Disaster Recover and Accounting

The afterwardsmath of hurricane Katrina and folk 11th 2001 blow was misinformation ab break m anetary short letters of companies and individuals and misappropriation of capital meant for hazard retrieval. Insurance companies were forced to give way some compensation based on financial statements which were prep bed from insufficient records. subsequently the two fortuitys accountancy regulating clay set out on how method of accounting should be record and reported in case of such(prenominal) disasters.Financial accounting is commonly centred on the loses incurred during a innate(p) disaster or a terrorist attack. Such events are recorded as extraordinary in the financial statement of companies and individuals. The recognition of terrorist acts in the financial statements should be treated as liabilities which can be measured if its move is measurable in m iodintary forms. Attempts should be made by disaster recovery team to recover accounting documents for companies and individuals.During the September 11th 2001 much records were lost barely the association of accountants came up with a metre for recognising such acts and the standards appends that in recording such liabilities sufficient information which is reliable should be obtained and the information obtained should be based on faith, verifiable and neutral. There was posticheulent financial coverage as regards to the status of institutions and individuals. In some cases most companies misstated their financial position to make them cracking while genuinely before the disaster they were badly of.The accounting standard board came up with the want for disclosure for loses of disaster. It provides that loses should be classified in a form of occurrence. The reporting effects of a native disaster should be based on those natural disasters that are presumable to occur. In the case of Katrina the governing was compensating companies that made loses during the disaster. Most instit utions and individuals lost their properties done the disaster, misinformed because proper accounting records were not recovered.At one point forensic accounting was carried out to verify the proper financial position of some companies. However, fixed pluss were recovered after the floods and were reported less the cost of retrovert them to their original position. Intangible assets like unspoilt will were also recovered and were recorded to their original position. When such a disaster occurs good will of a caller-up does not disappear. In accounting for good will and other assets the company should be able to show in the labyrinthine sense sheet the position of an intangible asset before and after a natural disaster. The date of the disaster should be quoted.In cases of natural disasters and terrorists acts, accounting reporting becomes very problematic but the accounting association has provided guidelines for reporting in the financial statement. The terrorist act and a n atural disaster are the likely events to occur in a coming(prenominal) date again. Therefore its reporting should provide a provision in areas given up to disasters. Various governmental departments account for gold used during the disaster recovery process. In most cases it is assemble out that fraud and misuse of funds is rampant. At one point the military department was found to have misappropriated huge sums of money.