9-1 Final Project Submission: Case Study Analysis Assignment Submit your case study analysis. It should be a complete, polished artifact containing all of the main elements of the final product. It sh
Trinity’s Compliance Report
Yvonne Saunders-Batchue
Southern New Hampshire University
September 27, 2019
Trinity’s Compliance Report
A change in accounting standards will require disclosure in the financial statements. Financial Statement users are to be aware of the change and its impact on the accuracy of the financial reports. A change in accounting standard has to be applied consistently for all future transactions. The IFRS suggest that a change in accounting standards should be applied retrospectively (Christensen, Lee, Walker & Zeng, 2015). That implies that the application of the new standard should be reflected in the equity balance in the earliest period presented. The retrospective application will be included in all prior periods included in the current financial statements. The change will impact equity balances and will alter the differed tax obligations for the company.
Trinity industries will improve its internal control compliance if it analyses the difference between GAAP requirements and IFRS requirements. The presence of an internal control management team is critical in enhancing compliance. The staff should be aware of the internal control implications when switching the accounting standards. It is also necessary to continually monitor and assess internal control risks. Trinity industry should also create an internal control environment that cherishes integrity and openness. The internal control team should always have open communication with the management to improve the processes. The internal and external auditors should also provide reports on the efficiency of Trinity’s internal controls (Kelly & Tan, 2017). Audit reports will point out weaknesses in the system that the company can improve. The auditors and the internal control team should also be allowed to work independently without management interference.
The IFRS and IAS standards will affect Trinity Industries when it changes its rules. The IFRS move will predominantly depend on the recommendations stipulated in IFRS 1. IFRS 1 provides the First Time Adoption of the standards in the general adoption for consistency (Fiechter, Halberkann & Meyer, 2018). That will necessitate the retrospective application of some of the rules such as they relate to revenue, asset, liability, and equity recognition. Some of the GAAP regulations will not necessarily change, but the name of the accounting standards will move to those presented in the IFRS.
Trinity’s governance infrastructure mainly consists of the governance steering committee and the financial controls in place. The governance structure was instituted to ensure that Trinity complies with the SOX requirements. IT infrastructure includes all the technical aspects that integrate the reporting and control processes. The governance steering committee coordinates with the IT personnel to make changes in the IT infrastructure. That includes any changes to the automated and manual control processes in terms of access and authentication. Trinity’s operations comprise of all the events that occur from inventory acquisition to the sale of a product. Internal control has to monitor the credibility of all the processes to guarantee compliance.
References
Christensen, H. B., Lee, E., Walker, M., & Zeng, C. (2015). Incentives or standards: What determines accounting quality changes around IFRS adoption?. European Accounting Review, 24(1), 31-61.
Fiechter, P., Halberkann, J., & Meyer, C. (2018). Determinants and consequences of a voluntary turn away from IFRS to local GAAP: Evidence from Switzerland. European Accounting Review, 27(5), 955-989.
Kelly, K., & Tan, H. T. (2017). Mandatory management disclosure and mandatory independent audit of internal controls: Evidence of configural information processing by investors. Accounting, Organizations and Society, 56, 1-20.