You have been hired as the CPA / Controller for an information technology start-up company....

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You have been hired as the CPA / Controller for an information technology start-up company. Thecompany is currently privately held with the goal to eventually become a publicly traded company.Write a three to four (3-4) page paper in which you:1. Discuss how the company’s management team can manipulate its earnings results though theadoption of different accounting methods and the obligation of accounting professionals to betransparent to shareholders.2. Assess how the start-up technology business may be impacted by the required compliance withU.S. GAAP accounting methods and make a suggestion for how the business managers shouldminimize the impact to the financial performance as a result of accounting compliance.3. Assume that the privately held technology company decides to become a publicly tradedcompany on the NASDAQ and is required to adopt International Financial Reporting Standards(IFRS). Determine the areas of the balance sheet that will be impacted by the shift and how thestock market is likely to respond to this change in accounting methods.4. Evaluate the impact to the accounting profession should privately held companies be required touse U.S.GAAP while publicly traded companies are required to IFRS.5. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and otherWebsites do not quality as academic resources.Your assignment must follow these formatting requirements:Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on allsides; references must follow APA or school-specific format. Check with your professor for anyadditional instructions.Include a cover page containing the title of the assignment, the student’s name, the professor’sname, the course title, and the date. The cover page and the reference page are not included inthe required page length.The specific course learning outcomes associated with this assignment are:Examine the accounting framework and governing boards both domestic and international.Analyze the financial principles and concepts related to short- and long-term assets, and otherfinancial statements.Use technology and information resources to research issues in financial accounting andreporting.Write clearly and concisely about financial accounting and reporting using proper writingmechanics.

David · Accepted Answer

Running Head: FINANCIAL REPORTING   1
Financial Reporting 
Student’s Name 
Professor’s Name 
Course Name
Date
FINANCIAL REPORTING   2
Financial Reporting 
Introduction 
Financial Reporting is one of the most important aspects for an organization. There 
are several principles and concepts that have been put forward by the governing authority for 
Accounting, the company needs to focus on recording their transactions as per the principles 
and the guidelines of the GAAP. 
Right from inception, presentation of financial statement was based on standards, and 
it is believed that a good number of stakeholders would fully understand it the same way.  
However, if there is evidence that not everyone made the correct interpretation, the fault for 
this may be that of the presenter. Or that this could be as a result of errors that something 
might have been misconstrued.  
Earnings manipulation 
Earnings manipulation is usually not the result of intentional fraud, but the 
manipulation can be done by using aggressive accounting rules as well as operating activities. 
This results in the misinterpretation of the financial reports. Earnings management can lead to 
the alteration of the financial statements and can mislead the stakeholders about the 
performance of the company. 
The organization can manipulate its earnings so as to meet their earning targets, this 
can be done by altering the schedules of the shipment, end of period sales and deferring 
maintenance. With these the organizations tries and smooth their income. 
Many organizations also take advantage of absorption costing system with which they 
are able to report lower cost of goods sold and report higher earnings. 
Some of the other activities that are used by the organizations to manipulate the 
earnings are accrual basis for accounting expenses. At times of strong earnings the company 
at times establishes additional accrual expenses with which they are able to reduce the burden 
FINANCIAL REPORTING   3
of liabilities that are shown in their accounts and are able to manipulate their earnings. The 
organizations also uses different capitalization practices for capitalizing intangible assets, 
software capitalization and research and development. With adoption of this practice they are 
able to manipulate their assets and are able to allocate more expenses to the asset and reduce 
their operating expenses. 
Accounting compliance for public and private firms (GAAP) 
It is important for the organizations to comply with the accounting standards that are 
brought forward by GAAP. There are different aspects that need to be considered by the 
company when reporting their financials. 
Accounting concepts and principles 
Objective of financial reporting: 
The objective of financial reporting is the first concept statement presented by FASB 
which states that the objective of the financial statement is for general purpose external 
reporting i.e. the financial reporting concerns to the external users as well as internal users. 
The objective of the financial reporting goes from a general purpose to the more specific 
purpose. 
General Purpose:

You have been hired as the CPA / Controller for an information technology start-up company. Thecompany is currently privately held with the goal to eventually become a publicly traded company.Write a...

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