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251Ch1NotesSend (1) - BUS 251 D1 & E1 (12-1) Lecture Notes...

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Lecture Notes Anne Macdonald Chapter 1 Overview of Corporate Financial Reporting 1 Bus 251 Chapter 1
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Accounting ACCOUNTING Accounting can be defined as an information system in which the economic data about an organization is measured, summarized, and reported. The ultimate goal is information that is understood by decision makers. 2 Bus 251 Chapter 1 H&M (the Swedish retailer) is used as an example in Chapter 1. The value of goods sold to customers in 2009 was 101,393,000,000 Swedish krona, Or approximately $15.6 billion Canadian dollars. Millions of individual transactions with customers. HOW MUCH DETAIL IS REQUIRED FOR A DECISION MAKER?
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Financial Reporting Financial statements are often part of the ‘Annual Report ’, which is prepared annually by the management of the business and made available to all owners of the business (now usually available online for publicly traded companies). 3 Bus 251 Chapter 1 Do you see a conflict here? The owners of the business will use the information to evaluate the business, AND to evaluate management’s performance in running the business.
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The Annual Report, can include Discussion of the current year results, past year trends and (perhaps) future plans Uses non-technical language, pictures, graphs, charts Allows readers to interpret the company’s performance through the ’eyes of management’ Bus 251 Chapter 1 4 The F/S: Balance sheet (B/S) Income statement (I/S) Cash flow statement (CFS) Highly structured and formatted Supported by Supported by Notes to the F/S: Additional information about amounts in the F/S Explanation of how the F/S were prepared (policies used) Language is often very technical
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PEOPLE INVOLVED IN FINANCIAL ACCOUNTING USERS OF F/S Owners / Investors / Shareholders Creditors / Lenders / Bankers Stock market Analysts Governments Employees Competitors ..... 5 Bus 251 Chapter 1 PREPARERS of F/S The company’s accountants (part of the management team ). The content of the f/s is management’s responsibility. CREDIBILITY ADDED Public accounting (audit) firms . Provide an independent (audit) opinion [The AUDIT REPORT] on the ‘fairness’ of the F/S.
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The Audit Report AUDITORS’ REPORT To the Shareholders We have audited the accompanying consolidated financial statements of WestJet Airlines Ltd. … Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation  of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, … Auditor’s Responsibility Our responsibility is to express an opinion  on these consolidated financial statements based on our audit. We  conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that  we comply with ethical requirements and plan and perform an audit to 
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This note was uploaded on 02/18/2012 for the course BUSE 237 taught by Professor Sf during the Spring '12 term at Simon Fraser.

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251Ch1NotesSend (1) - BUS 251 D1 & E1 (12-1) Lecture Notes...

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