1. Identify accounting rules of revenue recognition and describe the inadequacies in accounting context of using bill-and-hold to recognize revenue at Halliburton.
According to the accounting principle revenue recognition, it is the function when revenue is reported and recognized when a function has occurred. Under GAAP, revenue recognition should recognize a measurable amount of revenue once a certain transaction has been fully made. That would be the case, when certain types of goods or services are being transmitted to a consumer, and a certain amount of revenue is entitled to the company in charge of delivering such package. Therefore, there are accounting rules that highlights the certain fact that there should be revenue recognized …show more content…
KPMG was in charge to keep the interests of the shareholders well protected. Independently, Halliburton’s external auditors, KPMG should have taken into consideration the audit of the entire company. Any unethical or fraud founded should have been sent to the management. These slight events would have prevented any unethical situation from occurring at the end. However, the external auditors didn’t commit to it, and failed to keep the ethical environment and its corporate governance in Halliburton. Menendez, the whistleblower wasn’t included in the important meeting that Halliburton arranged. Throughout the meeting, KPMG was present without the employee Menendez. This meeting held the fact that there would be an accounting topic of a joint venture. However, SEC would find reasons in awkward situations considering KPMG and why they shouldn’t have had been in the RTA meeting consulted by Haliburton. KPMG’s profession and influence can impact the way that the shareholders’ opinion can react up at the end. The firm’s actions related towards the ethical expectations would lead those accounting individuals which were part of the audit meeting to have a violation with the relationship between their clients. Halliburton let the whole policy of revenue recognition against GAAP slip through time. This accounting profession would alert many professional CPAs. KPMG had a duty to fix anything wrong that would go …show more content…
Having corporate governance at its best throughout the company is to have a high set of standards for the shareholders. It simply describes how the specific management must set order and professionalism towards the shareholders of the company. Therefore, Halliburton’s corporate governance was in need to keep honest financial calculations and information to their overall investors and shareholders. To begin with, Halliburton financial information didn’t meet the requirements nor follow GAAP. Having a set of rules and policies that doesn’t follow GAAP would then question the shareholders to rely on such a big company like Halliburton. Halliburton would simply adopt a revenue recognition policy in which would permit the system to commit overstatement of revenue by recognizing certain amount of revenue before it had occurred and been truly earned. Another inadequacy in the corporate system would be the fact of having a weak whistle blowing policy. Many of its employees were in fear of committing the whistle blow, since their confidentiality wasn’t well protected and there were chances of retaliation from Halliburton. The last inadequacy I would describe would be the fact that there should have been a better working environment around Halliburton. To keep fraud away, Halliburton’s auditors and the rest of the committee should have a positive relationship between each other. The
According to the accounting principle revenue recognition, it is the function when revenue is reported and recognized when a function has occurred. Under GAAP, revenue recognition should recognize a measurable amount of revenue once a certain transaction has been fully made. That would be the case, when certain types of goods or services are being transmitted to a consumer, and a certain amount of revenue is entitled to the company in charge of delivering such package. Therefore, there are accounting rules that highlights the certain fact that there should be revenue recognized …show more content…
KPMG was in charge to keep the interests of the shareholders well protected. Independently, Halliburton’s external auditors, KPMG should have taken into consideration the audit of the entire company. Any unethical or fraud founded should have been sent to the management. These slight events would have prevented any unethical situation from occurring at the end. However, the external auditors didn’t commit to it, and failed to keep the ethical environment and its corporate governance in Halliburton. Menendez, the whistleblower wasn’t included in the important meeting that Halliburton arranged. Throughout the meeting, KPMG was present without the employee Menendez. This meeting held the fact that there would be an accounting topic of a joint venture. However, SEC would find reasons in awkward situations considering KPMG and why they shouldn’t have had been in the RTA meeting consulted by Haliburton. KPMG’s profession and influence can impact the way that the shareholders’ opinion can react up at the end. The firm’s actions related towards the ethical expectations would lead those accounting individuals which were part of the audit meeting to have a violation with the relationship between their clients. Halliburton let the whole policy of revenue recognition against GAAP slip through time. This accounting profession would alert many professional CPAs. KPMG had a duty to fix anything wrong that would go …show more content…
Having corporate governance at its best throughout the company is to have a high set of standards for the shareholders. It simply describes how the specific management must set order and professionalism towards the shareholders of the company. Therefore, Halliburton’s corporate governance was in need to keep honest financial calculations and information to their overall investors and shareholders. To begin with, Halliburton financial information didn’t meet the requirements nor follow GAAP. Having a set of rules and policies that doesn’t follow GAAP would then question the shareholders to rely on such a big company like Halliburton. Halliburton would simply adopt a revenue recognition policy in which would permit the system to commit overstatement of revenue by recognizing certain amount of revenue before it had occurred and been truly earned. Another inadequacy in the corporate system would be the fact of having a weak whistle blowing policy. Many of its employees were in fear of committing the whistle blow, since their confidentiality wasn’t well protected and there were chances of retaliation from Halliburton. The last inadequacy I would describe would be the fact that there should have been a better working environment around Halliburton. To keep fraud away, Halliburton’s auditors and the rest of the committee should have a positive relationship between each other. The