Accounting for Students

Professional Fees Professional fees should be a fair reflection of the value of the professional services performed for the client, taking into account: The skill and knowledge required for the type of professional services involved. The level of training and experience of the persons necessarily engaged in performing the professional services. The time necessarily occupied by each person engaged in performing the professional services. The degree of responsibility that performing those services entails. The fact that one professional accountant in public practice may quote a fee lower that another is not in itself unethical. Nevertheless, there may be a self-interest threat to professional competence and due care created if the fee quoted is so low that it may be difficult to perform the engagement in accordance with applicable technical and professional standards for the price. Appropriate safeguards which may be adopted include: Making the client aware of the terms of ...

Professional Appointments Client Acceptance Before accepting a new client relationship, a professional accountant in public practice should consider whether acceptance would create any threats to compliance with the fundamental principles. Potential threats to integrity and professional behavior may be created if the client is involved in illegal activities or if the client's owners or management lack integrity. Appropriate safeguards may include obtaining knowledge and understanding of the client, its owners, managers, and those responsible for its governance and business activities or securing the client's commitment to improve corporate governance practices or internal controls.  Engagement Acceptance A professional accountant in public practice should agree to provide only those services that he is competent to perform. A self-interest threat to competence and due care principle is created if the engagement team does not possess, or cannot acquire the competence n...

Safeguards Once a threat that is other than insignificant has been identified and evaluated, safeguards should be considered and applied as necessary. If the firm decides to accept or continue the engagement, in spite of the significant threats identified, such decision should be documented including a description of the threats identified and the safeguards applied to eliminate or reduce the threats to an acceptable level.The nature of the safeguards to be applied will vary depending upon the circumstances. Consideration should always be given to what a reasonable and informed third party having knowledge of all relevant information including safeguards applied, would reasonably conclude to be unacceptable. The consideration will be affected by matters such as the significance of the threat, the nature of the assurance engagement and the structure of the firm. In certain situations, no safeguards are available to eliminate or reduce the threat to an acceptable level. Hence, the ...

Intimidation threat  occurs when a member of the engagement team may be deterred from acting objectively and exercising professional skepticism by threats, actual or perceived, from the directors, or employee of an assurance client. Here are some examples of of circumstances that may create intimidation threat but are not limited to: Being threatened with litigation. Being threatened with dismissal or replacement over a disagreement with the application of an accounting principle. Being pressured to reduce inappropriately the extent of work performed in order to reduce fees. So, we have already discussed the threats to compliance with fundamental principles in auditing. Next, I am going to share with you the safeguards to minimize the threat or completely eliminate the threat to deliver the appropriate opinion in conducting the audit. 

Familiarity threat occurs when by virtue of a close relationship with a client, its directors, officers, or employees, a firm or a member of the engagement team becomes too sympathetic to the client's interest. Here are some examples of the circumstances that may create this threat but are not limited to: A member of the assurance team having an immediate family member or close family member who is a director or officer of the assurance client.  A member of the assurance team having an immediate family member or close family member who, as an employee of the assurance client, is in position to exert direct and significant influence over the subject matter of the assurance engagement.  A former partner of the firm being a director, officer of the assurance client or an employee in a position to exert direct and significant influence over the subject matter of the assurance engagement.  Long association of a senior member of the assurance team with the assurance cli...

Advocacy threat occurs when a firm or a member of the engagement team promotes, or may be perceived to promote an assurance client's position or opinion to the point that objectivity may, or may be perceived to be compromised. Such may be the case if a firm or member of the engagement team were to subordinate their judgement to that of the client. Here are some examples of circumstances that may create this threat, but are mot limited to: Dealing in, or being a promoter of share or other securities of the client. Acting as an advocate on behalf of an assurance client in litigation or in resolving disputes with third parties. 

Last time I have shared to you some details about self-interest threat in auditing. Now, lets know more about self-review threats  and how can it affect auditing. Self-review threat occurs when any product or judgement of a previous assurance engagement or non-assurance engagement needs to be re-evaluated in reaching conclusions on the assurance engagement or when a member of the assurance team was previously a director or officer of the assurance client, or was an employee in a position to exert direct and significant influence over the subject matter of the assurance engagement. Here are some examples of circumstances that may create this threat, but are not limited to: A member of the assurance team being, or having recently been, a director or officer of the assurance client.  A member of the assurance team being, or having recently been, an employee of the assurance client in a position to exert direct and significant influence over the subject matter of the assur...

Last time, I have shared to you the 5 threats to Compliance with Fundamental Principle in auditing. Now. I am going to elaborate more on the first threat to auditing which is self-interest. Self-interest threat occurs when a firm or a member of the engagement team could benefit from a financial interest in , or other self-interest conflict with a client. The nature and significance of the threats may differ depending on whether they arise in relation to the provision of services to a financial statement audit assurance client or a non-assurance client. Examples of circumstances that may create this threat include, but are not limited to: A direct financial interest or material indirect financial interest in an assurance client.  A loan or guarantee to or from an assurance client or any of its directors or officers. Undue independence on total fees from an assurance client.  Concerns about the possibility of losing the engagement.  Having a close business relat...

Hello dear readers, what I am writing in this blog is not only helpful to accounting students, but also to other readers who are interested about accounting. Accounting is a broad topic. Auditing is under this and I am going to share to you what are the threats to compliance with fundamental principles when doing an audit. Compliance with the fundamental principles may potentially be threatened by a broad range of circumstances. Many threats fall into the following categories: 1. Self-interest 2. Self-review 3. Advocacy 4. Familiarity 5. Intimidation Keep visiting my blog and I will discuss with you each of these categories next time.

Today's the start of classes this semester, and of course I was 45 minutes late for my 7AM class. Anyway, my teacher, Mrs. Causing in Auditing Theory and Problems, shared this tips for answering multiple choice questions, ans I am also going to share this with you.  1. Work individual questions in order. However, if a question appears lengthy or difficult, skip it until you can determine it, after an extra time is available. Mark it for review to remind you to return to a question that you have skipped or needs to be reviewed. (They say, you can mark these numbers on your questionnaire but never on your answer sheet during board exams.) 2. Read the stem of the question without looking at the answers. The answers are sometimes misleading and may cause you to misread or misinterpret the question.  3. Read each question carefully to determine the topical area.     a. Study the requirements first so that you will know which data are important.   ...

Today is the last day of my semestral break vacation and tomorrow is the first day of my last sem in college. It'll be hard waking for that  7 AM class, when I know that my teacher strictly checks the attendance as soon as she arrives in the classroom. She rarely comes late, if she does, she'll only be late for a maximum of ten minutes. She was once my teacher in Auditing and Assurance, and I have been often late in her class. I think our class started at 9 in the morning and she would always tell me every time I came late, " Miss Delgado, our class starts at 9". Of course, I was seated in the second row, and I kinda felt embarrassed before. However, once you have the habit of coming to class late, that feeling of embarrassment will just slowly go away. But I have to focus this last sem. I have four integrated review subjects and this time, for the last time, I have to take theme seriously. It won't be long and I will too become a CPA.

Normally, it would only take a person for years in the Accountancy curriculum to finish the degree. In my case, it is six years. I'm currently in my last semester, meaning to say, I have already survived those five and half years in college. Am I really this determined to get this degree? As I go through my classes, I have learned that accountants can make a difference in an organization. There have been a lot of cases where financial scandals brought the world economy down due to accounting anomalies. I have also learned that accountants don't really earn as much as managers. Yes, it is quite discouraging, but I know, I must move on. The question is, is salary a factor? Last semester, we had this feasibility study about operating an organic piggery. We enjoyed working on the project and one of the best experience is actually "manipulating" the figures so as to get a favorable outcome. What I mean when I say "manipulating" is actually adjusting the number...