Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 17

Statement on Auditing Standards (SAS) No. 90 on Audit Committee Communications requires the auditor to discuss with the audit committee the quality, not just the acceptability, of the accounting principles used by an entity. Describe what should be included in a discussion about the quality of accounting principles.

Step 1 of 2

Accounting:

In simple words, accounting is the process of recording, classifying, and analyzing the financial information of a company. This is not a single process as it includes many sub-processes under it. It requires specific knowledge.

According to the AICPA Code of Professional Conduct, an accountant should use his professional knowledge and should be responsible for moral judgment in all his activities done in the course of action.

An accounting plan is a systematic method by applying rules, specific accounting treatment to record books of account.

Accounting rules:

Accounting rules are defined as a statement which provides guidelines to record the accounting transaction.