《北美财务报告.ppt》由会员分享，可在线阅读，更多相关《北美财务报告.ppt（33页珍藏版）》请在金锄头文库上搜索。
1、1,FINANCIAL ACCOUNTING AND REPORTING IN NORTH AMERICA,Presented at School of Management, UESTC By George Lan, PhD Associate Professor of Accounting University Of Windsor Windsor, Ontario, Canada March 19, 2003,2,Outline of Presentation -1,Roles of standard setting bodies (FASB, CICA), Managers, Audi
2、tors and Suppliers of Capital (Investors and Creditors or lenders) See Diagram Information Economics Approach and Efficiency of capital markets WorldCom, Enron and Arthur Andersen Incentives of Management to Manage Earnings,3,Outline of Presentation -2,Steps to prevent scandals from occurring in the
3、 future? Some Ethical Principles An Ethical Case Questions regarding presentation or any other (accounting) questions.,4,Information Economics Approach,Information Asymmetry exists between the parties in business transactions. The managers ( agents) have more information than the investors (principa
4、ls). Managers may attempt to select policies or to release biased information that benefit themselves to the expense of the owners . Role of Accounting: to provide information useful for rational decision-making.,5,Decision Usefulness Approach,Section 1000 of CICA Handbook (par. 1000.15): The object
5、ive of financial statements is to communicate information that is useful to investors, members, contributors, creditors and other usersin making their resource allocation decisions and/or assessing management stewardship.,6,Objectives of Financial Statements,Statements of Financial Accounting Concep
6、ts (1978) (SFAC 1): To provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions. To provide information to help present and potential investors and creditors in assessing the amounts , timing and
7、uncertainty of prospective cash receipts from dividends or interest.,7,Relevance and Reliability,To be useful, accounting information should provide an informative information system that links current financial statements with future state realizations and payoffs. Accounting information should be
8、relevant I.e. has the capacity to affect investors beliefs about future returns. Accounting information should be reliable i.e. should faithfully represents what it purports to measure. It should be precise and free from bias.,8,Elements of Financial Statements,Assets: Probable future economic benef
9、its obtained or controlled as a result of past transactions. Liabilities: Probable future sacrifices of economic benefits Owners Equity: residual Interest in assets after deducting liabilities i.e. A= L + O.E. or O.E = A L. Revenues: inflows of assets (or settlement of liabilities) arising from the
10、entitys major or ongoing activities.,9,Accounting Principles -1,Historical Cost Principle i.e. recognise (record and report) assets and liabilities initially at the cash-equivalent cost. Revenue Recognition Principle i.e. recognise revenues when earned (earning process is complete and an exchange ha
11、s taken place ). All necessary costs have been incurred and collection is assured usually at point at sale.,10,Accounting Principles -2,Matching Principle i.e. recognise all expenses incurred in producing revenues in the same period as the revenues. Full Disclosure Principle i.e. disclose all releva
12、nt information.,11,LANS CLOTHING COMPANY,Invest 10,000 Yuans (Y) to start the business Buy 1000 shirts at 5 Y each. Pay wages of 1000 Y for the first month. Sell 400 shirts at 20 Y each. Pay rent of 600 Y for the first 6 months. Incurred miscellaneous expenses of 500 Y. Borrowed 4800 Y and bought a
13、truck. Truck will last for 4 years. What is my net income for first month?,Lans Clothing Net Income for first month,Net Income before taxes = Revenues Expenses = 400 X 20 (sales)- 400 X 5(cost of shirts sold) 1000(wages expense) 600/6 (rent for one month) 500 (miscellaneous expenses) - 4800/48 (amor
14、tisation expense for 1 month) = 4,300 Yuans,13,Standard Setting & Auditing -1,Standard setting or regulation is necessary to protect the investors (conflicting interests of investors and managers). The FASB (Financial Accounting Standards Board and the CICA ( Canadian Institute of Chartered Accounta
15、nts) are independent bodies.,14,Standard Setting & Auditing -2,Auditing (external) ensures that a third independent party has examined the financial statements and that they are in accordance to GAAP( Generally Accepted Accounting Principles).,15,Efficient Securities Markets,The prices of securities
16、 (stocks) “properly reflect” all information that is publicly known about these securities. Investors will quickly adjust to new or corrected information as it becomes available. Investors cannot expect to earn abnormal returns i.e. a return on a security in excess of its normal expected return.,16,WORLDCOM(Communications Industry) -1,Largest Bankruptcy in history. Bankruptcy date = July 21, 2002. Total assets (pre-bankruptcy) = US$103,914,000,000 approximately 850,000 millio
