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Module 4 Lecture 6

Module 4 Lecture 6 - Module4Lecture 1 Whyweneedthe 2...

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Module 4 Lecture 6               11/10/08   Statement of Cash Flows Auditing Finance and Accounting 1. Why we need the  Statement of cash flows   2. Auditing: What it is, why it’s important Why we need the Statement of Cash Flows - We can’t see if/where dividends were paid, or if and how we raised new money from just  the Income St. & Balance Sheet  Statement of Cash Flows 1. Cash flows from operations a. + our income b. - building up inventory, more money owed to the firm  2. Investing in and out a. + (in) sale of investments or equipment b. – (out) buying long term PPE (plants property equipment) 3. Financing  a. + Money from stock and bond sales       b.-  Dividends paid, bonds paid off SBUX - Statement of Cash Flows Auditing- Without it, we could not have public corporations An Introduction to Auditing Public accountants Regulated licensure by the  states But the Securities & Exchange Commission (SEC) (Federal) relies on them Why we need auditors 1. Each investor doesn’t have the time and skill to check the books of each company 2. The Securities and Exchange Commission (SEC) would need an army of accountants to  check the books of all firms 3. Instead, we rely on public accountants as intermediaries to check the books on our  behalf What auditors check ON TEST: least useful thing they can do is making sure sums add up because a computer can  do it instead.
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