The Conformity With Generally Accepted Accounting Principles

As we all know, the financial statements are prepared under the conformity with Generally Accepted Accounting Principles (GAAP) and as a general requirement, the preparation of both annual and interim financial statements usually requires the use of accounting estimates. Which are managements’ responsibility to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Since it is so called estimates, uncertainty and major or minor error is likely to occur so it has becomes auditors’ responsibility to judge each estimates whether it is reasonable or not. Usually, the estimates are based on historical experience and on various assumptions that the company believe to be reasonable under the circumstances at the time made, so it is possible that actual results may differ from those estimated depends on materials. Due to the potential uncertainty involved in making estimates, the actual results reported in future periods may be different from these estimates. First of all, an accounting estimate is an approximation of a financial statement element, item, or account. Accounting estimates are often consider the historical financial statements since the previous statements contents some measurement amounts or the valuation of some accounts is uncertain, pending the outcome of future events and the relevant data concerning events thatShow MoreRelatedNoted In Their Critical Accounting Estimates Section Of937 Words   |  4 PagesNoted in their critical accounting estimates section of their footnotes, they claim that their financial statements conform with U.S. generally accepted accounting principles and with general practices within the banking industry. 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