Both transaction-related and balance-related audit objectives include objectives related to presentation and disclosure. Visit the website of
Question:
Both transaction-related and balance-related audit objectives include objectives related to presentation and disclosure. Visit the website of the United States Securities and Exchange Commission (SEC) and locate the Accounting and Auditing Enforcement Release (AAER) No. 3850 issued on January 18, 2017 against General Motors (GM).
a. What was the problem with GM products that led to the underlying accounting issue investigated by the SEC?
b. Describe briefly the accounting standards guidance, as summarized by the SEC, related to recognition and disclosure of a loss contingency.
c. What were the two different approaches used by GM to accrue for estimated losses related to product recalls?
d. What breakdown in internal controls triggered the failure to adequately disclose the vehicle recalls?
Step by Step Answer:
a In 2014 General Motors informed the National Highway Traffic Safety Administration that they were recalling over 600000 Chevrolet Cobalts in model y...View the full answer
Auditing And Assurance Services An Integrated Approach
ISBN: 9780135176146
17th Edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley
