BUSI 407 exam 1 guide

BUSI 407 exam 1 - BUSI 407 Exam 1 Financial Statement Analysis 1 Information sources for financial analysis o Quantitative Financial statements

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BUSI 407: Exam 1 Financial Statement Analysis 1. Information sources for financial analysis o Quantitative Financial statements Industry statistics Economic indicators Regulatory filings (SEC) Trade reports Yahoo financial o Qualitative SWOT analysis Chairperson's letter Mission statement Financial press Press releases Websites 2. Financial Statements-- found in 10-K: part 2, item 8 o Balance sheet o Income statement o Statement of shareholders equity o Statement of cash flows o Notes to the financial statements ** conservatism: when it tends to understate income cash flows 3. Generally Accepted Accounting Principles (GAAP) o The Securities and Exchange Commission (SEC)- In 1993 given broad powers to determine measurement rules for financial statements 4. Accounting: management prepares the financial statements and maintains a system of internal controls to prevent/detect errors and frauds 5. Auditing: auditor, independent of management, tests both the financial statements and internal controls 6. CFO's responsibilities o Existence o Ownership o Valuation; purchase cost, market value o Cut-off; the correct time period
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o Classification; current of noncurrent o Disclosure; required footnote disclosures 7. Accounting standards: key issues o Recognition: existence, ownership, cut-off o Measurement: valuation o Presentation: classification o Disclosure 8. Accounting, auditing, and the SEC o SEC head: Mary Schapiro o Accounting (GAAP): Leslie Seidman o Auditing (PCAOB): James Doty 9. Auditor's Report o Unqualified-- presents fairly Statements present information in conformity with GAAP o Qualified-- effective internal audit Reports other than unqualified opinion due to various circumstanced (auditing limitations, uncertainties…)-- limited scope Everything is ok but the auditor feels that the company will be bankrupt in a year o Adverse opinion-- rare Financial statements have not been presented fairly in accordance with GAAP o Disclaimer of opinion is issued when--unlikely Auditor can't evaluate the fairness of the statements and expresses no opinion 10.Sarbanes-Oxley Act (SOX) o Passed by Congress in 2002 in hopes of ending future accounting scandals and renewing investor confidence o SOX established the Public Company Accounting Oversight Board (PCAOB) 11.Public Company Accounting Oversight Board (PCAOB) o Has the authority to register, inspect, and discipline auditors of all publicly owned companies o Prohibits audit firms from providing certain non-audit services when conducting an external audit o Requires CEO and CFO of a publicly owned company to certify the accuracy of the financial statements-- assume responsibility 12.International Accounting Standards Board (IASB) o Formed in 2001 with the goal of establishing international standards o Current chairman if IASB: Sir David Tweedie
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o Chairman of the IASB, 2011: Hans Hoogervorst 13.IFRS vs. GAAP
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This note was uploaded on 02/13/2012 for the course BUSI 407 taught by Professor Bowen during the Spring '11 term at UNC.

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BUSI 407 exam 1 - BUSI 407 Exam 1 Financial Statement Analysis 1 Information sources for financial analysis o Quantitative Financial statements

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