chapter 5_Notes

chapter 5_Notes - 5169879508 Chapter 5 Communicating and...

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5169879508 Chapter 5 – Communicating and Interpreting Accounting Information Corporate governance – produced designed to ensure that the company is managed in the interests of the shareholders. Good corporate governance eases company’s access to capital, lowering both costs of borrowing and perceived riskiness Players in the Accounting Communication Process SEC – US Securities and Exchange Commission protect investors and maintain integrity of securities markets. o Oversees Financial Accounting Standards Board (FASB) which sets up the generally accepted accounting principles (GAAP), the Public Company Accounting Oversight Board (PCAOB) which sets auditing 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 deficiencies and material weakness in the controls over financial reporting o they have disclosed to the auditors and adopt committee any weaknesses in internal controls or any fraud involving management or employees that have role 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 presentations in all material respects in conformity with GAAP Earnings forecast – are predictions of earnings for future accounting periods Market efficiency – a quick, 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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This note was uploaded on 02/20/2009 for the course AEM 221 taught by Professor Little,j. during the Fall '08 term at Cornell.

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chapter 5_Notes - 5169879508 Chapter 5 Communicating and...

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