"The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions."
Financial statement notes (footnotes) include disclosures that provide further details about the information summarized in the financial statements. Footnotes:
- Provide information about accounting methods, assumptions, and estimates used by management.
- Are audited, whereas other disclosures, such as supplementary schedules, are not audited.
- Provide additional information on items such as business acquisitions or disposals, legal actions, employee benefit plans, contingencies and commitments, significant customers, sales to related parties, and segments of the firm.
Supplementary schedules contain:
- Operating income or sales by region or business segment.
- Reserves for an oil and gas company.
- Information about hedging activities and financial instruments
Under the Sarbanes-Oxley Act, management is required to provide a report on the company's internal control system that includes the following elements:
- A statement that the firm's management is responsible for implementing and maintaining effective internal controls.
- A description of how management evaluates the internal control system.
- An assessment by management of the effectiveness over the most recent year of the firm's internal controls.
- A statement that the firm's auditors have assessed management's report on internal controls.
- A statement certifying that the firm's financial statements are presented fairly.
Financial Statement analysis framework:
- State the objective and context.
- Gather data.
- Process the data
- Analyze and interpret the data
- Report the conclusions or recommendations
- Update the analysis.
No comments:
Post a Comment