Essay about Materiality: U. s. Securities and Exchange Commission and Financial Statement

Submitted By victoramchang
Words: 423
Pages: 2
Open Document
Rotasha M. Wardlaw
MBA 632
November 27, 2012
Materiality brings up the question of how the omission or misstatement of information in a company’s financial statements impacts the actions of its users. If financial statement users would have been expected to alter their actions or decisions if the info had not been omitted or misstated then the items omitted or misstated are considered to be material. If the financial statement user(s) would not have been expected to change their actions, then it is considered immaterial. (Accounting Tools, 2012) Based on the SAB99 the financial user is a reasonable person and a matter is material if the reasonable person finds it important.
In the case of Polymedica, the reasonable persons were: Short-Sellers and the Securities Exchange Commission, whose purpose is to protect investors (short-sellers) from illegal financial practices by making sure that companies that offer securities to the public provide accurate financial information. The reasonable persons felt that using the capitalization method was material. Due to size of its effect on the income statement, it is an example of quantitative materiality.
In the case of Baush & Lomb, the company decided to force their vendors to take the company’s unwanted merchandise and threatened to not work with them if they didn’t do it. This would be considered qualitative materiality which could be useful information to certain reasonable persons because it could have caused a significant loss in customers who could then lead to a loss in future profits.
In the case of Merrimeck Tractors, Inc. LIFO or FIFO the question was whether or not they should change accounting practices due to
Show More

Related Documents: Essay about Materiality: U. s. Securities and Exchange Commission and Financial Statement

Swot Analysis Of Qantas Company

report will discuss different categories of laws which would be applicable the Qantas Group and also the potential level of the reliance that placed on the control environment of the Qantas Group. Furthermore, the report will briefly give a planning materiality bases and percentage regarding to our analysis.…

Words 3031 - Pages 13

Guilds to 2013 Aicpa Essay example

CONTENT AND SKILL SPECIFICATIONS FOR THE UNIFORM CPA EXAMINATION Approved by the Board of Examiners American Institute of Certified Public Accountants May 15, 2009 Update Approved on October 1, 2011 Effective Date: January 1, 2013 Examinations Team American Institute of Certified Public Accountants 100 Princeton South Suite 200 Ewing, NJ 08628 ii COPYRIGHT © 2011 BY AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, INC. CONTENT SPECIFICATION OUTLINES (CSOs) The outline portions…

Words 7307 - Pages 30

Essay about bombadier auditing review

differentiated products and is investing heavily into new technologies. b) Management integrity and responsibility: Bombardier’s MD&A has been prepared in accordance with the requirements of the Canadian Securities Administration. Audit committee for Bombardier consists entirely of independent and financial literate directors. MD&A contains both IFRS and non-GAAP measures with certain measures that are also presented on a pro-forma basis to reflect impact of new accounting changes such as debt. Non-Gaap…

Words 7867 - Pages 32