NBJ11e_IM_ch06 - 6 ADDITIONAL ASPECTS OF FINANCIAL...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
6-1 6 ADDITIONAL ASPECTS OF FINANCIAL REPORTING AND FINANCIAL ANALYSIS CHAPTER OBJECTIVES After careful study of this chapter, students will be able to: 1. Describe an auditor's report. 2. Understand the meaning of an operating segment. 3. Describe the disclosures in a segment report. 4. Explain interim reporting. 5. Prepare an interim report. 6. Understand intracompany and intercompany comparisons (Appendix). 7. Prepare horizontal and vertical percentage analyses (Appendix). 8. Perform ratio analysis (Appendix).
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6-2 SYNOPSIS Financial Statements and Market Efficiency 1. General purpose financial statements designed to meet the needs of external users are published in a company's annual report , which also includes accompanying notes, an auditor's report, the management report, and management's discussion and analysis. In addition, companies prepare interim reports for accounting periods of less than a year. 2. The efficient markets hypothesis presumes that the prices of securities traded in the capital markets fully reflect all publicly available information, and that these prices adjust to new information almost immediately in an unbiased manner. Full disclosure of financial information helps to prevent unscrupulous use of insider information and aids in the efficient operation of capital markets. Auditor's Report (Opinion), Audit Committee, and Management's Report 3. Most published financial statements are audited by an independent certified public accountant. In an audit of a public company, the certified public accountant conducts an examination of the company’s internal control over its financial reporting, as well as its accounting system, records, and financial statements in accordance with generally accepted auditing standards. The Public Company Accounting Oversight Board sets these auditing standards. Based on this examination, the auditor issues an audit report which expresses three opinions: (1) that management’s assessment that the company maintained internal control over its financial reporting is fairly stated, (2) that the company maintained effective internal control over its financial reporting, and (3) that the company’s financial statements present fairly the financial position of the company and the results of its operations and cash flows in conformity with accounting principles generally accepted in the United States of America. An unqualified opinion states that the internal control was maintained and the financial statements present the information fairly in accordance with generally accepted accounting principles (GAAP), in all material respects. A qualified opinion states that, except for the effects of the qualified item, internal control was maintained and the financial statements present the information fairly, in conformity with GAAP. An adverse opinion states that the internal control was not maintained or the financial statements do not present the information fairly, in conformity with GAAP. A disclaimer states that the auditor does not express an opinion.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/12/2011 for the course AC300 01 taught by Professor Smith during the Spring '11 term at Kaplan University.

Page1 / 26

NBJ11e_IM_ch06 - 6 ADDITIONAL ASPECTS OF FINANCIAL...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online