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Unformatted text preview: 1312 C H A P T E R 24 FULL DISCLOSURE IN FINANCIAL REPORTING LEARNING OBJECTIVES After studying this chapter, you should be able to: Review the full disclosure principle and describe implementation problems. Explain the use of notes in financial statement preparation. Discuss the disclosure requirements for major business segments. Describe the accounting problems associated with interim reporting. Identify the major disclosures in the auditors report. Understand managements responsibilities for financials. Identify issues related to financial forecasts and projections. Describe the professions response to fraudulent financial reporting. 8 7 6 5 4 3 2 1 Here are excerpts from leading experts regarding the importance of high-quality financial reporting: Warren E. Buffett, Chairman and Chief Executive Officer, Berkshire Hathaway Inc. : Financial reporting for Berkshire Hathaway, and for me personally, is the beginning of every decision that we make around here in terms of capital. Im punching out 10-Ks and 10-Qs every single day. We look at the numbers and try to evaluate the quality of the finan-cial reporting, and then we try to figure out what that means for the bonds and stocks that were looking at, and thinking of either buying or selling. Judy Lewent, Executive Vice President and Chief Financial Officer, Merck & Co., Inc. . . . Higher standards, when properly implemented, drive excellence. I can make a par-allel to the pharmaceutical industry. If you look around the world at where innovations come from, economists have studied and seen that where regulatory standards are the highest is where innovation is also the highest. Floyd Norris, Chief Financial Correspondent, the New York Times : We are in a situation now in our society where the temptations to provide bad finan-cial reporting are probably greater than they used to be. The need to get the stock price up, or to keep it up, is intense. So, the temptation to play games, the temptation to manage earningssome of which can be legitimate and some of which cannot beis probably greater than it used to be. High-Quality Financial ReportingAlways in Fashion PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark Abby Joseph Cohen, Chair, Investment Policy Committee, Goldman, Sachs & Co. : High-quality financial reporting is perhaps the most important thing we can expect from companies. For investors to make good decisionswhether those investors are buying stocks or bonds or making private investmentsthey need to know the truth. And we think that when information is as clear as possible and is reported as frequently as makes sense, investors can do their jobs as best they can....
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This note was uploaded on 07/14/2010 for the course ADMS 101 taught by Professor Jordan during the Fall '08 term at York University.
- Fall '08