Audit of Provisions and Value Adjustments – a Very Important Objective for the Assessment of Information Comprised in the Financial Statements
Any type of entity must show in its financial statements information regarding its significant estimations concerning the future periods and other important sources of uncertainty at the date at which the financial statements are drafted, which presents an increased risk of generating an adjustment...
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| Format: | Article |
| Language: | English |
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Dunarea de Jos University of Galati
2017-04-01
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| Series: | Annals of Dunarea de Jos University. Fascicle I : Economics and Applied Informatics |
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| Online Access: | http://www.eia.feaa.ugal.ro/images/eia/2017_1/Iovu2.pdf |
| _version_ | 1811205934238662656 |
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| author | Cristina IOVU |
| author_facet | Cristina IOVU |
| author_sort | Cristina IOVU |
| collection | DOAJ |
| description | Any type of entity must show in its financial statements information regarding its significant estimations concerning the future periods and other important sources of uncertainty at the date at which the financial statements are drafted, which presents an increased risk of generating an adjustment of the accounting value of the assets and debts in the future fiscal year. This information must include the nature of the estimations and their accounting value at the date of the balance sheet. The auditing of the financial statements in which accounting estimations are presented frame a high risk of significant distortion. Because of this, the auditor must obtain sufficient audit evidence which would certify if these estimations are reasonable, respectively if the data on which the estimations are based upon are accurate, complete and relevant, and the procedures and methods used for the development of the estimations are adequate for the balance sheet structures to which they apply. The development of provisions, as a manner to reflect uncertainties within the accounting system, contributes to the accurate representation of the company’s financial position. Such uncertainties are acknowledged through the presentation of their nature and value, but also through the exercising of prudence for the development of the financial statements. Prudence implies the identification of those accounting estimations, associated to the given uncertainties conditions, which would not over-evaluate the assets and the incomes, and the debts and expenses would not be under-evaluated. Exercising prudence should not allow, for instance, the accumulation of excessive provisions, the deliberate under-evaluation of assets and incomes, nor the deliberate over-evaluation of debts or expenses. This requirement is imperative, due to the fact that investors substantiate their economic decisions starting from the analysis of the financial statements, as accurate image of the financial position and efficiency of an entity. |
| first_indexed | 2024-04-12T03:39:34Z |
| format | Article |
| id | doaj.art-1d6885a1e38747a88cfe47d5ea95b5b2 |
| institution | Directory Open Access Journal |
| issn | 1584-0409 1584-0409 |
| language | English |
| last_indexed | 2024-04-12T03:39:34Z |
| publishDate | 2017-04-01 |
| publisher | Dunarea de Jos University of Galati |
| record_format | Article |
| series | Annals of Dunarea de Jos University. Fascicle I : Economics and Applied Informatics |
| spelling | doaj.art-1d6885a1e38747a88cfe47d5ea95b5b22022-12-22T03:49:19ZengDunarea de Jos University of GalatiAnnals of Dunarea de Jos University. Fascicle I : Economics and Applied Informatics1584-04091584-04092017-04-01231167175Audit of Provisions and Value Adjustments – a Very Important Objective for the Assessment of Information Comprised in the Financial StatementsCristina IOVU0Bucharest University of Economic Studies, RomaniaAny type of entity must show in its financial statements information regarding its significant estimations concerning the future periods and other important sources of uncertainty at the date at which the financial statements are drafted, which presents an increased risk of generating an adjustment of the accounting value of the assets and debts in the future fiscal year. This information must include the nature of the estimations and their accounting value at the date of the balance sheet. The auditing of the financial statements in which accounting estimations are presented frame a high risk of significant distortion. Because of this, the auditor must obtain sufficient audit evidence which would certify if these estimations are reasonable, respectively if the data on which the estimations are based upon are accurate, complete and relevant, and the procedures and methods used for the development of the estimations are adequate for the balance sheet structures to which they apply. The development of provisions, as a manner to reflect uncertainties within the accounting system, contributes to the accurate representation of the company’s financial position. Such uncertainties are acknowledged through the presentation of their nature and value, but also through the exercising of prudence for the development of the financial statements. Prudence implies the identification of those accounting estimations, associated to the given uncertainties conditions, which would not over-evaluate the assets and the incomes, and the debts and expenses would not be under-evaluated. Exercising prudence should not allow, for instance, the accumulation of excessive provisions, the deliberate under-evaluation of assets and incomes, nor the deliberate over-evaluation of debts or expenses. This requirement is imperative, due to the fact that investors substantiate their economic decisions starting from the analysis of the financial statements, as accurate image of the financial position and efficiency of an entity.http://www.eia.feaa.ugal.ro/images/eia/2017_1/Iovu2.pdfAudit of provisionsAccounting and fiscal impact of acknowledging provisionsAccounting / fiscal treatment in case of provisionsProvisions assessments |
| spellingShingle | Cristina IOVU Audit of Provisions and Value Adjustments – a Very Important Objective for the Assessment of Information Comprised in the Financial Statements Annals of Dunarea de Jos University. Fascicle I : Economics and Applied Informatics Audit of provisions Accounting and fiscal impact of acknowledging provisions Accounting / fiscal treatment in case of provisions Provisions assessments |
| title | Audit of Provisions and Value Adjustments – a Very Important Objective for the Assessment of Information Comprised in the Financial Statements |
| title_full | Audit of Provisions and Value Adjustments – a Very Important Objective for the Assessment of Information Comprised in the Financial Statements |
| title_fullStr | Audit of Provisions and Value Adjustments – a Very Important Objective for the Assessment of Information Comprised in the Financial Statements |
| title_full_unstemmed | Audit of Provisions and Value Adjustments – a Very Important Objective for the Assessment of Information Comprised in the Financial Statements |
| title_short | Audit of Provisions and Value Adjustments – a Very Important Objective for the Assessment of Information Comprised in the Financial Statements |
| title_sort | audit of provisions and value adjustments a very important objective for the assessment of information comprised in the financial statements |
| topic | Audit of provisions Accounting and fiscal impact of acknowledging provisions Accounting / fiscal treatment in case of provisions Provisions assessments |
| url | http://www.eia.feaa.ugal.ro/images/eia/2017_1/Iovu2.pdf |
| work_keys_str_mv | AT cristinaiovu auditofprovisionsandvalueadjustmentsaveryimportantobjectivefortheassessmentofinformationcomprisedinthefinancialstatements |