Explain the importance of this concept to the auditor.
c) Suggest some criteria for determining cut-off point in order to assess the materiality of an error.
Date posted: March 28, 2018. Answers (1)
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Required:
a) Do the auditors, XYZ & Co. have any liability to Mr. John Mutiso?
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Required:
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Date posted: March 22, 2018. Answers (1)