This answer can not be short to be honest. The first essential element that an internal audit needs in order to be effective is skilled, trained and qualified people. In addition, an internal audit needs to have a plan that is tailored to each business, the strategy, the environment and of course the risks that the business faces. The internal audit team should start by analysing the purpose and the objective of the audit as well as the specifics of the company (risks, processes, strategy etc).
Then, a plan should be developed. After the plan, the team should collect evidence that will support the opinion formed. There are quite a few ways to collect evidence such as interviews, observation etc etc. After the evidence has been collected, the results are analysed and the opinion is formed. The final step is very important and involves the communication of the findings accompanied with suggestions for improvements to the management.
First of all, it is illegal! Insider trading is a crime and there are quite a few cases where people have been sent to prison. Regarding the ethics, I find it highly unethical because you use information that you have due to your position and which is not available to the public to profit. The profit is generated from someone else’s loss so no its not ethical.
Yes, companies incorporated in the US and which are under the US laws are exempt from backup withholding.
Your salary is taxable either when its received or when it is due to be received (which even point is earlier). Therefore, a salary advance is taxable.
Sales tax is the tax that the consumer needs to pay for the purchase of goods or services. The sales tax is collected by the vendor which is then paid to the state. Each state in the US has different tax rates. Since the sales tax has been collected, the company debits the cash and makes two credits. The first credit is in the income statement and more specifically the revenue and the other credit is in the sales tax payable which is a current liability. The treatment is the same as the VAT in other parts of the world.
Off balance sheet is essentially anything that is not posted in the balance sheet. It needs to be posted somewhere and this is where the income statement is used. A valid point is that the income statement and the balance sheet are connected.
On the other hand, there are examples where for example a company keeps assets off the balance sheet by leasing them. Before the Enron Scandal, the accounting standards were not that strict regarding the finance and the operating leases.
The new standards introduce the “substance over form” definition but the leases is not the only off balance sheet treatment. Other examples include joint ventures and other more complicated items especially in the banking and the financial services sector in general.
