Financial Statements Additional Information

Transcription

1 ILLUSTRATION 1-1 THE ESSENTIAL CHARACTERISTICS OF ACCOUNTING AND FINANCIAL REPORTING Economic Entity Financial Information Accounting Identifies Measures Communicates Financial Reporting Financial Statements Additional Information Balance Sheet Income Statement Statement of Cash Flows Statement of changes in Owners' or Stockholders' Equity Corporation annual reports President's letter Supplemental schedules Prospectuses News releases Manangement forecasts Etc. Prepared in accordance with GAAP Not necessarily covered by GAAP 1

2 ILLUSTRATION 1-2 HOUSE OF GAAP House of GAAP (d) (Least Authoritative) AICPA Accounting Interpretations FASB Implementation Guides (Q & A) Widely recognized prevalent Industry Practices (c) FASB Emerging Issues Task Force AICPA ACSEC practice Bulletins (b) FASB Technical Bulletins AICPA Industry Audit Accounting Guides AICPA Statements of Position (a) (Most Authoritative) FASB Statements Interpretatons APB Opinions Interpretations AICPA Accounting Research Bulletins

3 ILLUSTRATION 1-3 ORGANIZATIONAL STRUCTURE FOR SETTING ACCOUNTING STANDARDS Foundation (FAF) To select members the FASB GASB their Advisory Councils, fund their activities, exercise general oversight. Stards Board (FASB) To establish improve stards of financial accounting reporting for the guidance education of the public, including issuers, auditors users of financial information. Stards Advisory Council (FASAC) To consult on major policy issues, technical issues, project priorities selection organization of task forces. Staff Task Forces To assist respective Boards on reporting issues by performing research, analysis, writing functions. Governmental Accounting Stards Board (GASB) To establish improve stards of financial accounting for state local government. Governmental Accounting Stards Board (GASB) To consult on major policy issues, technical issues, project priorities selection organization of task forces. Source: Kieso Weygt, Intermediate Accounting, 9th Edition 3

4 ILLUSTRATION 1-4 STEPS TAKEN IN THE EVOLUTION OF A FASB STATEMENT OF FINANCIAL ACCOUNTING STANDARD A topic or project is identified placed on the Board's agenda. A task force of experts from various sectors is assembled to define problems, issues, alternatives related to the topic. Research analysis are conducted by the FASB technical staff. A discussion memorum is drafted released. A public hearing is often held, usually 60 days after release of the memorum. The Board analyzes evaluated the public response. The Board deliberates on the issues prepares an exposure draft for release. After a 30-day (minimum) exposure period for public comment, the Board evaluates all of the responses received. A committee studies the exposure draft in relation to the public responses, reevaluates its position, revises the draft if necessary. The full Board gives the revised draft final consideration votes on issuance of a Stards Statement. 4

5 ILLUSTRATION 1-5 USER GROUPS THAT INFLUENCE THE FORMULATION OF ACCOUNTING STANDARDS Business entities CPAs accounting firms Financial community (analysts, bankers, etc.) AICPA (AcSEC) FASB Professional organizations (AAA, IMA, FEI, etc.) Academicians Government (SEC, CASB, IRS, other agencies) Investing public Industry associations Accounting stards, interpretations, bulletins Source: Kieso Weygt, Intermediate Accounting, 9th Edition 5