Intro to FSA & FR Standards

general features of FS according to IAB #1

- fair representation - going concern - accrual accounting - consistency - materiality - aggregation - no offsetting - reporting frequncy - comparing information

what actions are included in the 3. process data step in the FSA framework?

- ratio analysis - common size statements - statistical tools

Relevance

- should have predictive value, confirmatory value, or both - materiality is a part of relevance - should be able to influence investor's decision making

Under IAS No. 1, a complete set of financial statements includes

- statement of financial position - statement of comprehensive income - statement of changes in equity - statement of cash flows - notes comprising a summary of significant accounting policies and other explanatory information.

A core objective of the International Organization of Securities Commissions is to

- to ensure that markets are fair, efficient, and transparent - to protect investors (who use the FS) - to reduce sys risk

Proxy statement

-compensation to directors and executives - matters that are to be put to a vote at annual or special meeting of shareholders

Faithful representation

1. Completeness 2. Neutrality 3. Free from error

What are the 2 main standard setting bodies?

1. FASB 2. IASB

4 char that enhance relevance and faithful representativeness

1. comparability 2. verifiability 3. timeliness 4. understandability

FSA framework (6 steps)

1. determine the purpose 2. collect data 3. process data 4. analyze & interpret data 5. develop & communicate conclusions 6. follow-ups

two fundamental characteristics that make

1. relevance 2. faithful representation

Goal of audits

1. to obtain reasonable assurance that the FS are free from material misstatements 2. to report on FS and communicate findings (auditor's report)

phase in the financial statement analysis framework is most likely to involve producing updated reports and recommendations

Follow-up

comparability

Ability to compare the accounting information of different companies because they use the same accounting principles.

Which standard setting body sets forth IFRS?

IASB

The financial statement that presents a shareholder's residual claim on assets is the

B/S

Which standard setting body sets forth GAAP?

FASB

Information about accounting estimates, assumptions, and methods chosen for reporting is most likely found in:

Notes

what org overseas PCAOB?

SEC

best describes the role of financial statement analysis

To form expectations about a company's future performance and financial position

Information about elections of members to a company's Board of Directors is most likely found in:

a proxy statement

disclaimer of opinion

a report issued when the auditor is not able to become satisfied that the overall financial statements are fairly presented or the auditor is not independent - not exactly a bad thing

what actions are included in the 4. analyze & interpret data step in the FSA framework?

come up with conclusions & rec (but NO analyst report written YET)

Under International Financial Reporting Standards (IFRS), which of the following is most likely one of the general features underlying the preparation of financial statements?

consistency

What's included in the MDA section of FSA

contains an overview of the company and important information about business trends, future capital needs, liquidity, significant events and significant choices of accounting methods requiring mgt judgement

Providing information about the performance and financial position of companies so that users can make economic decisions best describes the role of

financial reporting

adverse audit opinion

financial statements materially depart from accounting standards and are not fairly presented.

timeliness

having information available to decision-makers before it loses its capacity to influence decisions

Qualified Audit Opinion

indicates that either the financial statements do not follow GAAP or the auditors were not able to complete the tests needed to determine whether the financial statements follow GAAP - presented fairly with some exceptions

Unqualified Audit Opinion

indicates that the financial statements are presented in accordance with GAAP = clean

verifiability

occurs when independent measurers, using the same methods, obtain similar results

The role of the International Organization of Securities Commissions (IOSCO) is best described as:

promoting cross-border cooperation and uniformity in securities regulation.

The valuation technique under which assets are recorded at the amount that would be received in an orderly disposal is

realizable value

OCI

revenues, expenses, gains, and losses that have yet to be realized and are excluded from net income on an income statement. - forex translations - unrealized g&l - pension plan g&l

materiality

whether an item is large enough to likely influence the decision of an investor or creditor - FS should be free from misstatement or omissions that could influence investors' decision making

what actions are included in the 5. develop & communicate conclusions step in the FSA framework?

write the analyst report (must distinguish between opinion and fact)