Forecasting Financial Statements
Analysts and investors forecast financial statements to value equity and debt
securities, and to rate firms credit. Others, including company insiders,
prepare and use forecasted finan
Chapter 1: Auditing and Assurance Services
Information and Information Risk
o Business Risk
The risk that the company will fail to meet its objectives.
o Environmental conditions that increase user demand for information
o The probability that that in the absence of internal controls, material errors or frauds
could enter the accounting system used to develop the financial statements materially.
o The probability that an audit will fail to pr
o Can be committed by anyone
o Fraud is knowingly making material misrepresentations of fact with the intent of
inducing someone to believe the falsehood and act upon it and thus suffer a loss or
Employee fraud is the use of fraud
o Internal control is a process, effected by an entitys board of directors, management, and
other personnel, designed to provide reasonable assurance regarding the achievement
of objectives in the following three categories
Don Russell : Experience of a controller/CFO
1. Does Don have the power to force ETIs top management to make a correcting accounting entry?
What should he do? If so, should he force the entry to be mad, and how large should it be?
Yes, Don has th
ARMCO INC : MIDWESTERN STEEL DIVISION
Armco was one of the largest steel manufacturers in 1990 located in the United
States of America. It was a major producer of stainless, electrical , carbon steels
and other steel products. Similarly ,the Kansas City w
Behavioral Implication of Airline depreciation Accounting Policy Choices
1. Assume that at least some rewards for the management team (and, hence, also other
employees) are based on performance measured in terms of accounting income and
returns on net ass
CATALYTIC SOLUTIONS, INC.
Evaluate the CSI performance measurement and compensation systems. What changes would you
suggest be made, if any? Explain.
Catalytic Solutions, Inc. (CSI) was founded in Santa Barbara, California in 1996 by Steve Golden and
AirTex aviation, a firm which was on the verge of bankruptacy. Two managers who
recently graduated purchased AirTex Aviation. The two partners decide to
implement a new system which improves transfer pricing, cost allocation and
Inherent risk in the revenue and collection cycle
o Revenue recognition
Revenue must be realized and earned to be recognized
Persuasive evidence of an arrangement exists
Delivery has occurred or services have been rendered
Collectability is reasonabl
Profit and Cost Center
Maher 10e Chapter 10
Explain reasons for conducting variance analyses.
Describe how to use budget for performance
Identify different types of variances be
Introduction of ourselves
Introduction to the course
Introduction to accounting career
Introduction to accounting profession
Who am I?
Our Course BAA603
Syllabus, PowerPoint slides, assignments,
Maher 10e Chapter 1
1. Distinguish between managerial and
2. Understand how managers use accounting
information to implement strategies.
3. Master concept of cost.
4. Compare and contrast in
Measuring Product Costs
Maher 10e Chapter 2
Understand the nature of manufacturing costs.
Explain the need for recording costs by department &
assigning costs to products.
Compare & contrast normal & actual costi
Strategic Management of
Costs, Quality, and Time
Maher 10e Chapter 4
Distinguish between the traditional view of
quality and the quality-based view.
Compare the costs of quality control to the
costs of failing to control quality.
Financial Modeling for ShortTerm Decision-Making
Maher 10e Chapter 6
Describe the use of financial modeling for profitplanning purposes.
Explain how to perform cost-volume-profit (CVP)
Describe the use
Capital Expenditure Decisions
Maher 10e Chapter 8
Explain role of capital expenditure decisions in
strategic planning process.
Describe steps of net present value method for making
long-term decisions using discounted
Profit Planning and Budgeting
Maher 10e Chapter 9
Explain the use of a budget as a tool for planning &
Explain how a budget can affect employee motivation.
Compare the 4 types of responsib