Auditing a Publicly Traded Company

Auditing a Publicly Traded Company

Auditing a Publicly Traded Company
Debra Meyer, Nora Farland, Elizabeth Pinon, and Jennifer Purvis
ACC541
April 18, 2011
Delphine Agnor Wolsker

Auditing a Publicly Traded Company
Memorandum
To: Delphine Agnor Wolsker, Supervisor
From: Learning Team B CPA, LLC
Date: April 18, 2011
Re: Evaluation of Generally Accepted Accounting Principles (GAAP), Share-Based Payment Reporting and Special Purpose Entities (SPE)

Learning Team B CPA, LLC will be auditing ACC541, Inc, a publicly traded company.   Throughout our audit, our field team will be appraising the company to verify conformity to Generally Accepted Accounting Principles (GAAP).   As the team designated to work on the client’s audit, we are providing a synopsis on what we are in search of to substantiate that the company is in compliance with GAAP while paying specific attention to share-based payment reporting and special purpose entities (SPE).

Is it GAAP?
The purpose in financial statements is to ensure that information reported on the financial statements is relevant, reliable, honest, and accurate. Financial statements help to communicate financial information of a company to its stakeholders and to identify a company’s financial performance. By complying with Generally Accepted Accounting Principles (GAAP), auditors can ensure appropriate internal controls are in place. The IASC designates that equity be classified to disclose amounts put in by stockholders, earnings, and capital maintenance adjustments. The shared base payment transaction is important to the decision-making needs of the users of financial statements because they indicate current legal restrictions, and may reveal that different ownership interests have different rights. To be consistent with GAAP, the accounting requirements for shared-based payment depends on transaction recognition through the issuance of: goods and services received; required to pay cash; transactions in which they are cash or equity during the...