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Peer Review Guide > Common Engagement Deficiencies > Specific Financial Statement Elements

Assets:

• Improper classification between current and long-term assets.
• Investment in subsidiary and consolidated financial statements not presented.
• Cash overdrafts shown as a negative asset.
• Accounts receivable recorded on cash-basis financial statements.
• Investments in debt and equity securities not classified or measured correctly.
• Deferred income tax assets are not recorded or properly measured.
• Impairment of long-lived assets is not recognized, if appropriate.
• Intangible assets or goodwill are not adjusted for impairment, if appropriate or are amortized when it is inappropriate to do so.

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Liabilities:

• Improper classifications between current and long-term debt.
• Liability for compensated absences is not recognized.
• Demand liabilities classified as long-term.
• Deferred tax liability have not been recorded or measured correctly.
• Capital leases obligations have not been recorded.
• Deferred revenue, if appropriate, has not been recognized.

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Equity:

• Treasury stock is recorded for corporations in states where repurchased shares are deemed to be retired.
• Changes in equity are not presented in a separate statement or as part of the income statement.
• Changes in accounting estimates are shown as prior period adjustments.
• Elements of comprehensive income are not reported.

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Income Statement:

• Income tax provision, where applicable, not recorded on interim financial statements.
• Reporting period is not clearly identified on the financial statement.
• Significant components of income tax expense not disclosed.
• Misclassification of balances.

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Cash Flows Statement:

• Cash flow statement not categorized by operating, investing and financing activities.
• Misclassification of activities between operating, investing or financing activities.
• No disclosure of noncash investing and financing activities.
• No disclosure of interest and taxes paid (if not disclosed in the footnotes.)

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Disclosures (incomplete or missing):

• Significant accounting policies.
• Basis of accounting other than GAAP.
• Modifications to cash basis or other basis of accounting.
• Cash equivalents, if applicable.
• Concentrations of credit risk.
• Disclosures about investments in debt and equity securities.
• Nature of the entity's business.
• Use of estimates.
• Collectibility of accounts receivable.
• Information about concentrations (products, services, customers, suppliers, etc.)
• Disclosures about risks and uncertainties due to concentrations.
• Disclosure of five year debt maturities.
• Related party transactions.
• Leases.
• Employee benefit plan disclosures.
• Disclosure of deferred taxes or components of income tax expense.
• Missing caption, "Selected Information - Substantially All Disclosures Omitted," if needed. (applicable only to compilations)

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Peer Review Guide > Common Engagement Deficiencies > Specific Financial Statement Elements

Updated: April 17, 2005