Financial Accounting: IFRS, 3rd Edition

CHAPTER 2 The Recording Process

FEATURE STORY Accidents Happen

How organized are you financially? Take a short quiz. Answer yes or no to each question:

• Does your wallet contain so many debit card receipts that you've been declared a walking fire hazard?
• Was Yao Ming playing high school basketball the last time you balanced your bank account?
• Do you wait until your debit card is denied before checking the status of your funds?

If you think it is hard to keep track of the many transactions that make up your life, imagine what it is like for a major corporation like Bank of Taiwan (BOT) (TWN). If you had your life savings invested at BOT, you might be just slightly displeased if, when you checked your balance online, a message appeared on the screen indicating that your account information was lost.

To ensure the accuracy of your balance and the security of your funds, BOT, like all other companies large and small, relies on a sophisticated accounting information system. That's not to say that BOT or any other company is error-free. In fact, if you'veever overdrawn your bank account because you failed to track your debit card purchases properly, you may take some comfort from one accountant's mistake at Fidelity Investments (USA), one of the largest mutual fund investment firms in the world. The accountant failed to include a minus sign while doing a calculation, making what was actually a $1.3 billion loss look like a $1.3 billion—yes, billion—gain! Fortunately, like most accounting ...