Nguyên lý kế toán - Chapter 5: Financial reporting and analysis

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinChapter 5Financial Reporting and Analysis PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Fred Phillips, Ph.D., CAAccounting FraudOpportunity(How?)Incentive(Why?)Character(Who?)The Fraud Triangle5-3The Sarbanes-Oxley (SOX) ActSOXCounteract IncentivesReduce OpportunitiesEncourage Good Character5-4Financial Reporting in the U.S.March 31, 2008May 8, 2008May 30, 2008Fiscal Year EndPreliminary Release of Key ResultsFinal Release of Annual ReportFinancial Statement PreparationIndependent External AuditEnhance financial statement formatObtain independent external auditRelease additional financial information5-5Comparative Financial StatementsA comparative format reveals changes over time, such as Activision’s huge increase in Cash and decline in Short-term Investments.5-6Multistep Income Statements5-7Statement of Stockholders’ Equity5-8Independent External AuditAuditors are Certified Public Accounts who are independent of the company. Unqualified Audit OpinionFinancial statements are presented in accordance with GAAPQualified Audit OpinionFinancial statements fail to follow GAAP or not able to complete needed tests5-9Securities and Exchange Commission (SEC) FilingsPublic companies are required to electronically file certain reports with the SEC, including Form 10-K, Form 10-Q, and Form 8-K.5-10Globalization and IFRSInternational Financial Reporting Standards (IFRS) are accounting rules established by the International Accounting Standards Board for use in over 100 countries around the world.In 2008, the SEC announced a plan to allow some U.S. companies to use IFRS in 2009 and could require mandatory use of IFRS starting in 2014. 5-11IFRS Formatting of Financial Statements5-12A side-by-side comparison of a balance sheet prepared using GAAP and a statement of financial position prepared using IFRS.5-13Comparison to Common BenchmarksPrior PeriodsTime series analysis compares a company’s results for one period to its own results over a series of time periods.CompetitorsCross-sectional analysis compares the results of one company with those of others in the same section of the industry.To help interpret amounts on the financial statements, it’s useful to have points of comparison or “benchmarks.”5-14A Basic Business ModelMost businesses can be broken down into 4 elements:Obtain financing from lenders and investors, which is used to invest in assets,Invest in assets, which are used to generate revenues,Generate revenues, which produce net income,Produce net income, which is needed to satisfy lenders and investors.(2) Assets(3) RevenuesOperatingInvestingFinancingInvested ingenerateproduce(1) Debt & Equity Financing(4) Net Income5-15Financial Statement RatiosIn addition to making it possible to compare companies of different sizes, a benefit of ratio analysis is that it enables comparisons between companies reporting in different currencies (dollars vs. euros). 5-16End of Chapter 5