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Friday, January 3, 2020

Finance and Investment Cycle - 1386 Words

Finance and Investment Cycle I. Introduction A. Special purpose entities B. Transaction: less frequent, large and complex C. Focus of control activities: authorization of transactions amp; compete of accounting personnel D. Focus of substantive procedures: understanding of the transactions, verifying amounts and calculations, ensuring presentation and disclosures II. Inherent risks E. Lease accounting 1. The classification of operating or capitalized lease is based on the assumption in ASC840 F. Loan covenants 2. Intend to keep the borrower’s financial position at the same level as it was when the bank initiated the loan 3. Covenants restrict payment of†¦show more content†¦When parts of the notes become due: CFO and controller reclassify current/LT x. Calculated liabilities and credits: lease obligation, deferred tax, pension, foreign currency gain/loss, etc. --- try to capture the economic reality by following GAAP 26. Periodic reconciliation xi. Verify number of sh ares: Obtain reports from registrar and transfer agent to verify company’s record of number of shares outstanding agrees with registrar’s number xii. Trustee: handle ownership of bond xiii. Ownership of bond: Obtain confirmation and reports from trustee to reconcile the trustee’s records to the company’s records xiv. Small companies self issue stock by using â€Å"stock certificate book† authorized by board of directors. Responsible person should periodically inspect the stock certificate book to determine if the missing certificate is in possession of owners. (By confirm ownership of shares with the holder of the records) O. Investing transactions: investments and intangibles (3) 27. Authorization xv. High level approval required xvi. Auditing: vouch major acquisition to the documented approval 28. Custody xvii. Negotiable certificate (bond, stock): kept in brokerage account xviii. Negotiable certificate (title to real estate): in the actual posse ssion of client, or in the bank safe deposit box of the company xix.Show MoreRelatedFinance and Internal Controls Essay697 Words   |  3 Pagesï » ¿Finance and Investment Controls Just as all cycles discussed in this proposal the finance and investment cycles are vital to the return of borrowed assessments and the value (and longevity) of the company. Corresponded or intertwined to that of the investment cycle and business cycle, the Finance cycle deals with the company’s ability to pay back investors and entities that have facilitated finance to the company’s mission and vision. The finance cycle commences from the initial moments of obtainingRead MoreRelationship Between The Net Trade Cycle1155 Words   |  5 Pageshighly statistically significant. Soenen (1993) examined the relationship between the net trade cycle as a measure of working capital and return on investment in the US enterprises. 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