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previous controller. Reason: New controller's weakness in GAAP increases chances of errors in financial statements. Reason: Not as familiar with internal controls. Situation Acceptable AR
previous controller. Reason: New controller's weakness in GAAP increases chances of errors in financial statements. Reason: Not as familiar with internal controls. Situation Acceptable AR ll? CR DR PE 1. The client hired a new controller. He is No change. Increase. Probably Decrease. Increase. not as competent in GAAP compared to the increase. 2. The shareholdermanager of the client has decided to sell her shares. Several parties are interested in buying the shares based on a business valuation of 5 times normalized earnings. 3. The internal audit department, which focuses on compliance with internal controls, has been eliminated. 4. The client determined that deferral of development costs is appropriate beginning this year. Prior to this year, research and development costs have been expensed. 5. The client has converted from awell known, offtheshelf accounting package to a new, customized accounting information system. The new system was implemented before it was com pletely tested
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