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Essay / Research Paper Abstract
This 3-page paper discusses a case study concerning potential misstatement of re-acquisition of franchise rights. SAS 101 and AS 5 are discussed as part of the assignment. Bibliography lists 2 sources.
Page Count:
3 pages (~225 words per page)
File: D0_MTromaacct.rtf
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Unformatted sample text from the term paper:
of Reacquired Franchise Rights" by Kohlbeck, Cohen and Holder-Webb. In this case study auditors for Roman Holiday Pizza chain are somewhat concerned about the accounting for reacquired franchise rights, as
well as the audit risk associated with auditing reacquired rights. The two questions indicated in this case study are the identification of possible controls to reacquired franchise rights that should
be put in place to ensure that assertion risks are correct and audit risks minimal. The second question deals with the preliminary assessment of the audit risk associated with the
reacquired franchise rights in question. The first question, concerning what controls can, and should, be put in place, are addressed by the
Statement of Auditing Standards No. 101. Statement No. 5. SAS 101 covers the audit of fair value measurements and disclosures (SAS No. 101). Specifically, the statement oversees disclosure of assets,
liabilities and certain components of equity that are disclosed as fair value in financial statements (SAS No. 101). Fair value is a somewhat slippery subject, however. Fair value can change
over time, depending on market conditions, the economy and so on. Generally Accepted Accounting Principles (GAAP) treats the concept of fair
value (and changes in measurements) in a variety of different ways (SAS No. 101). GAAP and SAS 101 both suggest that changes over time should be reflected in net income,
while others can be recorded in other comprehensive income and equity (SAS No. 101). The difficulty with SAS 101, however, is
it might not take into account fair value as it pertains to smaller companies (such as Roman Holiday Pizza). SAS 101 is fine with the larger players that have thousands
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