Improper Revenue Recognition

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• Please choose 3 terms from the following list for this paper

  Improper recognition of revenue and expenses is an area of concern for all companies. If revenues or expenses are recognized improperly, it can lead to both legal and ethical issues.

• 1. What type of fraud do you consider to be most damaging to an organization? 2. Of the analysis of control procedures, which do your prefer? Explain. 3. How can mergers and acquisitions impact accounting information systems?

  SEC classifies these violations into three categories: - Revenue recognition, including fraudulent reporting of fictitious sales, inaccurate timing of revenue recognition, and improper valuation of revenue.

• Importance of recognising revenue

  Improper recognition of revenue will affect the net income of the company for the particular financial period and it will have its impact on the prices of stock.

• Auditing: revenue recognition procedures and policies

  As you can understand, much of the literature and pronouncements by the SEC, FASB and the AICPA resulted from the occurrence of fraud, and there are numerous recent examples of improper revenue recognition procedures among Fortune 500 companies.

• Recognition policy

  Evaluate the employee recognition policy used by the original owner of the company. What could the original owner have done better? Evaluate the employee recognition policy used by the original owner of the company.

• Risks to the revenue and collection cycle

  565209 Risks to the revenue and collection cycle Explain some risks to the revenue and collection cycle that are the result of improper revenue collection. When improper revenue amounts are reported as income, the risks are that 1.

• Fraudulent Financial Reporting: Diebold

  This includes fraudulent use of bill-and-hold accounting, improper recognition of lease-agreement revenue, manipulating reserves and accruals, fraudulently delaying and capitalizing expenses, and improperly writing up the value of used inventory.

• Notes to financial statements

  a) to provide disclosures required by generally accepted accounting principles b) to correct improper presentation in the financial statements c) to provide recognition of amounts not included in the totals of the financial statements d) to present

• WorldCom: The Expense Recognition Principle

  Also, the requirement of Paragraph 68 of PCAOB Auditing Standard No. 12 which asks the auditor to presume a fraud risk involving improper revenue recognition is invoked when Dex recognizes revenues from Colorado Springs directory in 2000, and secretly