Category: Accountancy

Introduction

There is a number of accounting software program catering to the accounting and taxation needs of small business entrepreneurs, having different features. Each of the accounting software has its own unique features, although all of them have some common features. This paper makes a comparison of the accounting software, Simply Accounting with QuickBooks and

Simply Accounting versus QuickBooks

Both Simply Accounting and QuickBooks share many common features; but for the selection of a particular accounting software program, it is important to consider the differences between the two software programs.

Currency Options

Simply Accounting Pro version comes with a multicurrency option with two currencies built into the program. Other versions of Simply Accounting provide for the use of unlimited currencies. Companies operating in different countries may have to transact in more than one currency. For those companies, Simply Accounting is a better option.

In the QuickBooks Pro version, the user has only a single currency option, if the software program is bought online or from any dealer store selling the software. Businesses that require the use of more than one currency may call the QuickBooks sales to get the link for downloading the software to use multi-currencies. The multi-currency option is not available with the QuickBooks Pro version. It comes only with its Multicurrency Premier Edition. The advantage of the Premier version is that it has a three-user license; but the software is expensive than the Pro version, which is a disadvantage (Khan).

Upgrades

The accounting software Simply Accounting provides for easy upgrading of an earlier version to the latest version. It is possible to upgrade all versions of Simply Accounting, which provides for the facility of Multicurrency function; but this facility of upgrading is not available in Simply First Stage. However, there may be some problems encountered with Office XP. “Older versions of Simply Accounting may not upgrade to newer versions that require Windows 2003 or Windows 2007 Office software. Windows 97 Word or Excel may need to be upgraded.”

Multicurrency editions of QuickBooks pose major problems with upgrades. There is no facility to upgrade the single currency version of QuickBooks software automatically, especially when the business has started accounting using the Multi-currency version of the software. When the upgrading is attempted despite the lack of upgrading facility, it would lead to deletion of details. It may also lead to the transactions being presented without marking the base currency.

Payroll Accounting

When the accounting software was first introduced, Simply Accounting offered the feature of printing payroll checks free of cost. Presently there is the need to pay a subscription and the subscription rates vary from time to time. One has to call Sales to ascertain the current rate of subscription. In the case of QuickBooks, the Multicurrency version is quite expensive for including payroll options than the Pro versions. This is a disadvantage with QuickBooks.

Format for Report Generation

It is easier to generate reports in QuickBooks, as sending estimates, invoices, packing slips and other reports can be easily done with the click of the correct email icon. There is an automatic email procedure with the required report made out in a pdf format and sent to the desired receiver. This function with QuickBooks works hassle-free and is easy to work on.

In the case of Simply Accounting, there is a special report generation program known as ‘Crystal Reports’. Even though this program is not sold with any of the versions of the software, it is available free of cost to all Simply Accounting customers. With a call made to the sales department, the customers can get the Crystal Reports CD by mail. The customer has to pay only for the shipping charges. Nevertheless, Crystal Reports is not user-friendly software. It is necessary that there is someone, who has knowledge on setting it up or the user should take courses on using the software. Alternatively, the user can get to know the set-up procedure by referring to books on the topic.

Simply Accounting versus Peachtree

Peachtree is considered the most popular accounting software program next only to QuickBooks. It has more than one million users worldwide. For the price the user pays, Peachtree is found to provide the maximum value with extraordinary features built in to enhance the efficiency of the system and to meet a number of needs of small business owners. However, just like any other entry-level accounting software, Peachtree has its own limitations. Growing businesses will soon find themselves outgrowing Peachtree.

Peachtree is found useful when the business is a large operation with payroll and too much invoicing is to be done. Peachtree has many features similar to that of Simply Accounting. It has also many other features which enable users to find information on the status of accounts, income and expenditure, debtors and creditors, which are made available in one in one spot which is convenient for the users. The system has other features where users can add attachments such as scanned documents, which is not available in Simply Accounting. This capability of the software helps users to scan and business documents. It also facilitates the creation of a paperless office working with a superior accounting program.

The major advantage with Peachtree is its ability to accommodate multi-users to suit the business environment (Peachtree.com). It has a strong database capacity to store a larger volume of information as compared to Simply Accounting. Peachtree has more functionality like order process workflow, notifications, advanced security features, customer management center, transaction history and multiple contacts per business (Eitel) which are not available with Simply Accounting.

Peachtree does not support multicurrency, whereas Simply Accounting has this feature.

Upgrades in Peachtree accounting software are not difficult. With the latest editions, users can update the software to reflect the latest patches and can tune up the files and database.

The payroll section of Peachtree has all the resources needed to process the payroll with speed and ease. The user can run payroll for some or all of the employees at a point in time. The system can facilitate the printing or cancellation of the checks. It also provides for the direct deposit of funds in the employees’ accounts.

Report generation under normal circumstances in Peachtree would be slow, compared to Simply Accounting. Even with the Peachtree Purge Wizard built in the Peachtree accounting software does not do a good job in removing the old transactions (Michael). Peachtree Purge Wizard allows the user to remove transactions from the closed accounting period and to purge transactions relating to inactive customers, vendors or employees from the system. However, this function does not seem to be effectively functioning. Therefore, because of the storage of old data Peachtree is slow to report generation.

Accounts receivable in Peachtree has a special feature of view from the start to finish of an account, which is not available in Simply Accounting. This feature helps the user to decide the steps to be followed in proper sequence and take action accordingly. The accounts receivable section also provides details on sales tax codes and the user can track the performance of sales representatives (TopTenReviews).

Peachtree has an additional feature of ‘Turn off’ which enables the user to turn off selected Peachtree options in Maintain Global Options dialog box. This feature provides an option to the user to keep open the options “such as Check spelling as you type, or change this setting from “Slow but accurate” to “fast but less accurate”. Also change the settings under the Improve Performance tab to turn off Automatic field completion, dropdown lists, and page length to gain a little more speed.” (ASAResearch)

In order to get the full advantage of the Peachtree accounting software program, it is necessary that the user should use a faster computer and a faster server. Peachtree has special provisions for the display of the database size and the information on the number of records. This information helps the user to determine the usage level of the software and to assess whether the business is outgrowing the accounting software capabilities. This feature is not found in Simply Accounting. When the business outgrows the capabilities, of the earlier versions of Peachtree there is the option to upgrade to Peachtree Quantum, which has additional features, and much larger database capacity, which is a distinct advantage to a growing business; but the software is very expensive that the business has to invest a large sum for upgrading the software.

Choosing an accounting software program depends on the size, nature of business, number of users, and volume of transactions of the small business. Each of the accounting software has its own strengths and limitations, which need to be considered in making a rational choice on the selection of the appropriate accounting software to suit the business.

Works Cited

Accounting Software Review – Peachtree Complete. TopTenReviews. 2003. Web.

Eitel, Joe. Quickbooks Vs. Peachtree Accounting Software. 1999. Web.

Khan, Marlon. Quick Comparison – Choose Quickbooks Or Simply Accounting? 2010. Web.

Michael. Peachtree Accounting Software. 2008. Web.

Practical Advice for Companies who have Outgrown Peachtree ASAResearch. 2008. Web.

Sage Pagetree Quantum – Challenge Outgroqwing Software. SagePeachtree.2009. Web.

The process of designing an automated system project is associated with a number of risks, starting from the basic probability of equipment failure to more complex issues including the threat of the wrong choice of information management strategy, which might lead to confusion in the data and the ultimate failure of the venture. However, with the introduction of an efficient risk management plan, one will be able to coordinate the situation and solve the related issues as they emerge.

To start with, it is necessary to introduce the concept of the so-called risk register. By arranging the existing threats into a list and creating a specific classification of the threats in question, one will be able to not only come prepared when the necessity to face risks arrives, but also to adopt a flexible approach towards the risk management strategy design, since using a combination of strategies will be available. The key threats are listed below:

Table 1. Risk Register: Automated Accounting System Risks

As the chart shows, the key risks associated with the given change within the company settings that have truly drastic effects on the company’s operations and the production process concern the issue of rivalry, information exchange and the manager – employee relationships, as well as the employee – employee relationships.

However, knowing the risks that the organization may be afflicted by is only the first step towards designing the strategies to fight these risks efficiently. It is also crucial to define the key factors that shape the environment within which the organization in question works. Therefore, the array of factors affecting the organization has to be viewed. The entire range of factors that shape the company’s production process and even the relationships within the firm can be split into four major categories:

According to the chart, the socio-cultural factors seem to be the ones of the greatest impact on a company’s organizational processes. Apart from shaping the relationships within the company and defining the corporate morals that the firm follows, they contribute to shaping the company’s strategies of building relationships with its partners. More to the point, socio-cultural factors predispose the company’s strategy regarding competition and a possible failure. However, the importance of economical and financial factors is also not to be underestimated; unless a company evolves in a traditional competitive environment, and every company in the vicinity equal chances of succeeding in the specified field, the company in question will never be able to progress until it meets the international standards of the globalized market. Likewise, political factors play a major part in the evolution of a company; there is no secret that democracy and the availability of numerous options predisposes the progress of an entrepreneurship.

Sensitivity Analysis

Table 2. Best Case Scenario

Table 3. Worst Case Scenario

Another important stage of designing a risk management strategy, the risk response plan includes the following recommendations:

Table 4. Responding to Risks

Because of the challenges related to the necessity to embrace information technologies and financial strategy, as well as develop a coherent leadership strategy that will allow for holding the two together, designing a perfect accounting system project seems hardly possible; however, a well thought out risk management plan may help avoid the basic problems and teach to face more complicated ones. Once an adequate risk management strategy is introduced, the company will be able to handle any situation and define the best avenues to improve its position.

Project Introduction

The project aims at automating of ABC Ltd. accounting system through an upgrade of the current manual system. The project involves the installation of a computerized accounting system instead of the company’s IT system and accounting processes. Due to the increasing demand for transparency in processing of accounting data and proper reporting of financial information, the company found it worth installing automated accounting system. In installing the system, the company will make a valuable investment in an asset that will reduce management costs. The new system will also enable the company to reduce employee costs by lowering the number of accounting staff and improve the accuracy of the financial information.

Project Scope

The primary scope of the project is to install an automated computerized accounting system to operate the company’s accounting process. The main objective of the project is to provide an effective system to facilitate accuracy and efficiency of accounting for transactions as well as financial information. The system needs to be user friendly and supported by a centralized IT infrastructure. The system will be configured to ensure simplified posting of accounts payable and accounts receivable. The system should also eliminate the need for multiple postings in the books of accounts in order to maintain accounting records and comply with accounting principles.

This project will necessitate the company to acquire new computers with more efficient processors and reliable memory capacities. In addition, the project should include installation of secure and reliable data storage and backup system and devices. The project will also incorporate training of the company’s staff to match their skills with the demands of both the new system and the accounting principles.

Project Cost

The cost of the project depends on the selected software and the properties of the hardware installed for the new system. The investment for the project will involve the cost of disposing the current computers used by the accounting department. It will also include purchasing new computers, procuring the accounting software and the installation of the system to substitute for the existing procedures. Another cost driver is the training of the users of the new system for accounting and auditing processes. The total budget of the system is $75,000, which are broken into the five cost items.

First, the cost of disposing the current system is estimated at $7,500. Secondly, it will cost the company $30,000 to acquire new computer systems for the sales, accounting and auditing departments. Thirdly, the company will spend about $20,000 to purchase automated accounting software and applications to run the new system. Additionally, the company will incur up to $10,000 to install and configure the new system and applications to the installed computer system. Finally, the company will spend up to $7,500 to train all the employees on the new system demands as well as comply it with accounting standards. To cover these costs, the company will plough back previous year’s profit of $50,000 and take a loan on the remaining $25,000.

Net Present Value

Table 1: Net Present Value

Team Organization

The team that will be in charge of this project includes key leaders in charge of all the departments that will be affected by the new system. A project manager who will be assisted will head the team by the current head of IT department as a project assistant manager. A project management committee that will meet every week to review the progress of the project will make major decisions on the project. Overall, project team will comprise four teams responsible for specific roles. These teams are the system development, the hardware installation, the accounting, and the training teams. A supervisor who will be a member of the project management committee will head each of these teams.

Project Schedule

The project will be held in a period that will be determined by the company’s management since its implementation will disrupt the operations of the company’s accounting department. Project evaluation will be done on weekly basis but daily assessments will be carried out to review its progress. There will ensure there is no time gap between project pilot exercise and project rollout in order to avoid delays in the implementation schedule. The management will decide on the expected completion dates from three dates recommended by the project management committee.

The project of automating ABC Ltd’s accounting system and upgrading the current manual system is estimated to take two weeks. The project’s network diagram and schedule is described below.

Network Diagram

AOA Network for the project

The following are the identified project activities represented by each letter in the network above. Each activity will be implemented independently but in line with the schedule of the project.

Table 2: Activity Durations

Identification of all the paths of the project

A – D – H – K = 5 + 3 + 5 + 1 = 14

B – E – I – K = 2 + 1 + 6 + 1 = 10

C – F – I – K = 2 + 3 + 6 + 1 = 12

C – G – J – K = 5 + 4 + 2 + 1 = 11

The project’s critical path is B – E – I – K and will take ten days to complete. The shortest time it can take to complete the project is therefore ten days.

Gantt chart

This project’s project manager may find it quite useful to engage the use of a Gantt chart in managing complexity in cost and time. A Gantt chart is an intricate tool used for the management of interrelated tasks with different durations. When using a Gantt chart, the project manager assumes that the tasks are linear and their durations can be determined beforehand with a high degree of precision. However, it is advisable for management to have duration estimates with the relevant possible contingencies.

A Gantt chart has a number of benefits to the project manager. First, it diagrammatically represents the whole project. This makes it easy for the project manager to indentify the activities to complete first and clearly shows the relationships between tasks. Second, it shows the duration of a project. However, in as much as it may show the tasks clearly, it does not indicate dependencies among tasks and the project manager may not know from the Gantt chart how the delay of one task may affect another. For this purpose, the project manager will have to use the network diagrams. The figure below shows the Gantt chart for this project. It indicates the start times and durations for each activity. However, it does indicate the costs. The durations are indicated in days.

Table 3: Gantt chart Activity Durations

Communications Plan

The management of the project will adopt several methods of passing information as well as tools of sharing data among the team members and other users involved. The management will print out a Gantt chart for the project to indicate progress and use a timescale to make the Gantt chart fit to one page. The chart will then be pasted in a PowerPoint or printed on a slide for easy presentation.

The management will also print a “To-do List” information sheet for all the team members to ensure that everyone understands his or her role. In addition, the project manager will prepare a “Who Does What” information sheet that will determine all the roles and people responsible for them. This way, the team will facilitate coordination among the team players. Continuous update will be done to the communication plan as appropriate and will be reviewed during the weekly status meetings. However, the management of the company and the Project Manager will approve all the changes that should be made to the plan during the meetings.

Communications Matrix

In order to keep the work going on smoothly, it is very crucial to maintain an organized workforce. The project manager is an expert in leadership qualities. He knows how to handle such a huge workforce. He addresses them sympathetically and asks for any problems that they might have. This behavior of the project manager garners honor and respect for him. The workers come forward and express their problems and in turn, the project manager tries his level best to find solutions.

Table 4: Communications Matrix

Risk Management Plan

Risk assessment of the project will be defined in terms of the probability of occurrence of risky events. Concerning the impact of the risks, the negative cost of each one will eventuality be regarded as an impact of the risky event on the project? Risk analysis will therefore involve the increase in the impact of the speculated risk events and their probability to occur as well as their sensitivity to change. Risk response will be determined by the findings of risk analysis of every event. The response will determine appropriate actions to be taken if the speculated events occur. The response will be coordinated through a risk response table that will include a summary of a contingency plan for all the risks.

Designing an automated system will encounter a number of risks. For example, the basic probability of equipment failure to more complex issues including the threat of the wrong choice of information management strategy. The risks might lead to confusion in the data and the ultimate failure of the venture. However, an efficient risk management plan will ensure coordination. In this project, the highest risk is the technical risk. Technical risks may be occasioned by:

• Errors occasioned by design and construction
• Poor planning is the main reason for the occurrence of previous technical risk
• Quality assurance checklists are an important to curb technical risks
• Control point Identification charts are also crucial tools. A project specific Control point Identification chart is outlined below.

Control Point Identification Chart

The chart below will be useful for tracking areas that may go wrong and anticipating ways in which the project manager will solve the problems to avoid nasty surprises.

Table 5: Control Point Identification Chart

Risks Register

Table 6: Automated Accounting System Risks Register

Sensitivity Analysis

Table 7: Best/worst Case Scenario

Risk Response Plan

The risk response plan includes the following recommendations to mitigate risks

Table 8: Risk Responses

Supplier Management

The project management committee will float tenders to interested suppliers and receive their offers according to the company’s procurement procedures. After assessing the received tenders, the project management committee will recommend the best suppliers to the procurement department to select the most appropriate one among them. The selected supplier will be contracted to supply the company with the ordered software, computer hardware and system development services. In such a way, the project management team will acquire the services of the best supplier while maintaining the company’s procurement standards.

Conclusion

It would be in the interest of the company to undertake the computerized accounting system Project. This is because it arrives at a positive NPV and a high internal rate of return. The sensitivity analysis also indicates that this project is highly flexible to any change to cost of capital. This is despite the fact that the board meeting had noted that this is unlikely to happen. Hence, this project has the capacity to increase the wealth of shareholders. It also has the capacity to expand the market share of the company if the demand levels are anything to go by. The project will also have a futuristic impact to the company. It will also reduce wage bills and propel the company towards efficiency. The project is viable.

Introduction

Many researchers define a project as a distinctive undertaking that tries to achieve a distinct purpose. A project, normally, has multifaceted but interconnected small projects within it. A project’s limitations include duration, budgets, and scope. Researchers further state that each project is unique, as it is unlikely to be repeated. Project objectives are determined by the parameters of duration, budgets, and scope (referred to as performance) (Gray & Larson 2008). Duration, budgets, and scope have to be balanced for the most favourable outcome. Thus, duration, budgets, and scope are a triangle of objectives, referred to as “the magic triangle of project management”. If one is affected, the two other objectives will also be affected. However, the quality/performance objective is often considered paramount (Hay 2010).

Review of project management methodologies

Project Cost

The cost of the project depends on the selected software and the properties of the hardware installed for the new system. The investment for the project will involve the cost of disposing of the current computers used by the accounting department. It will also include purchasing new computers, procuring the accounting software, and installation of the system to substitute for the existing procedures. Another cost driver is the training of the users of the new system for accounting and auditing processes.

Project Scope

The primary scope of the project is to install an automated computerized accounting system to operate the government’s accounting process. The main objective of the project is to provide an effective system to facilitate the accuracy and efficiency of accounting for transactions as well as financial information. The system needs to be user-friendly and supported by a centralized IT infrastructure. The system will be configured to ensure simplified posting of accounts payable and accounts receivable. The system should also eliminate the need for multiple postings in the books of accounts to maintain accounting records and comply with accounting principles.

The current project will necessitate the government to acquire new computers with more efficient processors and reliable memory capacities. Also, the project should include the installation of secure and reliable data storage and backup system and devices. The project will also incorporate training of the government’s staff to match their skills with the demands of both the new system and the accounting principles.

Team Organization

The team that will be in charge of this project includes key leaders in charge of all the departments that will be affected by the new system. A project manager who will be assisted will head the team by the current head of the IT department as a project assistant manager. A project management committee that will meet every week to review the progress of the project will make major decisions on the project. Overall, the project team will comprise four teams responsible for specific roles. These teams are the system development, the hardware installation, the accounting, and the training teams. A supervisor who will be a member of the project management committee will head each of these teams (Rossberg 2014).

Project Schedule

The project will be held in a period that will be determined by the government’s management since its implementation will disrupt the operations of the government’s accounting department (Johnson, Whittington & Scholes 2011). Project evaluation will be done weekly, but daily assessments will be carried out to review its progress. There will ensure there is no time gap between project pilot exercise and project rollout to avoid delays in the implementation schedule. The management will decide on the expected completion dates from three dates recommended by the project management committee (Westland 2007).

Network Diagram

The following are the identified project activities represented by each letter in the

network above. Each activity will be implemented independently but in line with the schedule of the project (Schwalbe 2013).

Identification of all the paths of the project

• A – D – H – K = 5 + 3 + 5 + 1 = 14
• B – E – I – K = 2 + 1 + 6 + 1 = 10
• C – F – I – K = 2 + 3 + 6 + 1 = 12
• C – G – J – K = 5 + 4 + 2 + 1 = 11

The project’s critical path is B-E-I -K and will take one year to complete. The shortest time it can take to complete the project is, therefore, one year (Kirkpatrick & Locke 1991).

Gantt chart

The project’s Project Manager may find it quite useful to engage the use of a Gantt chart in managing complexity in cost and time (Vargas 2007). A Gantt chart is an intricate tool used for the management of interrelated tasks with different durations. When using a Gantt chart, the project manager assumes that the tasks are linear, and their durations can be determined beforehand with a high degree of precision. However, management should have duration estimates with the relevant possible contingencies (Ahrens & Chapman 2007).

A Gantt chart has several benefits to the project manager. First, it diagrammatically represents the whole project, which makes it easy for the project manager to identify the activities to complete first and clearly shows the relationships between tasks. Second, it shows the duration of a project. However, in as much as it may show the tasks clearly, it does not indicate dependencies among tasks and the project manager may not know from the Gantt chart how the delay of one task may affect another. For this purpose, the project manager will have to use the network diagrams. The figure below shows the Gantt chart for this project. It indicates the start times and durations for each activity. However, it does indicate the costs. The durations are indicated in days/months (Snyder 2010).

Project cost

Measuring performance is used to determine the success or failure of a project. The project is successful if it has been completed according to specifications and on eight time. However, for a long-term project such as National IT Project, these criteria cannot be used to assess the entire project while it is still ongoing. However, they can be used to measure the performance of project tasks, which are an indicator of the eventual outcome of the project.

As the project parameters are time, cost, and performance, the first measurement parameter for National IT Project is whether the subcontracts have been completed on time and within budget. In terms of performance, some aspects of the project can only be assessed when it is complete. Nevertheless, if quality control is done for each segment of the project as and when it is completed, the likelihood of the completed project meeting and /or exceeding performance requirements will be increased.

Project and Budget Control Charts

The project manager may use the Project and Budget Control Chart below (Johnson, Whittington & Scholes 2011).

Project communication

The management of the project will adopt several methods of passing information as well as tools of sharing data among the team members and other users involved. The management will print out a Gantt chart for the project to indicate progress and use a timescale to make the Gantt chart fit one page. The chart will then be pasted in a PowerPoint or printed on a slide for easy presentation.

The management will also print a “To-do List” information sheet for all the team members to ensure that everyone understands his or her role. Also, the project manager will prepare a “Who Does What” information sheet that will determine all the roles and people responsible for them. Hence, the team will facilitate coordination among the team players. The continuous update will be done to the communication plan as appropriate and will be reviewed during the weekly status meetings. However, the management of the government and the Project Manager will approve all the changes that should be made to the plan during the meetings.

In the National IT Project, project change is authorized through change orders. The project manager keeps track of them and reports on them to stakeholders at all levels of the project. Changes are often caused by a change in the clients’ requirements, changes in local authority regulations, correcting errors in the specifications, unavailability of specific materials or equipment, and new technology. Minimizing misunderstanding due to change is the responsibility of the project manager. Requests for change should be detailed, including the time and cost estimates for making the change, and the period for responding to the change request.

In the National IT Project, the change procedure is the responsibility of the project manager. As far as reasonably possible under the contract agreements, subcontractors are supposed to fulfil the terms and conditions of their contracts. If a subcontractor is unable to do so, they are required to communicate with the project manager, who will then decide what level of change (if any) can be allowed from the original requirements without compromising project schedule, budget or quality.

The following is a model communication matrix (Manzoor, 2012).

Risk Management Plan

Risk assessment of the project will be defined in terms of the probability of occurrence of risky events (Hitt & Hoslisson 2008). Concerning the impact of the risks, the negative cost of each one will eventuality be regarded as an impact of the risky event on the project? Risk analysis will, therefore, involve the increase in the impact of the speculated risk events and their probability to occur as well as their sensitivity to change. Risk response will be determined by the findings of risk analysis of every event (Castells 2011). The response will determine appropriate actions to be taken if the speculated events occur. The response will be coordinated through a risk response table that will include a summary of a contingency plan for all the risks (Holliday 2007). Designing an automated system will encounter several risks. For example, the basic probability of equipment failure to more complex issues, including the threat of the wrong choice of information management strategy. The risks might lead to confusion in the data and the ultimate failure of the venture. However, an efficient risk management plan will ensure coordination (Chase & Aquilano 2006). In this project, the highest risk is a technical risk.

Risks Register

Sensitivity Analysis

Risk Response Plan

The risk response plan includes the following recommendations to mitigate risks.

Project review

For this project, the most appropriate method of reporting the project should be the linear method. In this method, project members will report to the project manager over their respective tasks. The project manager will compile this report to help determine the level of success of the project. The project manager will then prepare a detailed report and give it to the projects coordinator. The project coordinator will verify this report and then send it to the top management. The top management will approve and make a publication of the report at a preferred time.

In the process of implementing a project, problems would always rise. When such cases arise, the management is forced to come up with a solution that will help in dealing with the problem. One such problem that can arise when implementing this project is when employees start giving fake reports to please the management. The latter is quite dangerous because of the hope and subsequent responsibility and finance that will be committed to the project will be lost. To deal with this problem, the management should conduct regular evaluation of the project and discourage unfaithfulness among employees. Another problem may arise when there is lack of corporation or proper coordination of the employees who form the team implementing the project. Therefore, there will be an ongoing review of work done as it progresses.

Supplier Management

The project management committee will float tenders to interested suppliers and receive their offers according to the government’s procurement procedures (Barney 2002). After assessing the received tenders, the project management committee will recommend the best suppliers to the procurement department to select the most appropriate one among them. The selected supplier will be contracted to supply the government with the ordered software, computer hardware and system development services. In such a way, the project management team will acquire the services of the best supplier while maintaining the government’s procurement standards.

Reference List

Ahrens, T & Chapman, C 2007, Management Accounting as Practice, Accounting, Organizations and Society, vol. 32 no. 1, pp 1-27.

Barney, J 2002, Gaining and Sustaining Competitive Advantage, Pearson, Upper Saddle River, NJ.

Castells, M 2011, The Rise of the Network Society: The Information Age: Economy, Society and Culture, John Wiley & Sons, New York, NY.

Chase, B & Aquilano, N 2006, Operations Management for Competitive Advantage, McGraw Irwin, New York.

Gray, C & Larson, E 2008, Project management: The managerial process, McGraw–Hill Education, Singapore.

Hay, I 2010, Qualitative Research Methods in Human Geography, London, Oxford University Press.

Hitt, M & Hoslisson, R 2008, Strategic Management Competitiveness and Globalization, Thomson, London.

Holliday, A 2007, ‘Doing and Writing Qualitative Research’, Journal of Geography, Vol. 65, no. 2, pp. 14-16.

Johnson, G, Whittington C & Scholes, K 2011, Exploring Strategy Text & Cases, FT Prentice Hall, New York.

Kirkpatrick, S, & Locke, E, 1991, ‘Leadership: do traits matter?’, Academy of Management Executive, vol. 5 no. 2, pp 48-60.

Manzoor, Q 2012, ‘Impact of employees motivation on organizational effectiveness’, Business Management and Strategy, vol. 3, no. 1, pp. 1-12.

Project Part One 16 Rossberg, J 2014, Beginning application lifecycle management, Springer, Berkeley, CA.

Schwalbe, K 2006, Introduction to project management, Thomson Course Technology, Boston.

Schwalbe, K 2013, Information technology project management, Cengage Learning, Boston.

Snyder, C 2010, A user’s manual to the PMBOK guide, Wiley, Hoboken, NJ. Stonebumer, G, Goguen, A & Feringa, A 2002, Risk management guide for information technology systems, McGraw-Hill, London.

Vargas, R 2007, Practical guide to project planning, CRC Press, New York, NY. Westland, J 2007, The project management lifecycle, Kogan Page, London.

RFID Definition

Radio Frequency Identification (RFID) device is an object used for collecting information about a particular product or place minimizing the possible errors at this (Path, 2003). Such devices have become commonplace as hyper-accurate, contact-less, and quite a versatile system for capturing information from any item in which the chip is embedded. The RFID tag or “transponder” essentially consists of:

• An integrated circuit embodying data that may be permanent (an SKU, employee name, or ID number, for instance) or updates dynamically as purchases are made and credits replenished;
• A section “hard-coded” with the modulator-demodulator programming enables the device to accept and respond to radio-wave signals.
• An antenna and, optionally, a battery.

How it works

The components of the RDI devices allow them to transmit information and processing it according to the needs of a definite application. The data that an RFID transmits may be used to identify the place of a particular object, its characteristics (such as color), and even the date of purchase (Association for Automatic Identification and Mobility, 2009). The nearby scanners can send a query signal to a chip-bearing product and read the return signal correctly identifying the item type, the size and variety (also known as “sales keeping unit”), the value stored with the item, and the user to whom an RFID card is assigned.

Schematic of an RFID System That Integrates with Accounting, A.K.A:

Advantages and Disadvantages

Since the antenna can just be a loop of copper wire laid flat around the IC, RFIDs can be miniaturized to a fraction of thumbnail size (Figure 2). Such miniaturization means, among others, that RFID tags can be implanted in currency bills and casino playing chips. In the latter end-use, it becomes possible to detect anyone trying to exit the casino with any number of chips, no matter how well-concealed, as long as the covering material is permeable to radio waves.

Below is an example of an RFID-equipped supply chain with benefits for logistics and forces in the field (Anonymous, 2006).

As far as the disadvantages of RFID are concerned, there are also some. First of all, it is more costly due to its small size and preciseness of data it may give. In addition, “to realize a full potential, RFID requires a system – wide solution, involving all stakeholders, and changes in processes to act on the increased transparency” (Staples, 2005). And finally, the use of this device raises such issues as data ownership and privacy. Nevertheless, all these disadvantages do not make the use of RFID any less frequent.

The relationship between RFID and Accounting

RFID devices facilitate tracking and payment transactions, provide data for financial analysis of credit cards usage, product inventory in the supply and value chains, sales performance, employee attendance and whereabouts, and sales promotion effects. These are all relevant to accounting since such end-uses go towards calculating revenue contribution or operating costs. Other uses include security, health care, and customized advertising or merchandising, but these only indirectly impinge on accounting.

In the aforementioned casino end-use, it is possible for a tableside reader device to instantly count the quantity and total value of pot in a game and thus alert management that the player (or the house) might score a big money win. And this brings us to the key advantage of RFID systems versus bar codes. As may be seen from Figure 3, radio-enabled devices capture data from a short distance away instead of needing to hold each piece or unit of product in front of a laser scanner programmed for bar codes.

This hastens the process of updating inventory or recording sales. Since the data is transmitted to a local server, thence to an integration platform and enterprise resource planning/supply chain management/customer relationship management software suites, accounting information systems can now truly be updated in real-time. The net result is that enterprise management can make vital decisions faster, a critical goal of the finance function.

Reference

Airline-News.Co.UK (2008). BAA and Emirates test new baggage tagging technology. Web.

Anonymous (2006). RFID orders growing. Web.

Association for Automatic Identification and Mobility. (2009). What is RFID? Web.

Path. (2003). Emerging scanning results: radio frequency identification devices. Web.

FoodyLife (2009). RFID system and food traceability. Web.

Rickey’s World (2007). RFID interface with AVR atmega32. Web.

SkyeTek (2006). RFID ecosystem. Web.

Staples. (2005). RFID in Retail. Web.

Introduction

Government accounting has several distinctive features and a specific purpose, which is reflected in legislation and the theoretical principles governing it. While private companies are accountable to public institutions, the government is also accountable to the people for the amount and purpose of the budget funds spent. According to Schiavo-Campo (2017), in order to comply with such accountability, it is essential to maintain the collection and analysis of relevant financial information and to report regularly on certain transactions.

Various financial and legal systems of specific states differ in their accounting standards and basis. This paper analyzes the nature of government accounting and its common features with private company accounting and discusses accounting standards, accounting basis, and budget principles and procedure for budget development in the UAE.

Nature and Characteristics of Government Accounting

The nature of the government environment is to perform public functions and serve the society within the framework set by the legislation. The state does not have a profit-making function, although it should spend the resources reasonably. As a rule, the state budget is primarily formed by taxes and trade transactions with state property or natural resources, which by default, are the public property. Thus, the government, when using these funds and resources, is obliged to be accountable to the people in this regard.

The government accounting system focuses mainly on recording, classifying, compiling, and publishing financial information on transactions conducted by authorities and public institutions. According to Schiavo-Campo (2017), “accurate and timely financial information, verification and assessment of results are crucial for transparency, accountability, and the rule of law” (p. 248). In order to satisfy this requirement, there is a strict hierarchy of accountability among the governmental entities. Unlike private sector companies, they have fixed functions and approved budget that should be spent exclusively on their implementation.

Nevertheless, there are several similarities between state entities and commercial organizations. Generally, legislation regulating market rules do not differentiate public and private entities. They function on an equal basis, according to the fundamental principles of competition, supply, and demand. Accordingly, the accounting systems for government and private sectors have certain similar features.

Due to the identical nature of the market activity, public and private entities are accountable for the same transactions and events. Schiavo-Campo (2017) states that “recording of all expenditures and revenues according to the same methodology” and “regular production of financial statements” are required for the government accounting system (p. 249). It bears mentioning that this also applies to private sector companies.

In addition, there are identical names for accounting provisions and units and also a unified classification of accountable operations in government and private accounting systems. Researchers note that accounting systems are divided into cash and accrual types, depending on the regulations that specify which financial events and transactions should be recognized for accounting (Schiavo-Campo, 2017). This division is inherent in both private and government accounting systems as both accounting bases can be used for either companies or public entities.

Accounting Standards and Accounting Basis in UAE

The UAE is an economically rapidly developing country that is becoming increasingly attractive to foreign investors. The researchers note that the UAE has not established national codified accounting standards (Aghimien, 2016). However, over time, the central bank has obliged certain financial institutions to report under the International Financial Reporting Standards (IFRS) in order “to meet the foreign investors’ requirements of reliable accounting information” (Aghimien, 2016, p. 81).

According to the UAE Ministry of Finance (MoF) official website, the UAE Cabinet adopted a Resolution No (2/2) of 2017, which included the Manual of Federal Government Accrual Accounting Standards (FGAAS) (UAE MoF, 2019). This document states that it is “mainly based on International Public Sector Accounting Standards (IPSAS),” which also complies with IFRS regulations (FGAAS, 2017, p. 5). Consequently, national government accounting standards in the UAE are in line with the principles of IPSAS.

The IPSAS is initially aimed at transparency and accuracy of financial data on transactions and events carried out by state authorities and public institutions. It also ensures the uniformity of such standards in different states, which is significant given the globalizing economic processes. The IPSAS contributes to the increased quality and transparency of public institutions’ accounting reports and more objective assessments. The FGAAS expressly enshrines these principles, arguing that its primary purpose is “to ensure the preparation of high-quality financial statements and presentation of transaction and events in the most transparent and accountable manner” (FGAAS, 2017, p. 21). Thus, the UAE is increasingly complying with international government accounting standards.

As the name of the above manual indicates, the UAE applies an accrual accounting basis. According to Schiavo-Campo (2017), it recognizes financial transactions and events to be relevant for reporting when a commitment has been made, rather than when cash has been paid or received under the commitment. The FGAAS states that the UAE government has only started a program to change the accounting basis from cash to accrual (FGAAS, 2017). This basis is more complicated because it deals with all commitments but is actively used in developed countries as it allows a better overview of economic dynamics.

Government Budget in UAE

The approach to the type of budget in UAE government accounting is constantly evolving. According to the UAE MoF official website available at www.mof.gov.ae/en/, “in 2001, program and performance-based budgeting was adopted, and input allocations were linked to output objectives” (UAE MoF, 2019). It also states that at the beginning of the second decade of the 21st century, the UAE began to adopt a three-year budget based on the zero-based framework. Thus, the UAE keeps pace with the latest trends in budget reporting.

The budget’s primary goal are to make government entities publicly accountable and to improve the transparency of budget spending by comparing the remaining funds with the adopted budget. The FGAAS, equally with this objective, points out that the importance of the budget is to demonstrate the public authorities’ compliance with the approved budget and financial indicators in achieving the budget goals (FGAAS, 2017).

With regard to the contents, the UAE MoF stated on the referred website that 37.62% of the overall 2020 federal budget was directed to social development and social benefits spheres. Besides, “14.00% was allocated to infrastructure and economic resources and 32.61% to government affairs”. The federal budget approval proceeds in several successive steps, including issuing a preliminary MoF circular, planning revenues and expenditures by public entities, drafting a budget law, its discussion, approval by higher authorities, and adoption. It should be concluded that the characteristics of the UAE budget demonstrate the high economic and infrastructural advancement of its government accounting standards.

Conclusion

The nature of public functions and the government environment has a strong influence on the specificity of government accounting, although it has a number of similarities with private sector accounting. The UAE government accounting is in a transitional period towards the goal of complying with current international accounting standards. The principles of formation and characteristics of the procedure for adopting the UAE federal budget indicate that the state is highly developed in the economic sphere.

References

Aghimien, P. A. (2016). Development of accounting standards in selected Middle Eastern countries in comparison to the United States of America. Review of International Business and Strategy, 26(1), 69-87.

Schiavo-Campo, S. (2017). Government budgeting and expenditure management: Principles and international practice. New York, NY: Routledge.

UAE Cabinet. (2017). Manual of Federal Government Accrual Accounting Standards. Web.

UAE Ministry of Finance, 2019. Web.

It is a well-known fact that each person can speak and participate in any kind of discourse community due to the existed ability to create various discourse texts.

As far as I am personally concerned, I belong to the accounting discourse community. Accounting is my major at school, and I spend a great deal of my time to penetrate deeply into the subject matter of this particular field of study. And, without any doubt, I have to live in the accounting community discourse as some of my friends and people around me are also involved in accounting on different levels. Moreover, our modern life is based on a variety of economic principles, people are absorbed into counting either money or taxes. What is more, people observe and discuss the prices in supermarkets, and make numerous attempts to become an integral part of the chosen discourse community.

Another kind of community I belong to is the youth discourse community. My belonging to this community may be explained by the simple fact that I am a young person with my ambitions, interests, and skills. I think that none will argue that the youth has its specific vocabulary, genres, and problems that may affect the text that produces the discourse. More than that I am a member of the society and this makes me belong to the various discourse communities, no matter who participates in this discourse and what languages they use (social security discourse, street communication discourse, school discourse, etc).

It is necessary to admit that all discourse texts can be of different genres. However, for instance, in the case of the accounting discourse community to which I belong, three different genres of the discourse texts may be defined: the genre of producers, the genre of the customers, and the genre of brand awareness.

The first one concerns itself with texts and vocabulary that the producers mainly use (commercials ads, accounts, business reports, etc.); the second genre deals with customers’ viewpoint to the service provided and to the actions of the producers and their teams; and finally, the third genre may be characterized as the one combining both sides and dealing with the famous trademarks (the so-called “brands”), the customer’s awareness of them, and the producer’s desire to create a new brand or to drive the sales of an already existing one.

The discourse texts that are produced during that tag-like game are sometimes very difficult to be created by an uninitiated person, as well as to be used or read. Nevertheless, the unity of a good effort, persistence, necessity, or need and the fact of being surrounded by (or even existing in) this particular discourse makes me learn the idea of discourses deeper and understand how and why I need to be able to write, read, and use the texts of the accounting discourse community. From my own experience, I would like to stress that it is rather complicated and sometimes even boring for a non-native speaker of English to study the accounting discourse community texts.

The vocabulary and grammar seem to be the first problem because the use of some specific terms and word-combinations with the specific grammar constructions complicates the understanding of each of them. Another problem I faced with is the difficulty to retrieve correct information from this permanent “flood” of accounting problems, especially in the course of my studies. First, I could not simply understand what was needed so that I could start searching for the details.

I had to start studying this very problem of discourse genres and their lexis on the Internet forums. When people say that it was the Kilkenny cats’ fight, they mean saying nothing at all. It has been the persistent surfing on websites to get and expand basic information slowly to put every piece of information to its place. Finally, everything settled down in my head.

Facts

The public company accounting board was created as part of reforms in an act in 2002. The mandate of the board which was composed of members was to have oversight in the securities industry. This was averse to others like the securities commission which had limited powers (Justia, 6). The board had a right to start an investigation on a matter in the industry emanating from any firm that violated or was perceived to have violated the guidelines to the industry regulator. They did not have control from even the president meaning their power was executive. Free enterprise funds went to the court to seek the powers of the board curtailed on the basis they lacked control (Kilman, 20).

Issues

Free enterprise fund, the petitioner went to the court to seek removal of executive authority from the public company accounting board. The argument was that any executive authority is bestowed on the president of the United States and lack of control from his office of the powers to the board is in deep contravention from the constitution. The appointment of the board members was also questioned as having violated the appointments clause (Justia, 2010). This clause requires presidential appointment and Senate approval: this due process was not followed. Therefore the investigation that had earlier been carried out on the petitioner firm in which crucial information on its auditing procedures was released, was to be declared unconstitutional on that basis (Smith, 19).

Rules

The act that was passed to have the board has executive authority over financial institutions. This is in contravention with the constitution which states “executive powers will be vested in the president of the united states of America”. Therefore vesting the same powers to inferior officers without direct presidential control has separation of powers put into question (Irons, 70).

Analysis

The act blatantly said that the board members can only be removed on a good cause. This expressly restrains the president from removing the members from office on whichever ground, apart from a good cause. This cause is not definable hence lines are hard to be drawn on that case. The commission that has been mandated the removal powers are not under direct presidential control. The petitioner, therefore, has a case considering that it is touching on executive powers vested to the president in the constitution. Congress, therefore, erred in its lawmaking by not putting into consideration separation of powers. This diffusion should not have happened (Justia, 3).

Conclusion

The petitioner free enterprise fund has a genuine case against the plaintiff public company accounting oversight board. The powers bestowed upon the board are contravening presidential executive authority and congress erred in making them. Although the petitioner may have been on the wrong side of the law, the arguments laid pts to question the party that found and duly investigated the complaint. Therefore the petitioner’s auditing procedures should not have been public information at all (Justia, 2). The bench that looked into the case, therefore, found the board was illegally set up and was not under the direct mandate of the president of the United States to conduct their business and be held accountable for their actions if they went against the law. The petitioner was justified to have the case brought to the bench since the board’s decision was appearing final (Daniel, 192).

Works Cited

Daniel, Lorttherm. et al: The Forgotten Founders on Religion and Public Life. Notre Dame: University of Notre Dame Press, 2009.

Irons, Peter. A People’s History of the Supreme Court. New York: Penguin Books, 1999.

Justia, Law. Free Enterprise Fund Et Al. V. Public Company Accounting Oversight Board Et Al. Web.

Kilman, Justin. The Constitution of the United States: Analysis and Interpretation. London: Oxford University Press, 2002.

Smith, James.E. The Constitution and American Foreign Policy. St. Paul, MN: West Publishing Company, 1987.

• The Accountant
• ABC Accounting Services
• Address
• John Smith
• Crazy Crown Enterprises Pty Ltd
• Address
• October 15, 2012

Dear Sir,

Duties of a director

Mr. Smith, this is to clarify to you the duties of company directors as stipulated in the Corporations Act 2001. Directors are responsible for decisions about how a corporation should be managed. However, if the directors are not legally made responsible for their actions, they are bound to put the organization in jeopardy. Therefore, the state has come up with guidelines that restrict the actions of directors to ensure that the interests of shareholders are safeguarded. These guidelines are contained in the Corporations Act 2001.

The duties of a director can be divided into two groups: the common law and statutory law duties. The statutory law duties are contained in the Corporations Act 2001 and besides explaining what is expected from a director, they detail which laws lead to a criminal offence when breached and which ones attract a civil suit. Moreover, a director is expected to act in accordance with the stipulations of the company’s constitution, which the director is supposed to read and internalize before signing a contract (Fu 2010).

As far as the common law is concerned, a director is expected to act in good faith and in the best interest of the corporation. Therefore, a director is supposed to execute his or her powers in what is beneficial to the corporation. The duty is subjective because it allows a director to make a choice of what is in the best interest of the corporation, and one’s decision may not be similar to another person’s (Baxt B & Baxt R 2005). However, the court has powers to intervene if the actions taken by a director are not what a responsible director will consider as being in the best interest of the corporation.

Furthermore, directors are expected to avoid conflict of interests in the course of their duties. This means that directors are expected to perform the functions of the corporation first, notwithstanding what they want to gain (Horrigan 2010). In addition, directors are not supposed to perform their duties or use the powers of their position in a manner that may benefit them or third parties. On the same note, directors are not supposed to have vested interests in actions that are within the scope of their duties as directors of a company. It is also expected that in avoiding conflict of interests, directors will safeguard the assets of the corporation and not use them for their personal gain or that of a third party. It is important to note here that some of the above duties can be contravened if and only if the corporation gives fully informed consent (Keay 2007).

In section 183, the Corporations Act 2001 states that the directors have a duty not to use a company’s inside information for their benefit. It stipulates that the directors should not use any information gained by them for inside trading. In the line of duty, a director can come across information about the probability of a rise in the price of shares in the future, due to the good end-year results about to be announced. The director can buy or advise the third party to buy shares at the current lower price and sell them later when prices have gone up, hence making huge profits for the director. This is against what is expected of directors and has a penalty according to the law (Wells & Fisse 2011).

In section 184, the Act states that a director of a company should not use the information dishonestly or recklessly in a manner that is aimed at being advantageous to the director, a third party, or cause damage to the company. In committing the above act, the director will not have executed his or her duties in good faith, for proper purposes within their mandate, or in the best interest of the company (Fu 2010).

Moreover, directors are expected to apply due diligence, care and skill in the execution of their duties. In this regard, directors are to apply enough care that they, or any other person, would have applied if they were acting in their own interest (Adams 2005). For a case where a director has sufficient evidence that the other director is well experienced and has proper knowledge concerning a certain matter, then he or she is allowed to rely on the information given by the said director. In section 189 of the Corporations Act, it is elucidated that a director is allowed to rely on professional advice from both a fellow director and an expert in the field in question; provided that the director believes that the person is competent (Tomasic, Bottomley & McQueen 2002). The reliance is also supposed to be made in good faith and after making a personal investigation about the information. On the same note, the director should put into consideration the complexities of the company and the economic situation.

Any action taken by a director is on behalf of the company and not in the director’s personal capacity. Therefore, if in the course duty a director comes across an opportunity that is profitable to the company, the director is expected to exploit the opportunity for the benefit of the company and not for personal gain (Horrigan 2010). Therefore, collaboration with a third party to take advantage of any opportunity present or upcoming that is supposed to benefit the company is illegal, and the director should be held accountable for that.

As far as a delegation of duties is concerned, a director is expected to make inquiries if necessary, to prove that the person the duties are delegated to is qualified for the purpose, and has the interests of the company at heart (Adams 2005). It is the duty of the director to make the delegate aware of the requirements of the Corporations Act, and the stipulations of the company’s constitution in regard to the duties delegated. Otherwise, the director will be responsible for the actions of the delegate as if they were performed by the director personally (Keay 2007).

Thank you for your time,

The Accountant.

Reference List

Adams, M 2005, Australian Essential Corporate Law 2/E, Routledge, London.

Baxt, B & Baxt, R 2005, Duties and Responsibilities of Directors and Officers, AICD, Sydney.

Fu, J 2010, Corporate Disclosure and Corporate Governance in china, Kluwer Law International, Alphen aan den Rijn.

Horrigan, B 2010, Corporate Social Responsibility in the 21^st Century: Debates, Models and Practices Across government, Law and Business, Edward Elgar Publishing, Northampton.

Keay, A 2007, Company Directors’ Responsibilities to Creditors, Routledge, London.

Mancuso, A 2009, Incorporate your Business: A Legal Guide to Forming a Corporation in Your State, Nolo, Berkeley.

Tomasic, R, Bottomley, S & McQueen, R 2002, Corporations Law in Australia, Federation Press, Annandale.

Wells, C & Fisse, B 2011, Australian Cartel Regulation: Law, Policy and practice in an International Context, Cambridge University Press, Cambridge.

As a company producing computer servers, Super Micro was found guilty of improper financial accounting by the securities and the exchange commission. In the FY 2015 through to 2017, the company engaged in fraudulent deals breaching a number of sections of securities act of 1933. The company prematurely recognized revenue and deliberately misstated financial statements amounting to grievous violation of the Securities Exchange Act of 1934.

Poor internal control was widely witnessed as employees were pushed to maximize revenue and minimize expenses. Goods were delivered to the customers before due dates as stipulated in the terms and in the process undermining generally accepted accounting principles (GAAP) (Larkin and DiTommaso 391). Through its employees, the company illegally changed shipment terms, delivered incomplete goods, and held the bill of lading abusing the rights of its carriers. Due to these gross violations, the security and exchange commission delivered cease-and-desist injunction barring the company from conducting some of its activities. Although the super micro has been fined $ 19.5 million, a detailed audit should be carried out to ascertain the extent of fraud.

Before commencing the audit process, auditor should first understand the client, the kind of business being conducted, and the accounting process. An audit company needs to draw a comprehensive strategy audit plan that would be used in the whole process. The accuracy of accounting system including internal control structure being used by the company in question should be verified. The nature of audit to be employed must be decided on earlier enough.

Generally, auditor is simply an expert of financial matters. However, when faced with complex scenarios like in the case of Super Micro which deals with computer technologies, the auditor may require services of a specialist. According to auditing standards (AS 1210) of the PCAOB, a specialist is an individual with special skills and knowledge in a given field (Krishnan et al. 153). To obtain correct evidential matter from the substantive tests while evaluating the books and technological property of Super Micro, the help of a specialist would be of great significance.

In the case of Super Micro, it would not be appropriate to design tests on the financial statements assertions provided by the company. The firm has inadequate internal control system and fundamental financial reporting is not done. This can be supported by the fact that it presented wrong financial statements on net sales to the securities and the exchange commission, and was forced to alter them. The company does not keep proper financial records to avoid backlash from its employees who have in some occasions tried to expose some of its dealings. The risks of material mistreatments are higher since a number of its employees engage in fraudulent acts by threatening customers and carriers through personal emails to accomplish company demands. Therefore, the auditing team should carry out its own substantive audit tests to help in exposing the fraud being practiced in the firm.

The internal control tests that should be adopted include inspection of all the documents such as payrolls, deliveries, and invoices. Approvals in terms of signatures, stamps, and check marks should be inspected to assess any illegal dealings. Observations of internal controls that are used by the firm and their effectiveness must be made. According to PCAOB, transactions should be traced from the origin to their inclusion in the financial statements (DeFond et al. 593). The control element on the business should be put into perspective. This is due to the fact that in some cases recognition of revenue is done upon shipment of goods without customer authorization, prior to delivery, before obtaining customer acceptance, and sometimes with incomplete or damaged shipments.

Communication records are some of the pieces of evidence that can be used to detect any illegal practices in an organization. To evaluate such, direct communications between third party and Super Micro should be assessed. This can be done through designing confirmation requests and sending them to the other stakeholders involved in the business. The main aim would be to obtain information about particular items affecting financial assertions. According to AICPA auditing standards, upon establishment of confirmations, they can be sent to the third parties and feedbacks evaluated (Swieringa 128). If evidence obtained is inadequate, more confirmations can be sent.

In the case of Super Micro, validations can be sent to the carriers and customers whose rights have been infringed by the firm through illegal financial practices. Shipment processes between the company and some of its customers were marred with irregularities as they could in some occasions be threatened by employees through emails to accept goods when they do not need them. A number of goods could be hoarded in carriers’ stores against their will. Such information can be obtained through sending confirmations.

Comparison of account estimates would prove crucial to ascertain all evidential matters are material to financial statements developed by the firm. It would also ensure approximations are reasonable and records of the company’s business operations are true. It would also help to establish if all estimations conform to the GAAP and Securities Exchange principles. Changes of principles in the industry are always disregarded by the organizations in the business.

As such, their methods of operation should be evaluated to ensure they conform to the new accounting pronouncements. According to AS 2110, an accounting estimate should be conducted to ensure new entries in the industry adhere to the operating strategies (Acito et al. 15). The comparison of industry’s estimates and super micro’s would be significant to ensure new entries which are conducting business with the firm are following the rules. Pursuant to AS 2505, comparisons should be done to check any form of litigation claims. Such information would enable the auditing team to assess damages or infringements by the firm.

Lastly, to ensure all the Super Micro’s financial statements and supporting documents are valid, complete, accurate, and without errors, some substantive tastings must be conducted. Confirmations should be sent to the banks requesting accounting records of end cash balances. Accounts receivable balances for the costumers must be verified to ensure they are correct. Super Micro in most cases failed to update its inventory records; therefore, it would be suitable to evaluate the period-end physical inventory count. A specialist should verify if the values of all the assets are reasonable and conform to the market prices. The records of fixed assets should be substantiated to check if they match physical possessions. Loan balances should be ascertained by the lenders as well as approved dividends.

In conclusion, the fraudulent acts committed by super micro are serious and need detailed auditing to establish their full extent. A specialist familiar with technological assets should be engaged to help the auditing team in the investigations. Confirmations should be sent to the third parties conducting business with the firm to obtain more information. The firm has no adequate internal control systems as records of financial statements are not sufficient. On one occasion, it gave wrong net sales records to the securities and the exchange commission. Therefore, auditing team should conduct their own substantive testing.

Works Cited

Acito, Andrew A., Chris E. Hogan, and Richard D. Mergenthaler. “The Effects of PCAOB Inspections on Auditor-Client Relationships.” The Accounting Review, vol. 93, no.2, 2018, pp. 1-35. Web.

DeFond, Mark L., and Clive S. Lennox. “Do PCAOB Inspections Improve the Quality of Internal Control Audits?” Journal of Accounting Research, vol. 55, no.3, 2017, pp. 591-627. Web.

Krishnan, Jagan, Jayanthi Krishnan, and Hakjoon Song. “PCAOB International Inspections and Audit Quality.” The Accounting Review, vol. 92, no. 5, 2017, pp. 143-166.

Larkin, Richard F., and Marie DiTommaso. Wiley Not-for-profit GAAP 2018: Interpretation and Application of Generally Accepted Accounting Principles. John Wiley & Sons, 2018, pp. 382-413.

Swieringa, Robert J. “The Early Years of the Financial Accounting Foundation and the Financial Accounting Standards Board, 1972 to 1980: The “Special Relationship” with the AICPA.” Journal of Financial Reporting, vol. 3, no.1, 2018, pp. 127-130. Web.