We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Question 1

The best essay writers are ready to impress your teacher.
Make an order now!


Proceed

The main role vested by the Certified Public Accountant is to provide financial information to interested users in order to aid them in their economic decisions.  The complexity of organizations is recurrently increasing in today’s dynamic markets.  The accountant is thus an important player that highlights the critical areas of the firm from the elaborate information generated from its operations (Gawalis Joseph Jr. 2002).

GET A BETTER ESSAY OUR TEAM IS READY TO WRITE
YOUR ESSAY ON
Certified Public Accountan JUST FROM $13/PAGE

Accounting is a process that commences from the business transaction and ends up in the reports prepared to interested users both internal and external users.  The accountant should therefore ensure that such process runs properly to provide appropriate information.  A problem of independence frequently arises in firms, especially limited companies where separation between the providers of finance and the management exist. Shareholders, lenders, creditors and other parties who have provided assets to the company are interested in evaluating the efficiency with which such firm is managed.

This principle of management stewardship is assessed with the aid of the financial statements prepared by the accountant (Lewis Richard et al, 1996, p 58).  Thus the accountant may face pressure from management to hide negative financial information that may have arisen in order to enhance a positive assessment on their stewardship.

On the other hand the providers of finance would request objective information on all relevant aspects of profitability, liquidity and stability.  In this respect it is important that the accountant is independent, that is free from bias and reports what has actually happened in the firm without unethically favouring any party.  Incidents like the Enron case have increasingly highlighted the importance of such ethical concept.

Question 2

The qualitative characteristic of relevance rests on the premise that to be fruitful, financial information should be applicable to the decision making needs of the interested users.  Financial information is conveyed to be relevant when it holds the capability to influence the decision of users (Lewis Richard et al, 1996, p 13).  For example, a lender would be interested in the ability of the firm to pay the interest on time.  Relevant information would thus be on the profitability and cash flow position of the company.

Every information to be of use should be reported on time, because otherwise it will lose its relevance (International Accounting Standards Explained 2000, p 87).  For instance, if the financial performance of the company of 2000 is provided in 2007, such information being seven years late would be of no relevance because the decision of the lender will not be affected.  Indeed company regulators normally pose deadlines on the preparation of the financial statements in order to abide with such principle.

The majority of financial information that is provided comprises numerical amounts that represent the financial strengths/weaknesses of the organization.  It is imperative that such information is of the correct numerical amounts and they represent faithfully what has actually happened in the company.

Question 3

Three types of audit opinion comprise unqualified opinion, disclaimer of opinion and qualified adverse opinion.

The unqualified opinion arises when the auditor has obtained all the necessary audit evidence and no material misstatements were found.  In this respect such opinion states that the financial statements are true and fair and comply with relevant laws (ACCA Study Text 2000, p 326).

In instances where the auditor was not capable to obtain all sufficient and appropriate audit evidence in a number of sections due to incomplete records or other relevant feature, a disclaimer of opinion is issued.  This is the result of no audit opinion being given on the company audited (ACCA Study Text 2000, p 333).

Whenever significant errors are found in the financial statements of the firm in a number of areas, a qualified adverse opinion is issued.  This states that the financial statements do not give a true and fair view of the state of affairs of the company (ACCA Study Text 2000, p 335).

References:

ACCA Study Text. The Audit Framework. Eighth Edition. London: BPP Publishing Limited, 2000.

Gawalis Joseph Jr. What is a Certified Public Accountant?. Webspawner, 2002. (Accessed 27th July 2007). Available from: http://www.webspawner.com/users/gawalisjr5/index.html.

International Accounting Standards Explained. Framework for the Preparation and Presentation of Financial Statements. West Sussex: John Wiley & Sons Limited, 2000.

Lewis Richard; Pendrill David. Advanced Financial Accounting. Fifth Edition. London: Pitman Publishing, 1996.

Share this Post!

Kylie Garcia

Hi, would you like to get professional writing help?

Click here to start