Audit And Business Structure Essay Samples
A review of financial statements requires an auditor to perform analysis and inquiry procedures in addition to the basic financial analysis service provided by the auditor. An audit consists of review of financial statements of the company and providing and opinion on its accuracy and information. The similarity between the two is the review of financial statements with the intention to locate any misstatements in accounting. The differences between the two are vast. Audit is conducted through the generally accepted auditing standards and a review is conducted in accordance with the standards of accounting and review services. An audit provides the opinion on financial statements as a whole while a review only brings attention to certain significant matters affecting the financial statements and a detailed analysis of the same.
The primary accounting fields include bookkeeping, accountant and CPA. The responsibilities of a book keeper involve maintaining day to day books for a business. The daily books like sales, purchase, cash etc should be prepared and kept up to date. The duties may also involve generation of internal as well as external financial documents. The work of a bookkeeper is reviewed by an accountant or an auditor as assigned by the company. The responsibilities of an accountant involve detailing and maintaining adequate information as required by the company. Accountants are hired by large companies to write and generate financial statements. An accountant is required to be a strategic thinker and should be able to work with a team. A CPA is basically hired by CPA firms or large organizations. They provide services like audit and assurance and are required to work with various clients. There are various fields a CPA can work in.
The different types of business structures include sole proprietorship which involves one person running a business, the owner is personally liable for any liabilities or taxes for the business. Partnership is a business which is owned by more than two people who have a share in the business. Each partner is liable for debt and taxes payable by the business. Nonprofit corporations include a corporation which is formed to carry out a service or art or promote a social cause. They do not intend to generate profits from the business. Co-operatives are businesses which are owned and run by its members. It is generally formed by consumers who want to create a friendly place for a business. A company is formed by a group of people and is run by them or people hired by them. A company is required to follow the rules of the State and it is required to report its income and financial information to the required stakeholders.
The basic difference between cash and accrual methods of accounting is related to the timing differences between the recognition of the two. Cash basis recognizes revenue when the money comes in and accrual basis recognizes revenue when it is earned. In cash basis, the income and expense is recognized when it is earned or spent. While in accrual basis, the revenue is recognized only on the completion of a job or provision of a service. In accrual basis, you will find accounts receivable and accounts payable, whereas in cash basis you will not find the same. This is because the income will be realized at the time of receipt of cash and not before or after that. Cash method takes cash flow in consideration and the benefit of accrual method is that it works according to the requirements of GAAP and provides information about the real income.
Accounting jobs and opportunities. (n.d.). Retrieved from Accounting Coach: http://www.accountingcoach.com/careers/accounting-jobs
Shankar, S. (n.d.). Accounting Methods: Cash Vs. Accrual. Retrieved from Houston Chronicle: http://smallbusiness.chron.com/accounting-methods-cash-vs-accrual-3732.html
The difference between an audit, audit review and compilation. (n.d.). Retrieved from National Association of Broadcast Employees and Technicians: http://www.nabetcwa.org/pages/the_difference_between_an_audit_review_audit_and_a_compilation
Types of Business Structures. (n.d.). Retrieved from Find Law: http://smallbusiness.findlaw.com/incorporation-and-legal-structures/types-of-business-structures.html