1. AB 99 lists eight qualitative factors that impact the definition of materiality. List all eight...

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Accounting

1. AB 99 lists eight qualitative factors that impact thedefinition of materiality. List all eight of these qualitativefactors, and explain five.
2. Define Disclosure Fraud and list and explain four examples ofit.

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Ans The Definition of Materiality In accounting materiality refers to the impact of an omission or misstatement of information in a companys financial statements on the user of those statements If it is probable that users of the financial statements would have altered their actions if the information had not been omitted or misstated then the item is considered to be material If users would not have altered their actions then the omission or misstatement is said to be immaterial The materiality concept is used frequently in accounting especially in the following instances Application of accounting standards A company need not apply the requirements of an accounting standard if such inaction is immaterial to the financial statements Minor transactions A controller who is closing the books for an accounting period can ignore minor journal entries if doing so will have an immaterial impact on the financial statements Capitalization limit A company can charge expenditures to expense that would normally be capitalized and depreciated over time because the expenditures are too small to be worth the tracking effort and capitalization would have an immaterial impact on the financial statements Thus materiality allows a company to ignore selected accounting standards Here are several examples of materiality in accounting information A company encounters an accounting error that will require retrospective application but the amount is so small that altering prior financial statements will have no impact on the readers of those statements A controller could wait to receive all supplier invoices before closing the books but instead elects to accrue an estimate of invoices yet to be received in order to close the books more quickly the accrual is likely to be somewhat inaccurate but the variance from the actual amount will not be material A company could capitalize a tablet computer but the cost falls below the corporate capitalization limit so the computer is charged to office supplies expense instead Ans2 Define and Disclose the fraud By fraud we mean Any intentional false representation including failure to declare information or abuse of position that is carried out to make gain cause loss or expose another to the risk of loss In the UK the term fraud is used to describe many acts such as deception bribery forgery extortion corruption theft conspiracy embezzlement misappropriation false representation concealment of material facts and collusion Fraud and Corruption Arguably the terms fraud and corruption should be considered as one fraud and corruption It provides the opportunity to adopt a wide and simple definition fundamentally that fraud and corruption is an unethical act by anyone diminishing the value of the organisation This does not limit fraud or corruption to specific offences under which they may be prosecuted such as the Fraud Act 2006 the Prevention of Corruption Act 1906 or the Bribery Act 2010 As well as clear criminal Fraud Act fraud intending dishonesty gain or loss criminal Bribery Act bribery bribing being bribed failure to prevent fraud and corruption also includes both fraud and bribery civil offences and damaging misbehaviour etc Example types of fraud Fraud risks Fraud risks are many and varied See Answer

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1. AB 99 lists eight qualitative factors that impact the definition of materiality. List all eight...

50.1K

Verified Solution

Question

Accounting

1. AB 99 lists eight qualitative factors that impact thedefinition of materiality. List all eight of these qualitativefactors, and explain five.
2. Define Disclosure Fraud and list and explain four examples ofit.

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1. AB 99 lists eight qualitative factors that impact the definition of materiality. List all eight...

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Accounting

1. AB 99 lists eight qualitative factors that impact thedefinition of materiality. List all eight of these qualitativefactors, and explain five.2. Define Disclosure Fraud and list and explain four examples ofit.

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1. AB 99 lists eight qualitative factors that impact thedefinition of materiality. List all eight of these qualitativefactors, and explain five.
2. Define Disclosure Fraud and list and explain four examples ofit.