Question: Consider the case of backdated stock options as reported in the chapter for UnitedHealth. a. What happens to the financial statements when options are backdated

Consider the case of backdated stock options as reported in the chapter for UnitedHealth.
a. What happens to the when options are backdated and the company fails to record compensation expense? Do outsiders receive information that is materially misstated?
b. Describe two management assertions violated when a company fails to record compensation expense related to backdated stock options.
c. Describe a substantive audit procedure that an auditor could use to determine whether are misstated through backdating of stock options.

Step by Step Solution

★★★★★

3.20 Rating (164 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Compensation expense is understated net income is overstated Outsiders often receive information that is materially misstated because compensation e... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

386-B-A-A-A-N (3615).docx

120 KBs Word File

Students Have Also Explored These Related Auditing Questions!

Consider the case of a developed group, where all members have been socialized. What are the benefits to the individuals of norm conformity? What are the benefits of not conforming to the group's...

Consider the case of a positive consumption externality. A. Suppose throughout this exercise that demand and supply curves are linear, that demand curves are equal to marginal willingness to pay...

Consider the case of a Foreign monopoly with no Home production, shown in Figure 9-7. Starting from free trade at point A, consider a $10 tariff applied by the Home government. a. If the demand curve...

financial SUBDOMAINS: 325.4 COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 326.1 MANAGING INTERNAL COST & CONTROLLING FINANCES 326.2 MANAGING CAPITAL & FINANCIAL ASSETS 326.4 MANAGING ENTERPRISE RISK &...

GIVIISI V. Common Size Income Statement Prepare a common size income statement for two years and compare/contrast the changes (Refer to chapter 17) VI. Ratio Analysis of Financial Statements Prepare...

I have a attached a copy of the data used to answer the question Prepare a 2007 classified balance sheet and multistep income statement. Use the account balances from the unadjusted trial balance and...

BETTER FORGOTTEN: NEW SUIT? I GUESS YOU DONT NEED A RAISE! A young manager was overdue for an increase and anxiously awaiting corporate approval. A senior executive, well aware of this situation,...

Hello, I am in need of help with a huge assignment. I am responsible for only one part of this, but I would like to understand what everything means in the end. At any rate, please let me know if...

Ernst & Young (EY), an accounting firm, audited the financial statements of semiconductor company Broadcom Corporation. In 2005, EY issued an unqualified opinion that Broadcom's financial statements...

questions 6, 7 and 8. please help! thank you! (6) List and describe two internal controls that you believe might have helped to detect this fraud. Explain how the internal controls you listed would...

1. Ratio Analysis (25 marks)

How does one negotiate effectively?

[ 3 ] Which of the following is normally included in the operating budget? A . Capital budget. B . Cash budget. C . Selling expense budget. D . Budgeted balance sheet.

The function of education is to create human beings who are integrated and therefore intelligent. ________. We may take degrees and be mechanically efficient without being intelligent. Intelligence...

What is an example of a test of control or substantive test of transactions that can be performed using CAATs for payroll transactions?

List two substantive analytical procedures that can be used to provide audit evidence related to the payroll expense accounts and the payroll- related liabilities.

Discuss how an auditor would audit the accrued payroll taxes account.

Based on the following data, determine the total assets, total liabilities, net worth, total cash inflows, and total cash outflows. \ table [ [ Balance Sheet and Cash Flow Items,,, ] , [ Rent for the...

A bond is selling at $900 (below its par value of $1000). The bond matures in 10 years and has pays offers a 5% coupon rate. Interest is paid semi-annually. What is the bonds yield-to-maturity? A...

Sampler A has a useful life of 12 years, an initial cost of $12,141, an annual maintenance cost of $1800. Your net present worth of the life of the equipment is (-$18,266). Sampler B has an initial...