Accounting and Auditing

  As the term suggests, for-profit companies are driven primarily by one goal — to maximize profits for their owners. Nonprofits, on the other hand, are generally motivated by a charitable purpose. Here’s how their respective financial statements reflect this difference. Reporting revenues and expenses For-profits produce an...

  Financial statement auditors spend a lot of time evaluating how their clients report work in progress (WIP) inventory. Here’s why this account warrants special attention and how auditors evaluate whether WIP estimates seem reasonable. Accounting for inventory Companies must report the value of raw materials, WIP and...

  Business owners often complain that they’re required to provide too many disclosures under U.S. Generally Accepted Accounting Principles (GAAP). But comprehensive financial statement footnotes contain a wealth of valuable information. Here are some examples of hidden risk factors that may be discovered by reading footnote disclosures....

Today’s auditors spend significant time determining whether amounts claimed on the income statement capture the company’s financial performance during the reporting period. Here are some income statement categories that auditors focus on. Revenue Revenue recognition can be complex. Under current accounting rules, companies follow a patchwork of...