Accounting is one of the fields that are often discussed in media despite their complexity and abundance of terminology that only the specialist are capable of recognizing and placing in the context of the narration. In a recent article “Survey Finds Audit Flaws by the Big Accounting Firms” published by Reuters in the New York Times, a major accounting fraud is discussed with a mentioning of a range of terms and concepts, which, though used appropriately, still lack certain detailing that would have made the argument more convincing.
Though the author of the article uses the accounting terms properly, it is still obvious that more information could be mentioned in relation to these terms and that most of them are used for creating the impression of a professionally written article. Simple concepts such as “publicly traded banks” (Reuters para. 3) and “audit” (Reuters para. 2) are used correctly; however, as they became household names quite a while ago, it is reasonable to dismiss them as only partially related to specific terminology. More complicated notions, however, add a touch of vagueness to the report.
A further examination of the article shows that the author has a rather good grasp of the concept of an audit, as well as its key principles, purposes and ethics. Defined by Williams, Haka, Bettner and Carcello as the assumption of liability being transferred to the market participant in question, with the performance risks remaining the same before and after the transfer (Williams, Haka, Bettner and Carcello 13), the concept does relate to the topic discussed by the author and creates the premises for tying in the specifics of accounting and the accounting ethics.
When outlining the methods of addressing the threat of a financial and accounting fraud in a company, the author of the article mentions internal control testing as a method for preventing fraud in a company (Reuters para. 9). Indeed, the specified approach is deemed as rather worthwhile in the realm of accounting. In fact, it is traditionally preferred over other types of control, including financial reporting (Williams et al. 22). Therefore, it can be assumed that the author’s position regarding the issue and the prevention measures is quite legitimate.
The significance of a financial statement is also emphasized in the article as the key to successful supervision of the company’s key accounting processes and financial transactions: “procedures used to assess how financial statements are presented” (Reuters para. 9) are supposed to help identify a possible fraud. While even a close consideration of an organization’s financial statement is not enough to prove the fact of a fraud in most cases, one still has to admit that the specified process is a basic step in any audit, which helps spot the existing financial or accounting inconsistencies.
Finally, the necessity for conducting an audit of investment valuation deserves to be listed among the key accounting terms used by Reuters in the article (Reuters para. 10). Another doubtlessly efficient method of fighting financial frauds, the specified approach is a crucial part of a thorough inspection (Williams et al. 43).
Though the accounting terminology included in the article is used correctly and appropriately, it is still desirable that the author could have expanded on the solutions proposed. Without a more detailed explanation of the basic audit processes, the article looks rather empty. Nevertheless, one must give the author credit for addressing the corresponding financial issues in a proper manner.
Works Cited
Reuters. “Survey Finds Audit Flaws by the Big Accounting Firms.” New York Times. 2014. Web.
Williams, Jan, Sue Haka, Mark Bettner and Joseph Carcello. Financial & Managerial Accounting – With Access Code. 17th ed. New York City, NY: McGraw-Hill Irwin, 2014. Print.