5. How would the error impact your general ledger account?

In the general ledger account, error such as unrecorded transaction, calculated incorrectly occurs summation errors in both debit and credit sides.

6. How would the irregularity impact the balances in your financial statements?

Purchase and sales journals are the prime book of entry. Certain violations of laws and regulations such as intentionally misstating or omitting the amounts that required to be disclosed would have a direct financial effect on specific account balance in the financial statements. It would overstatement the profit and reduce the rationalization of Financial Statement Fraud.

7. Demonstrate how the error can be corrected.

Accountants should replace the inappropriate entries to the correct category through the valid material financial records, supporting documents, or business transactions.

8. Demonstrate how the irregularity can be corrected.

As an accountant, it is responsibility for discovering any illegal acts, the auditor should modify the audit report accordingly.

·         Company management is responsible for financial statements

·         Company’s board of directors and senior management set the code of conduct

 

9. Who benefits from accounting irregularity?

The Senior management, Mid- and lower-level employees and organized criminals might benefit from accounting irregularity to conceal true business performance  and meet or exceed their earnings or revenue growth expectations of stock market analysts from the accounting irregularity.

 

10. Explain how errors and irregularities impact users of the financial statement.

Deliberate misstatements or omissions of amounts or disclosures of financial statements to deceive financial statement users, particularly investors and creditors. It would diminishes the confidence of the capital markets, as well as market participants, in the reliability of financial information and make the capital markets become less efficient.