Financial Statements and Corporate Managers

In today’s world, the role of IT has turned accounting estimated critical in financial reporting and disclosure. Houghton and Fogarty have said that non-accurate or incorrect estimates have often caused to misstatements in audit report (Gray & Manson, 2007).

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

This course focuses on ways in which financial statements reflect business operations and emphasizes use of financial statements in the decision-making process. The course encompasses all business forms and various sectors such as merchandising, manufacturing and service. Students make extensive use of spreadsheet applications to analyze accounting records and financial statements. Prerequisites: COMP100 and MATH114 / 4-4

The next step is to inspect the accounting estimates made by the company. It is another area in which misstatements can easily be occurred. In this area, we will also identify any potential trends that may be offsetting the financial

6. Governmental accounting and reporting with direct impact on entities ability to collect financial information accurately,

Financial statements are used to determine the business activities of a firm and the role of accounting analysis is to determine the accuracy and quality of the information provided. This analysis would look into the degree of its accounting figures captures its business reality through the policies used and its resulting noise, potential forecast errors and its impact on Myer’s profit.

If a material accounting error is discovered, accounting standards require companies to restate their historical financial statements (FASB ASC 250-10-45-23)

This course provides a framework for financial accounting concepts and practices used by internal and external users in businesses. Topics presented include the accounting cycle, financial reporting, financial statements analysis, ratio calculation and interpretation, and management decision making based on financial results.

There are certain errors that are not as imperative to investors as other errors are. An error that can be classified as significant for example those errors that result in overstatement should always be pointed out to investors. There are certain errors that can reveal weaknesses in a company’s internal controls therefore, resulting in more significant errors. Errors should be corrected as soon as they are discovered. To correct errors the restatement approach should be employed and all prior period statements that are presented should be corrected and the beginning balance of retained earnings for the first period presented should be restated when the error effects occur

B) I think the auditors should have equal responsibility for detecting material misstatements due to error and fraud. It’s their job to make sure the financial statements are as accurate as possible. Although it may be hard to check all the information from a company it’s the responsibility of the auditor to sign off that everything is in check.

Financial statement fraud occurs when financial statements are intentionally misstated in order to make an organization appear better off than it actually is. This not only includes misstatements but also information that is intentionally omitted or improperly stated. The two sub-categories of financial statement fraud are asset/revenue overstatements and understatements. Financial statement fraud is the least common type of fraud, occurring in 9% of the cases studied in 2014, but the most costly with a median loss of $1,000,000. (Report to the Nations,

Each user of the financial statements interprets the information in a different manor. They use the information to determine their interactions with the organization. Management, investors, and employees use the same information from the financial statements but for different purposes. These four basic statements are the fundamentals of accounting which can be much more detail and complex. They do not need to be more complex for the users of the information; these basic statements have all the information needed to make

b) The auditor should pay close attention to the changes of company’s financial result and analyze those changes in time to see if they are reasonable. Most auditors should have detected this kind of material misstatement in company’s financial results, because this defalcation is caused by a personal factor.

The external users that will want financial information about the company will receive false information because the books are incorrect and this one egregious error will be the tip of the iceberg. Once the external users lose confidence in the company then the company will be doomed to fail because of that lack of trust coming from the accounting department, the very ones that control the money.

Nevertheless, besides the advantages as mentioned above, financial reports have a number of disadvantages. Firstly, the expensive cost of providing audited financial statement that meet requirements of IASB (International Accounting Standards Boards) is a common problem of a firm. Secondly, because financial statement based on a specific time or period, it is historical record of financial status of a firm so it has a little value in predicting and forecasting the future performance of this firm. For example, in a period of time a company has produced a good financial report might only because of a sudden increase in sale or gaining a big contract so the sales and net profit increase but after this period, the situation is different. Another disadvantage of financial statement is disclosure. When public company releases their financial report, some difficulties can be revealed to competitors so they can access to the financial health of a company or they can copy some techniques and strategies in financial management of a firm.