311-Ch05RevNotes(7th) - Chapter 5 Communicating and...

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

View Full Document Right Arrow Icon
Chapter 5 - Communicating and Interpreting Accounting Information Note: You are only responsible for Chapter 5 material through page 247. Overview Company managers, auditors, government regulators, and information intermediaries (including analysis and information services) are the key players in the communication of accounting information. Management of the reporting company must decide on the appropriate format and level of detail to be presented in their financial statements. Financial statement announcements from public companies are usually first transmitted to users through electronic information services. These include earnings press releases, annual and quarterly reports, and the more detailed reports required by the SEC. Analysts play a major role in making this and other information available to investors through their stock recommendations and earnings forecasts. These analysts consider the company’s selection of the alternative measurement rules available under GAAP in making these assumptions. Business Background The end of the “internal” portions of the accounting process is the beginning of the communication process to “external” users. The internal process includes analysis of and adjustment of accounts, financial statement presentation, and the closing process. The communication process delivers information about a company to decision makers. Successful companies match financial reporting strategies to their business strategies. Marketing and communication are fundamental to both of these strategies. Players in the Accounting Communication Process A. Regulators SEC (Securities and Exchange Commission) is the government agency charged with the responsibility to determine the requirements for financial statement and other disclosure reporting for publicly traded companies. Sanctions are enforced on companies and auditors who do not properly comply with the established standards. FASB (Financial Accounting Standards Board) establishes the rules: GAAP (Generally Accepted Accounting Principles). PCAOB (Public Companies Accounting Oversight Board) sets auditing standards for independent auditors and the stock exchanges. Chapter 5 Review Notes Acc 311 - Page 1
Background image of page 1

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

View Full Document Right Arrow Icon
B. Managers The management of a company has the primary responsibility for the financial statements and related disclosures. The highest officers in the company have the ultimate responsibility for financial information. They sign the statement of management responsibility for reports filed with the SEC.
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.

{[ snackBarMessage ]}

Page1 / 5

311-Ch05RevNotes(7th) - Chapter 5 Communicating and...

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