Intro to FSA Flashcards
Framework of financial analysis (6 steps)
- State the objective of the analysis.
- Gather data.
- Process the data.
- Analyze and interpret the data.
- Report the conclusions or recommendations.
- Update the analysis.
Standard-setting bodies
Professional organizations of accountants and auditors that establish financial reporting standards.
FASB & IASB. They set US GAAP and IFRS
Regulatory authorities
Government agencies that have the legal authority to enforce compliance with financial reporting standards.
SEC & FCA
Financial statement notes (footnotes)
Include disclosures that provide further details about the information summarized in the financial statements.
A business segment or operating segment
Portion of a larger company that accounts for more than 10% of the company’s revenues, assets, or income.
Management commentary / Management discussion and analysis (MD&A)
Assessment of the financial performance and condition of a company from the perspective of its management
Trends, significant events, and uncertainties that affect the firm
Effec
Audit
Independent review of an entity’s financial statements
Unqualified opinion /unmodified/clean opinion
Of auditor
Auditor believes the statements are free from material omissions and errors.
Qualified opinion
Of auditor
Exceptions to accounting principles
ÿes, apart from..
Adverse opinion
Of auditor
Statements not presented fairly
Overall, “no”. There are material errors
Disclaimer of opinion
Unable to form an opinion
DIfferences between IFRS and US GAAP
Financial reporting
Financial reporting refers to how companies show their financial performance
Financial analysis
refers to using the information to make economic decisions.
