UNIVERSITI TENAGA NASIONAL

COLLEGE OF BUSINESS MANAGEMENT AND ACCOUNTING

DEPARTMENT OF ACCOUNTING

SUBJECT:

ACCOUNTING THEORY AND PRACTICE

PREPARE FOR:

DR.NORHAYATI MAT HUSIN

PREPARE BY:

NUR FADZILAH BT NORIZAN (AC086628)

NUR IZYAN BT MOHD ISHAK (AC086934)

NURUL AQILAH BT ZAMRI (AC085167)

THILAGA SEGARAN (AC086628)

BACHELOR IN ACCOUNTING (HONS)

CASE 1: WASTE MANAGEMENT

a) Define the matching principle and explain why it is important to users of financial statements.

Matching principle requires a company to match expenses with related revenues that they helped to generate in order to report a company's profitability. The matching is based on a cause
As an auditor should examine relevant information about comparable useful lives used in the industry and monitor the company’s actual experience for similar assets in the past to determine if the organization’s decision to change the useful life and alvage value of its assets was appropriate inder GAAP. All the decision for any changes must be well supported and reasonable.

Besides that, in order to make the decision, it would be essential if an interview shall be conduct with managers and other relevant personnel as each of the estimates are subjective. After considering all of the available evidence, if the auditors are still unsure about the decision, they could hire the third part to evaluate the changes to the useful life and/ or salvage value as proposed by the management.

e) Consider the role of the Waste Management employee who was responsible for calculating depreciation expense and recording the proper amount in the financial statements. Assuming that the employee knew that the consolidating entries in the fourth quarter recorded by upper management were fraudulent, do you believe that the employee had a responsibility to report the behavior to the audit committee? Why or why not?

In my opinion I think, before the employee could take any action he/she first must be consider the effect of his action to the related party, which is to either the present actual fact in the account and face possible consequences if