Chapter 5 Flashcards
corporate governance
procedures to ensure that the company is managed in the interests of the shareholders
Sarbanes-Oxley Act
a law that strengthens financial reporting and corporate governance for public companies
Regulators of Financial Information
SEC and stock exchanges, FASB, PCAOB
Securities and Exchange Commission
protects investors and maintains the integrity of the securities markets
Financial Accounting Standards Baord
sets generally accepted accounting principles (GAAP)
Public Company Accounting Oversight Board
sets auditing standards for independent auditors (CPAs) of public companies
Board of Directs (Audit Committee)
audit committee of the board of directors
Independent Auditors
follow established auditing standards to assess the fairness of the financial statements and related presentations
Unqualified, clean audit opinion
states that the financial statements are fair presentations in all material respects in conformity with GAAP
Information intermediaries
Sources of information for investors, EDGAR (Electronic Data Gathering and Retrieval) service, financial analysts’ reports
Institutional investors
pension, mutual, endowment, and other funs that invest on behalf of others
Private investors
individuals, including venture capitalists, who purchase shares in companies
Lenders or creditors
suppliers, bankers, commercial credit companies, and other financial institutions that lend money to companies
SEC regulation FD, “Fair Disclosure”
requires that companies provide all investors equal access to all important company news
Annual reports
Include:
- 4 financial statements
- Related notes
- Report of Independent Accountants if statement is audited
