Auditing Memo

In: Business and Management

Submitted By shay1
Words 1042
Pages 5
Subject: Share-Based Payment Reporting and SPE Reporting

Special Purpose entities (SPE) within publicly traded companies have special accounting rules that one must follow to be compliant with the Generally Accepted Accounting Principles (GAAP). When auditing a company that uses share-based payments and SPE’s this firm needs to be familiar with the proper standards of reporting. To ensure an efficient audit this memo will discuss the treatment of share-based payments as well as the accounting for consolidations relating to SPE’s. This will help in an effort to provide the best services possible to our clients.
Client’s Consistency with GAAP
Our company shall note that we shall conduct audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards demand that we make sure our audited material is free of misstatement. Throughout the audit we must plan and perform to acquire a reasonable outcome of the financial statements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. The audit also includes evaluating the accounting principles used and important estimates made by management as well as appraising the financial statement presentation. The basis for our opinion relies on a reasonably based audit.
Accounting Consolidation Theory
A technique used in financial accounting is termed consolidation which combines a group of companies' financial statements into one. This is beneficial because if offers a view of the whole company’s financial state. This gives the auditors a chance to see how combinations of the companies are performing. Accounting Consolidation is used when a corporation owns 50% or more of another company. The technique of consolidating accounting records is handled by combining the income…...

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