Financial Accounting
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Please discuss the quality control standards and practices within the accounting profession. How are these standards and practices applied? Please use examples in your discussion.
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Solution Summary
The quality control standards and practices within the accounting profession are discussed.
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The Financial Accounting Standards Board (FASB) sets accounting principles for the profession.
Fundamental qualities of accounting financial statements:
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* Relevant
Relevant information makes a difference in a decision. It also helps users make predictions about past, present and future events (it has predictive value). Relevant information helps users confirm or correct prior expectations (it has feedback value). It must also be available on time, that is before decisions are made.
* Reliable
Reliable information is verifiable (when independent auditors using the same methods get similar results), neutral (free from bias), and demonstrate representational faithfulness (what really happened or existed).
* Comparable
Information must be measured and reported in a similar manner for different enterprises (allows financial statements to be compared between different companies).
* Consistent
The same accounting methods should be applied from period to period and all changes in methods should be well explained and justified.
To achieve basic objectives and implement ...
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