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Resources for Accountants

Substantive Procedures for the Purchasing Process [Video]

Substantive Procedures for the Purchasing Process

After the auditor has set the achieved level of control risk and determined the risk of material misstatement, the auditor can adjust detection risk. The auditor can decrease detection risk by increasing the nature, timing, and extent of the substantive procedures to be performed.

There are two types of substantive procedures: analytical procedures and tests of details.

Analytical procedures substantiate accounts or disclosures by comparing recorded amounts (or ratios derived from recorded amounts) with the auditor’s independent estimates for those amounts. The auditor arrives at independent estimates by examining relationships between accounts (both financial and nonfinancial) to see if they are plausible. As part of this process, the auditor would:
• Compare financial information to information from comparable prior periods
• Compare financial information to budgeted information
• Examine relationships between related accounts during the period
• Compare financial information to the industry average
• Compare financial information with nonfinancial information

There are two types of tests of details: tests of transactions and tests of account balances.

Tests of transactions are designed to detect fraud or errors in individual transactions. An example would be vouching a sample of journal entries from the purchases journal back to the respective purchase orders, receiving reports, and invoices to verify occurrence.

Tests of account balances, on the other hand, verify the ending balances of accounts. An example would be confirming accounts payable balances with vendors to determine whether the ending balance for accounts payable is fairly stated.

After the substantive procedures have all been performed, the auditor will calculate the aggregate misstatement for accounts payable and related accounts. If the aggregate misstatement is less than or equal to the tolerable misstatement, the auditor will conclude that accounts payable and related accounts are fairly presented. If the aggregate misstatement is more than the tolerable misstatement, the auditor will conclude that accounts payable and related accounts are not fairly presented. In that case, the auditor would want the client to make an adjusting journal entry.

0:00 Introduction
0:28 Substantive procedures and detection risk
0:49 Types of substantive procedures
2:01 Analytical procedures
4:33 Tests of details (tests of transactions)
8:26 Tests of details (tests of account balances)
10:15 Confirmations of accounts payable
11:41 Comparing the aggregate misstatement to the tolerable misstatement
13:13 Auditing disclosures

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Resources for Accountants

Internal Rate of Return (IRR) | Formula | Calculation with Example [Video]

In this video on internal rate of return (irr), here we learn formula, example of irr along with significance and its drawbacks.𝐖𝐡𝐚𝐭 𝐢𝐬 𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐥 𝐑𝐚𝐭𝐞 𝐨𝐟 𝐑𝐞𝐭𝐮𝐫𝐧 (𝐈𝐑𝐑)?-------------------------------------------------------------------Internal return rate is the rate at which the net present value of the project is zero, the rate at which future cash flows are adjusted to calculate the present value.𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐥 𝐑𝐚𝐭𝐞 𝐨𝐟 𝐑𝐞𝐭𝐮𝐫𝐧 (𝐈𝐑𝐑) 𝐅𝐨𝐫𝐦𝐮𝐥𝐚-------------------------------------------------------------------NPV= 0= CF0 + CF1/(1+IRR)^1 + CF2/(1+IRR)^2 + ..... CFn/(1+IRR)^n𝐒𝐭𝐞𝐩𝐬 𝐭𝐨 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐈𝐑𝐑 𝐢𝐧 𝐄𝐱𝐜𝐞𝐥------------------------------------------------------#1 - Calculate Cash inflows and outflows in a standard format.#2 - Use the IRR formula in Excel#3 - Compare IRR to Discount Rate𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐥 𝐑𝐚𝐭𝐞 𝐨𝐟 𝐑𝐞𝐭𝐮𝐫𝐧 (𝐈𝐑𝐑) 𝐒𝐢𝐠𝐧𝐢𝐟𝐢𝐜𝐚𝐧𝐜𝐞-------------------------------------------------------------------------The IRR of any project shall be estimated taking into account the following three assumptions:1- The investments made are kept until the maturity dates.2 - The intermediate cash flows will reinvest itself in IRR.3 - By nature all cash flows are periodic, or the time gaps between various cash flows are equal.To know more about 𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐥 𝐑𝐚𝐭𝐞 𝐨𝐟 𝐑𝐞𝐭𝐮𝐫𝐧 (𝐈𝐑𝐑), you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- https://www.wallstreetmojo.com/internal-rate-of-return-irr/Subscribe to our channel to get new updated videos. Click the button above to subscribe or click on the link below to subscribe - https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUw?sub_confirmation=1

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Resources for Accountants

Crypto accounting for startups | Finance Basics with Kruze Consulting’s Scott Orn | E1339 [Video]

Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp00:00 The credible next wave of crypto startups03:17 What regulation actually applies to crypto04:32 Tax treatments on tokens and the right move for startups08:24 Recent improvements in crypto accounting infrastructure12:07 What happens if your business is paid in crypto, making the right moves with the IRS17:39 Historical comparison of airline miles & points to tokens21:25 Emerging guidance for startups regarding crypto25:22 Closing thoughtsCheck out Kruze Consulting: https://www.kruzeconsulting.com/twistFOLLOW Scott: https://twitter.com/scottornFOLLOW Jason: https://linktr.ee/calacanishttps://thisweekinstartups.com/basicsListen here:Apple: https://podcasts.apple.com/us/podcast/this-week-in-startups-audio/id315114957Spotify: https://open.spotify.com/show/6ULQ0ewYf5zmsDgBchlkr9Overcast: https://overcast.fm/itunes315114957/this-week-in-startups-audioMore from us:Twitter: https://twitter.com/twistartupsInstagram: https://www.instagram.com/twistartupsOfficial site: https://thisweekinstartups.comSubscribe to our YouTube to watch all full episodes:https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1Subscribe to TWiST Clips for all the best moments:https://www.youtube.com/channel/UCS7tJlcUA6PzVHEMo-X7ddg?sub_confirmation=1#startups #entrepreneurship #investing #angelinvesting #tech #news #business

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Resources for Accountants

Investment Management: Industry Overview [Video]

Part of the "Investment Management Industry Fundamentals" learning path, this CPE-eligible, eLearning course (1.0 CPE) provides you with an overview of the investment management industry and an introduction to the applicable accounting guidance for investment companies in accordance with U.S. GAAP (ASC 946). As you tour the investment company landscape, the following topics will be discussed: Characteristics of an investment company, Investment strategies, General categories, Capital and legal structures, Key players (service providers), Definition of an investment company in U.S. GAAP, and Overview of applicable U.S. GAAP accounting guidance. This online course also explores the fundamental differences between U.S. GAAP and IFRS related to investment company accounting. This course is a must for anyone beginning to work in the investment management industry and serves as the starting point for our online Investment Management Industry Fundamentals course collection. Take our self-study eLearning course here: https://www.gaapdynamics.com/product/investment-management-industry-overview/ Learn more about GAAP Dynamics: https://www.gaapdynamics.com/ Check out our other online courses on the GAAP Dynamics Learning Library: https://www.gaapdynamics.com/individu... Subscribe to GAAP Dynamics to see more videos like this!