chapter 4_Notes - Chapter 5 Communicating and Interpreting...

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Chapter 5 – Communicating and Interpreting Accounting Information Corporate governance – procudeds designed to ensure that the company is managed int eh interests of the shareholders. good corporate governance eases company’s access to capital, loweringboth costs of borrown and perceived riskiness Players in the Accounting Communication Process SEC – US Securities and Exchange Commission, protect investors and maintain integrity of securities markets. o Oversses Financial Acouting Standards Board (FASB) which sets up the generally accepted accounting principles (GAAP), the Public Company Accounting Oversight Board (PCAOB) which sets auditings standards for independent auditors (CPAS) of public companies, and the Stock exchanges that set overall corporate governance standards At al public companies the two officers (CFO and CEO), certify tat: o each commission does not contain untrue material or omit facts o there are no significant deficeines and material weakness in the controls over financial reporting o they have disclosed to the auditors and adot committee any weakenssees in internal controls or any fraud involving management or employees that have role in in financial reporting board of directors – elected by the shareholders to represent their interests, is responsible for maintaining the integrity of the company’s financial reports. Unqualified (Clean) audit opinion – auditors’ statement that the financial statements are fair presnetatisons in all material respects in conformity with GAAP Earnings forecast – are predictions of earnings for future accounting periods Market efficiency – a quik, unbiased reaction to information in a stock price Institutional investors – managers of pension, mutual, endowment, and other funds that invest on the behalf of others
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chapter 4_Notes - Chapter 5 Communicating and Interpreting...

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