Management Accounting Financial Statement Audited

Question: Discuss about theManagement Accountingfor Financial Statement Audited. Answer: Requirements by the Organizations to get their Financial Statement Audited Financial statements are the integral part of the organization that represents the business performance and position during the accounting year. The financial statements are prepared to determine the organizational profitability and position of assets and liabilities for the use and benefits of stakeholders. According to the Corporations Law and accounting standards requirements, it is important for the organizations to get their financial statements audited even though there is no legislative requirement (Tang, Tian and Yan 2015). Auditing is required to ascertain the true and fair view of the financial statements as well as to ensure the compliance of relevant accounting principles and standards. Auditing of financial statement is important to determine the transparency and accountability of the financial information recorded and reported in accordance with the generally accepted accounting principles (Abbott et al. 2016). Identification of Specific Control Activity for Each Internal Control (a) Authorization and approval to ensure the consistency of the working hours of the employees. (b) Reconciliation activity is considered to ensure the presence of employees for presenting the payroll cheques. Reconciliation and review is to be conducted to determine the genuine presence and true facts about the proposed employees. (d) Physical security in the form of previous termination notices and other documents to verify the actual reasons. (e) Record and maintenance to ensure the safety of checques not collected by employees. Specific Misstatement Resulting from the Absence of Control (a) Amount of payroll may not tally with the total working hours of the employees. (b) Misstatement may occur in presentation of cheque to unauthorized employees. Such misstatement may result in mislead or fraud appointment of proposed employees. (d) Failure to this internal control might reflect wrong information on the previous termination reason. (e) Such misstatement would result in monetary loss to the organization. Reference List Abbott, L.J., Daugherty, B., Parker, S. and Peters, G.F., 2016. Internal audit quality and financial reporting quality: The joint importance of independence and competence.Journal of Accounting Research,54(1), pp.3-40. Tang, D.Y., Tian, F. and Yan, H., 2015. Internal control quality and credit default swap spreads.Accounting Horizons,29(3), pp.603-629.