Management Audit
Categories: Accounting, Company Management
Were the numbers...accurate? Fair? Reflective of truth, reality, and GAAP? That's the determination in a management audit. That is, a financial audit really just covers the 10K, 10Q, and other filings for public companies, like a special 8K filing (not the breakfast cereal). A management audit covers things like amounts spent on air travel from Dallas to JFK. Like...did the CFO really need to fly first class? Did she need to stay at The Four Seasons? And what is this dinner bill for $812 for four people? Are vendors getting kickbacks? Are supplies fairly and equitably distributed among divisions in the company?
Tons of questions, little time. Haughty accountants aggressively press for the details. Evidence of even small wrong-doings usually leads down a path of the discovery of other wrong-doings, and then there's a fan which is struck repeatedly by human waste.
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Finance: What is Adverse Audit Opinion?27 Views
Finance a la shmoop. What is an adverse audit opinion and you know deficiency
letter. Okay people this is not good you thought you had good grades but when [Report card is thrown onto the desk]
you got your report card your teachers had opinions adverse to yours... [Report card has bad grades in it]
They sent your parents a deficiency letter you know the one with all those [Mom looks shocked]
D's on it well when it's a company's audit that has similarly gone awry it's [Boss looks angry and employee looks shocked]
the nice way to say it well then it means they didn't count the beans
properly when they gave their financial reports to their investors or whoever
the auditors were serving usually this implies that companies overstated how [Employee counting coffee beans]
profitable they really were or how well they were really doing so tens of
thousands of investors if you know the company was public when this all [Big line of people waiting to invest]
happened paid twenty seven dollars and 32 cents a share when with the real
numbers the stock probably should have been trading more at like you know
fourteen dollars and 27 cents a share big difference well basically an auditor
is saying that yours are not bread-and-butter misstatements no oops [Bean report with the numbers crossed out]
it's more of a dude there were material ie important
mistakes and they were pervasive like everywhere math, science, english, history
your failure it's no mystery that's how auditors talk really
all right well then there are massive losses to massive numbers of people who hire [Protesters on a street]
massive numbers of lawyers who sue you.. massively.. in the world of finance an
adverse audit opinion is a bit like running over everyone's favorite dog [Car goes over a bump]
several times only you're the one who is likely dead meat [Guy reverses and runs the dog over again and the owner comes to fight]