Article review Example | Topics and Well Written Essays - 500 words - 1

Review - Article Example ) â€Å"The goals of SOX were to enhance the transparency of financial information, reaffirm auditor independence, and define corporate governance – the responsibilities of corporate boards and audit committees†. The author has pointed out the advantages of Sarbanes act on the economy and young generation, as many of them are indulging in educating themselves on the aspects of this new law. However, one fact that distracts the reader is that, paragraphs are divided in to real small units. Moreover it can be realized that, the third paragraph is slightly complicated, which can turn the readers perplexed and confused. Many a times, readers can be of ordinary category and they can find theses sentences overwhelming or distracting. On the other hand, the best part is that, the third paragraph gives out statistical fact and figure by mentioning historical evidence on the financial security acts. In the third paragraph, there is also statement about the merits of the Sarbanes Act on the financial and investment sector Further, more proceeding into the later paragraph, it can be understood that the writer is projecting on the quality of PCAOB (Public Companies Accounting Oversight Board) in giving organizations an opportunity in securing their investment and financial transaction processes. It is stated in the article that, PCAOB will establish quality control in auditing, maintain ethical independence and standards in a registered public accounting firms. Moreover, the authenticating nature of PCAOB is revealed in the article, where in it shows how the accounting firms, media and press consider the above listed act. Another highlight of the PCAOB is detailed as its ability to give employment opportunity to people in information technology field. According to (Rosavich)â€Å" Documenting internal control involved a thorough review of systems and also meant additional employment opportunities for information technology professionals†. The writer had presented the

Brief Case Studies - Week 7 Essay Example | Topics and Well Written Essays - 750 words

Brief Case Studies - Week 7 - Essay Example They are listed in different stock exchanges of the world as well. Under such circumstances, it becomes quite complicated as well as costly to prepare the financial statements under different reporting requirements. IFRS issued by IASB provides the treatment of fair value accounting of property, plant and equipment which is currently not supported US GAAP issued by FASB. However, with the increasing adoption of IFRS, it is very likely that US GAAP will also add the similar treatment for fair value accounting of Property, Plant and Equipment. b) Fair value accounting has the biggest disadvantage of valuing property, plant and equipment on the basis of subjectivity. When measuring fair values of the property, plant and equipment, several subjective assumptions are taken by the evaluators which pose question marks upon the objective approach towards financial statements. Thus, the financial statements become less attractive to be compared with other financial statements of other entitie s due to lack of objectivity element. c) The fair value accounting for property, plant and equipment has the similarity with that of investment accounting. Under both types of accounting, if the fair values of the asset are increased, then stockholders’ equity is also increased directly such that it has no impact on the net profit of the entity. However, in case of decrease of the fair value of property, plant and equipment, and investment, the amount of decrease is expensed out in the income statement which directly decreases the profitability of the entity. After that the decreased amount of net profit is credited to stockholder’s equity. This mechanism is set out in order to apply the principle of conservatism which states that the entity should not anticipate any profits but it must anticipate all the losses. The fair value accounting for property, plant and equipment and investment accounting consider this principle as the unrealized gains are credited directly to equity whereas unrealized losses are charged as an expense in the income statement thus reducing the profitability of the entity. Analysis of Statement of Cash Flows (Case 16-3) a) 1. As far as depreciation is concerned, it is an item of non-cash expense. To make it very clear, it is not a cash flow. However, the reason behind including depreciation in cash flow statements is the elimination of effect of depreciation from calculating net cash flow increased or decreased. In order to arrive at the corrected figure of cash flows, the depreciation amount needs to be added in the net profit as it was deducted previously when calculating net income in the income statement. Since it is a non-cash expense, therefore, it does not decrease the cash flows. Because of this, it is added in the cash flow statement in order to provide the correct amount of cash flows. 2. Even though share issued for acquiring land is not a cash transaction, however, the substance of this transaction is based on share. If the company is going to buy back these shares, it would have to complete this transaction by providing consideration in cash. Under existing scenario, cash is not directly involved, but a significant investment is made, therefore, this transaction is shown as a separate schedule in the cash flow statement and not included in the mainstream working of calculation of cash flows. 3. Gain on sale of investment is also non-cash income therefore its treatment is similar to that of depreciation. Since the amount