Consider the case of backdated stock options as reported in the chapter for UnitedHealth a What happens to the financial statements when options are backdated and the company fails to record compensation expense Do outsiders receive information that is materially misstated b Describe two management...

a Compensation expense is understated net income is overstated Outsiders often receive information that is materially misstated because compensation e ...

Consider the case of backdated stock options as reported in the chapter for UnitedHealth. a. What happens

Question:

Consider the case of backdated stock options as reported in the chapter for UnitedHealth.
a. What happens to the when options are backdated and the company fails to record compensation expense? Do outsiders receive information that is materially misstated?
b. Describe two management assertions violated when a company fails to record compensation expense related to backdated stock options.
c. Describe a substantive audit procedure that an auditor could use to determine whether are misstated through backdating of stock options.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...