1.30 Pierpaolo Maio

8/3/2019 1.30 Pierpaolo Maio

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Implementing EffectiveAccounting Controls to

Comply with Books and

Records Provisions

(Practical cases)

Pierpaolo Maio

Frankfurt, January 2010


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Sarbanes Oxley

Two basic principles:

Companys documentation (purchase orders,

contracts, invoices, expenses, project closure

forms) must reflect reality

Each and every employee is responsible for this


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Expenses

Must be documented with accurate receipts

Must be lawful under local law

Should be reflected accurately in the companys

books and records

Should be reasonable and in proportion to business

purposes

Avoid discretionary spending


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Traps for the unwary ?

Reflecting a payment to the wrong payee

Submitting false or inaccurate expense account report

Use of travel and expense forms to obtain cash for

improper payments

Unrecorded accounts or transactions

Over invoicing or false invoices

Recording revenues prematurely

Miscellaneous accounts can hide improper payments


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Revenue recognition (principle)

The Revenue recognition principle is a cornerstone

of accrual accounting together with matching principle.

They both determine the accounting period, in

which revenues and expenses are recognized.According to the principle, revenues are recognized when

they are (1) realized or realizable, and are (2) earned

(usually when goods are transferred or services

rendered), no matter when cash is received.In cash accounting - in contrast - revenues are recognized

when cash is received no matter when goods or services

are sold.


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Excerpt from Avaya training course


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USGAAP Revenue

RecognitionMyriad of rules SAB 101 & 104 (SEC interpretative guidance)

EITF 00-21 (Multiple element arrangements)

SFAC No. 5 and 6 (Definition of revenue)

SFASNo 48 (Rights of Return)

SOP 81-1 (Contract Accounting) SOP 97-2 & 98-9 (Software Revenue Recognition)

EITF 03-5 (Non software elements in a software contract)

EITF 99-19 (Principal v Agent)

EITF 01-9 (Contra-Revenue vs. Expense)

FTB 90-1 (Extended Warranty and Service Contracts)

EITF 00-24 (Trade-In Rights)

Multiple bodies issue rules & guidance Financial Accounting Standards Board

Securities and Exchange Commission

Emerging Issues Task Force


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In order to recognize revenues 4 criteria must be met:

Persuasive evidence that an arrangement exists

Delivery has occurred or services have been

rendered

The seller's price to the buyer is fixed ordeterminable

Collectibility is reasonably assured

Principles of Revenue

Recognition Policies


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Code of Conduct and related

policies support Operating with

Integrity and Compliance with Law

Avayas Code of Conduct, Operating with Integrity,

applies to all Directors and employees of Avaya ona worldwide basis.

Because Avaya believes so strongly in ethical behavior,individuals who do not comply with the provisions of this

Code of Conduct and other company policies andinstructions may be disciplined, up to and includingdismissal. Additionally, violations of these standardscould result in criminal penalties and/or civil liabilities


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The Code of Conduct covers

topics such as (1/2):

Promoting Avaya's Interests & Assets

Gifts and Entertainment

Obtain Proper Authorization Before Entering IntoCommitments on Behalf of Avaya (SOA)

Never Utilize Avaya Computing and Networking Resourcesto Access or Disseminate Sexually ExplicitMaterial orOther Content Inconsistent with Avaya Values

Financial Reporting

Requires complete and accurate financial reporting


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The Code of Conduct covers

topics such as (2/2):

Dealing with customers and suppliers

Truthful and AccurateMarketing

SelectSuppliers Solely on Their Ability to Help AvayaMeet

its Business Objectives

Avoid and report conflicts of interest

Commercial Bribery

Dealing with Government Officials and Employees

(Compliance with Foreign Corrupt Practices Acts andother anti bribery laws)

Selecting Agents, Consultants and Other Representatives


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Schedule of authorizations


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Commercial SoA

1.30 Pierpaolo Maio

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