Corporate management has choices with respect to which accounting methods and estimates it chooses to utilize. These choices have an impact on a company's real earnings and potentially on the quality of the information presented in financial reporting.
Based on your readings for this week:
List and describe three areas where quality can be most easily compromised.
How would you identify these areas?
How would switching to the IFRS change this?
With these thoughts in mind:
Post a brief statement by Day 3 that expresses your thoughts on three areas that may compromise the quality of information presented on financial reports. The length of your response(s) should be a minimum of 150 words.
Read a selection of your colleagues' postings.
Respond by Day 5 to two or more of your colleagues' postings in one or more of the following ways:
Ask a probing question.
Share an insight from having read your colleagues' postings.
Offer and support an opinion.
Validate an idea with your own experience.
Make a suggestion.
Expand on your colleagues' postings.
Return to this Discussion in a few days to read the responses to your initial posting. Note what you learned and the insights you gained as a result of the comments your colleagues made.
Be sure to support your work with specific citations from the Learning Resources and any additional sources.
Click the Reply button below to post your response.
Readings
Course Text: Understanding Financial Statements
Chapter 2, "The Balance Sheet" (pp. 75-76 only)
Appendix 3A, "A Guide to Earning Quality" (pp. 116-133 only)
Chapter 4, "Statement of Cash Flows" (pp. 168-169 only)
In Chapter 2, the authors stress that the quality of reported financial information is a key element in evaluating financial statement data. In Appendix 3A, the authors also include a checklist for earnings quality, including sales, cost of goods sold, operating expenses, nonoperating revenue and expense, and other issues.
Websites
Prentice Hall. (2012). Companion Website for Understanding Financial Statements, 10th ed. Retrieved from
http://wps.prenhall.com/bp_fraser_financial_10/
This website serves as a companion to the course text, Understanding Financial Statements. It provides various student resources, including multiple-choice and true/false tests, PowerPoint presentations, Internet links, and more for each chapter.