What arc \"off-balance-sheet\" financing transactions Explain and provide two or

Question

What arc "off-balance-sheet" financing transactions Explain and provide two or more examples. What is a compensating control Describe what type of compensating controls might be implemented in the finance and investment cycle. The FASB has recently issued two exposure drafts concerning materiality. What changes to the auditor's current view of materiality will occur if these exposure drafts arc adopted The AICPA has issued an exposure draft consuming future CPA exams. Discuss the proposals in the documents. What changes to the CPA exam arc proposed What things will remain the same for the CPA exam

Explanation / Answer

1. Off- Balance Sheet Financing

A form of financing in which large capital expenditures are kept off of a company's balance sheet through various classification methods. Companies will often use off-balance-sheet financing to keep their debt to equity (D/E) and leverage ratios low, especially if the inclusion of a large expenditure would break negative debt covenants.

Examples of Off- Balance Sheet Financing transactions are:

2. Compensating Control:

A compensating control is a data security measure that is designed to satisfy the requirement for some other security measure that is deemed too difficult or impractical to implement.

A compensating control for finance and investment cycle accounts is a control feature used when a standard control procedure (such as strict segregation of functional responsibilities) is not specified by the company. In the area of finance and investment, the compensating control feature is the involvement of two or more persons in each kind of important functional responsibility.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.