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Green Dreams

In: Business and Management

Submitted By spenc010
Words 617
Pages 3
Seth Spencer
Accounting Research 533-01
August 27, 2015

Answer these questions on an individual basis: 1. Identify the main financial accounting question and the main auditing question you will try to answer in your research. What additional issues can you identify at this time? (Don’t be limited to just one area of accounting).

Financial accounting question: Financially, how do we account for sales tax transactions?
Audit question: How does the current treatment of sales tax affect the financial statements and therefore the outlook of the company to investors?
Tax Question: How does their current outlook on sales tax affect Green Dreams’ tax liability?
Ethical Questions: Does the intentional abuse of the law (and use penalties to pay less taxes/not disclose liability) affect the shareholders in other ways?
Could the continued abuse of the law lead to higher penalties?
How would it be necessarily “wrong” if they are cooperative with authorities and paying the penalties?

2. Audit Facts * Disclosure of liability (or inability to disclose liability) * Logic of accounting director is skewed—could mean more “iffy” disclosures

Audit Facts * Disclosure of liability (or inability to disclose liability) * Logic of accounting director is skewed—could mean more “iffy” disclosures

Identify which of the scenario facts are relevant to the main financial accounting and auditing issues.

Financial Accounting Facts * Outside of state purchases * Estimation technique of sales tax liability * “Iffy” assumptions regarding purchasing equipment out of state. (Use of “per se”)

* Outside of state purchases * Estimation technique of sales tax liability * “Iffy” assumptions regarding purchasing equipment out of state. (Use of “per se”)

* Sales Tax liability not stated * Indicates that some of the…...

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