New Going Concern Financial Accounting Standard.
Need help with my Accounting question – I’m studying for my class.
Before FASB issued ASC 205-40 (“Presentation of Financial Statements—Going Concern”) in 2014, there has been no guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. Meanwhile, auditors have been always required to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern, and, under certain circumstances, discuss the matter in the Auditor Report (AS 2415 for PCAOB standards; SAS 132 for AICPA standards). For this assignment, students are required to read relevant accounting and auditing standards and understand effects of ASC 205-40 on auditors and information users of the financial statements.
- Read AS 2415 and explain briefly what auditors are required to do when there is a doubt on the client company’s ability to continue as a going concern (hint: A doubt does not ALWAYS result in an additional paragraph in Audit Report).
- Read ASC 205-40 and the WSJ article posted on Blackboard, and discuss any difference between when the management is required to discuss the going concern issue in their report and when the auditors is required to include a ‘going concern’ paragraph in Auditor Report.
- Review the 2016 annual report of Sears Holdings Corp. (SHLDQ), for the fiscal year ended January 28, 2017, and find the disclosure on going concern issues in footnotes for financial statements. Then, see if there is any discussion on the same issue in the Auditor Report. If there is any difference in disclosures, explain the reason based on your analysis in 2. above.
- Read newspaper articles and academic/practitioner journals discussing the topic, and think about how the new accounting standard will affect auditors and investors (or information users of the financial statements).
- Would ASC 205-40 change the auditors’ decision on whether to include the going concern paragraph in the Auditor Report?
- What would happen to auditors if they did not discuss the going-concern issues in their report when the client management included a footnote disclosure regarding the issue? Think about it in relation to legal liability for auditors (Chapter 4).
Note: The list above does not present a complete list of issues related to the topic. You may additionally discuss other issues relevant to going concern disclosure requirements in your paper.
- Length for the essay: minimum 1500 words (no more than 1800) (on double-spaced pages) PLUS a list of references (make sure you follow an appropriate introduction, conclusion and reference format).
- Follow APA formatting guidelines: The guidelines are described at https://owl.english.purdue.edu/owl/resource/560/01…
ACCT 461 – Prof. Buhler
READ THE INSTRUCTION CAREFULLY!!!
- Margins: 1” (Left justification ONLY).
- Font: Times New Roman, 12 point.
- Headings and Subheadings: Use them as appropriate.
- Do not forget Page Numbers.
- References: You must provide proper citations for all references used to avoid plagiarism. Any direct quotes must be indicated as such. You must include at least FIVE unique references. Wikipedia.com, random blogs, and class lecture notes do NOT count as references! Include references in your paper using the author/year (e.g. Smith 2015) parenthetical citation method with the full citation listed in the reference section (i.e., do not use footnotes to list your references). In additional to the Wall Street Journal article you are required to read, a wealth of excellent resources exists at your disposal. I encourage you to use popular and business press articles (New York Times, Wall Street Journal, Financial Times, Business Week, The Economist, etc.), practitioner journals (Journal of Accountancy, CPA Journal, Accounting Today, etc.), and academic journals (The Accounting Review, Accounting Horizons, Auditing, etc.) to inform your research. You have access to these and many more through George Mason University’s Library website.
- Write a clear, concise Introduction: Your introduction should summarize your arguments and conclusion.
- Show your analytical skills. This assignment is not about how well you summarize what you read.
- Do not use lists, bullet points, contractions or the second person (e.g., “you”) in your writing (Note: The first person (“I”) is allowed).
- Be clear and direct! Professional writing must be as unambiguous as possible.
- A paragraph needs at least three sentences.
- You may only use up to two (2) SHORT direct quotes, which should be properly anchored in your paper (i.e., quotes should not disrupt the flow of your essay).
- Use passive voice sparingly.