Our best Round Rock area Certified Public Accountants answer basic accounting concerns:
The information provided by financial reporting from Round Rock area CPA firms often results from approximate, rather than exact, measures. The measures commonly involve numerous estimates, classifications, accounting concepts, and allocations. Thus, despite the aura of precision that may seem to surround financial reporting in general and financial statements in particular, with few exceptions the measures are approximations which may be based on rules and conventions rather than exact amounts.
More best practices by top CPAs and accountants in Round Rock, TX - Elements defined:
The information provided by financial reporting pertains to individual nonbusiness entities, regardless or size, and other CPA firms handling their books. This Statement, however, does not include criteria for determining the appropriate reporting entity for purposes of financial reporting by nonbusiness organizations. That matter will need to be addressed by other projects.
Financial reporting is but one source of information needed by those who make economic decisions about nonbusiness organizations. They need to combine information provided by financial reporting with relevant social, economic, and political information from other sources. The information provided by financial reporting involves a cost to provide and use. The cost includes not only the resources directly expended to provide the accounting info, but also may include adverse effects on an organization from disclosing it. As an example, comments about a pending lawsuit may jeopardize a successful defense.
Although some CPA firms serve as business consultants, the consulting role has been under scrutiny following the Enron scandal where Arthur Andersen simultaneously provided audit and consulting services which affected its ability to maintain independence in its audit duties. This incident resulted in many accounting firms divesting their consulting divisions, but this trend has since reversed. In audit engagements, CPAs are (and have always been) required by professional standards and Federal and State laws to maintain independence (both in fact and in appearance) from the entity for which they are conducting an attestation (audit and review) engagement.
Although most individual CPAs who work as consultants do not also work as auditors, if the CPA firm is auditing the same company that the firm also does consulting work for, then there is a conflict of interest. This conflict voids the CPA firm's independence for multiple reasons, including: (1) the CPA firm would be auditing its own work or the work the firm suggested, and (2) the CPA firm may be pressured into unduly giving a positive (unmodified) audit opinion so as not to jeopardize the consulting revenue the firm receives from the client.
Financial reporting is but one source of information needed by those who make economic decisions about nonbusiness organizations. They need to combine information provided by financial reporting with relevant social, economic, and political information from other sources. The information provided by financial reporting involves a cost to provide and use. The cost includes not only the resources directly expended to provide the accounting info, but also may include adverse effects on an organization from disclosing it. As an example, comments about a pending lawsuit may jeopardize a successful defense.
Although some CPA firms serve as business consultants, the consulting role has been under scrutiny following the Enron scandal where Arthur Andersen simultaneously provided audit and consulting services which affected its ability to maintain independence in its audit duties. This incident resulted in many accounting firms divesting their consulting divisions, but this trend has since reversed. In audit engagements, CPAs are (and have always been) required by professional standards and Federal and State laws to maintain independence (both in fact and in appearance) from the entity for which they are conducting an attestation (audit and review) engagement.
Although most individual CPAs who work as consultants do not also work as auditors, if the CPA firm is auditing the same company that the firm also does consulting work for, then there is a conflict of interest. This conflict voids the CPA firm's independence for multiple reasons, including: (1) the CPA firm would be auditing its own work or the work the firm suggested, and (2) the CPA firm may be pressured into unduly giving a positive (unmodified) audit opinion so as not to jeopardize the consulting revenue the firm receives from the client.