24-38
5. Identify the major disclosures in the
auditor’s report.
6. Understand management’s
responsibilities for financials.
7. Identify issues related to financial
forecasts and projections.
8. Describe the profession’s response to
fraudulent financial reporting.
After studying this chapter, you should be able to:
LEARNING OBJECTIVES
1. Review the full disclosure principle and
describe implementation problems.
2. Explain the use of notes in financial
statement preparation.
3. Discuss the disclosure requirements for
related-party transactions, subsequent events, and major business segments.
4. Describe the accounting problems
associated with interim reporting.
24
24-39
Management commentary
helps in the interpretation of the financial position, financial performance, and cash
flows of a company. Such a report may include a review of the:
Main factors and influences determining financial performance;
Company’s sources of funding and its targeted ratio of liabilities to equity; and
Company’s resources not recognized in the statement of financial position in accordance with IFRS.
LO 6
24-40
Management’s Responsibilities for Financial Statements
Management is responsible for preparing the financial statements and establishing and maintaining an effective
system of internal controls.
The auditor provides an independent assessment of whether the financial statements are prepared in accordance with IFRS.
LO 6
24-41
5. Identify the major disclosures in the
auditor’s report.
6. Understand management’s
responsibilities for financials.
7. Identify issues related to financial
forecasts and projections.
8. Describe the profession’s response to
fraudulent financial reporting.
After studying this chapter, you should be able to:
LEARNING OBJECTIVES
1. Review the full disclosure principle and
describe implementation problems.
2. Explain the use of notes in financial
statement preparation.
3. Discuss the disclosure requirements for
related-party transactions, subsequent events, and major business segments.
4. Describe the accounting problems
associated with interim reporting.
24
24-42
Reporting on Financial Forecasts and Projections
Financial forecast
is a set of prospective financial statements that present, a company’s expected financial position, results of
operations, and cash flows.
Financial projections
are prospective financial statements that present, given one or more
hypothetical assumptions
, an entity’s expected financial position, results of operations, and
cash flows. Regulators have established a
Safe Harbor Rule
.
LO 7
24-43
Internet Financial Reporting
A large proportion of companies’ websites contain links to their financial statements and other disclosures.
Allows firms to communicate more easily and quickly with users.
Allow users to take advantage of tools such as search engines and hyperlinks.
Can help make financial reports more relevant by allowing companies to report expanded disaggregated data and more
timely data.
LO 7
24-44
5. Identify the major disclosures in the
auditor’s report.
6. Understand management’s
responsibilities for financials.
7. Identify issues related to financial
forecasts and projections.
8. Describe the profession’s response to
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