AUDITING

Executive Memo: Auditing a Publicly Traded company

EXECUTIVE MEMORANDUM

To: [Name of the Target Users]

From: [Name of the author and its professional affiliation or Name of the company]

Date: [Insert the Latest Date]

RE: Auditing a Publicly Traded company

The statement of financial position is a snapshot of the organization's financial health. This statement shows the balances of all financial accounts at a specific point in time, usually the end of a month, quarter, or year. The statement of financial position answers questions such as: How much cash do we have? Does anyone owe us money? How much debt do we have? And do we have the resources to pay our debt?

The statement of financial position is divided into three sections and is based on the basic accounting equation: Assets = Liabilities + Net Assets. The statement of financial position is also called the balance sheet because both sides of the accounting equation must always be in balance. The statement of activities presents the financial operating results of the organization over a given period of time, usually a month, quarter, or year (ASCF, 2008). This statement shows whether the organization had a net gain (surplus) or net loss (deficit). The statement of activities answers questions such as How did we do? What were our revenues? What were our expenses? The statement of activities is divided into two sections: revenues and expenses.

REVENUES: Revenues can be generated from providing services or goods to customers. In addition, revenues can come from donations and grants. Examples of revenues include membership due, service fees, admission fees, and unrestricted gifts.

EXPENSES: Expenses are the cost of providing programs, services, or products. Examples of expenses include employee salaries, supplies, rent, and utilities.

The statement of activities compares the total revenues to the total expenses over a given time period and reports whether the organization had a net gain or net loss for the time period reported. A business would report this as net income or profit. GAAP requires that revenues and expenses be reported as unrestricted, temporarily restricted, or permanently restricted. In this connection, this memo will include a description of what an auditor will look for to see if the client is consistent with the generally accepted accounting principles.

Share-Based Payments

From the perspective of an auditor, the share-based payments approaches are used by the organizations to offer employees an incentive to keep them motivated. Such changes are usually performed to maximize the performance of employees ...