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By William H. Webster, CPA

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Do you personally know of any situaDoes it have procetion in which you would have had to dures for ensuring answer in the negative about a comcompetence, requipany? How many of these have you site skills, and knowl- personally witnessed, either positive edge for particular or negative? Now that you’re learning jobs? some of the things auditors are supposed to look for, you’ll be able to • Are the human resource policies and audit the auditors. 42 Accounting for Managers procedures adequate to provide sufficient, competent personnel with adequate resources?

Comparability means that business activities can be matched, that revenue for one business is the same as revenue for another. Consistency requires that activities be treated the same over time. Business and external forces can cause the treatment of certain items to vary over time. Recent bad faith charges have often fixated on charges of inconsistency. For this reason, the concept of consistency is receiving greater emphasis. Every business has wide discretion under general GAAP guidelines to treat certain transactions differently.

It expresses the fundamental equation of accounting. ❏ The accounting equation—assets = liabilities + equity—is the foundation of any accounting system. It assigns an increase component and a decrease component to each element of the accounting equation, establishing normal balances for the increase of each type of account. 2 Concepts and Principles, Checks and Balances T he double-entry innovation to track the increase and decrease of each part of the accounting equation (assets = liabilities + equity) made recording business transactions more manageable.

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