What role should the precautionary principle play in the development and application of accounting standards? Discuss the potential tensions that may arise between the need for financial transparency and the desire to mitigate against excessive risk-taking or risk-taking or overly optimistic reporting.

What role should the precautionary principle play in the development and application of accounting standards? Discuss the potential tensions that may arise between the need for financial transparency and the desire to mitigate against excessive risk-taking or risk-taking or overly optimistic reporting.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter3: Internal Control Over Financial Reporting: Responsibilities Of Management And The External Auditor

Section: Chapter Questions

Problem 2CYBK

See similar textbooks

Similar questions

What role should the precautionary principle play in the development and application of accounting standards? Discuss the potential tensions that may arise between the need for financial transparency and the desire to mitigate against excessive risk-taking or overly optimistic reporting.
What is non-IFRS financial information? Discuss how ASIC’s RG230 could be applied to minimise the provision of non-IFRS financial information that could be misleading to investors.
The various methods of financial statement analysis need to be used cautiously, with an awareness of the limitations of accounting data. True or false?
Define materiality. How does materiality come into play when assessing financial statement restatements? Other than materiality, what is the one word that might be the most distinguishing factor between ethical earnings management and unethical earnings management?
Which of the following situations violates the concept of reliability? Relevance is the capacity of information to make difference in decision by helping users from predictions about outcome of past, present and future events, or confirm/correct prior expectations The quality of reliability assures readers that the financial information is free from bias and faithfully represents what it purports to show, including adequate disclosure of significant information Under the IASB Framework for the Preparation and presentation of financial statements, conservatism is not a concept that is recognized as a qualitative objective I and II only II and III only I and III only I, II and III
Which of the following statements is false regarding planning analytical procedures in the revenue cycle? a. As revenue is typically regarded as a high-risk account, planning analytical procedures related to revenue are not required. b. The first step in planning analytical procedures includes developing an expectation of recorded amounts or ratios, and evaluating whether that expectation is precise enough to accomplish the relevant objective. c. Trend analysis would not be appropriate as a plan-fling analytical procedure in the revenue cycle. d. All of the above statements are false.
In the context of accounting conservatism, explain how accountants should handle uncertain events and estimates when preparing financial statements. Consider the impact of this principle on asset valuation and revenue recognition timing. What safeguards does this principle provide against overly optimistic financial reporting?
What kind of financial risk caused the SVB crisis, what could be done to deal with it and what could they have done to avoid it?
Which of the following arguments supports the view that regulation is not necessary, particularly to the extent that it currently exists? Select one: a. Markets for information are not efficient and therefore produce a sub-optimum amount of information, given the problem of 'free riders'. b. Accounting information is like any other good, and people will be prepared to pay for it to the extent that it has a use. c. Investors need protection from fraudulent organisations that may produce misleading information. d. Information asymmetry exists because not everyone has the same power over resources to obtain the information they need.
What reforms to the financial system might reduce its exposure to systemic risk?
What possible actions would an auditor might take if a client’s financial statements depart from GAAP. Would the demand for assurance services increase or decrease in the future?
What is the best way to reduce financial statement fraud?