Financial Reporting and Corporate Governance

Glossary of Terms.

About the Author.

About the Book.

Acknowledgments.

Chapter 1: Corporate Financial Reporting.

Learning Objectives.

Introduction.

Illustration 1 Good News at Flash Bang Wallop plc.

Bad News at Flash Bang Wallop plc.

Financial Play with Actors and Plot.

Lessons to be Learnt.

Companies.

Corporate Managers.

Corporate Governors.

Corporate Financial Statements.

Accounting Numbers.

Creative Accounting.

Corporate Auditing.

Problems for Public Accountants.

Financial Statement Users.

General Purpose Financial Information.

General Legal Requirements in UK.

Learning Objectives.

Exercises 1–6.

Additional Reading.

Chapter 2: Corporate Governance.

Learning Objectives.

Introduction.

Defining Corporate Governance.

Accountability or Stewardship.

Legislative Developments in Corporate Governance.

Non-accounting Regulations in Corporate Governance.

Accounting Regulations in Corporate Governance.

Auditing and Corporate Governance.

Other Corporate Governance Developments.

Audit Committees.

Ineffective Audit Committees.

US Developments in Corporate Governance.

Internal Control and Internal Audit.

Learning Objectives.

Exercises 1–8.

Additional Reading.

Chapter 3: Corporate Financial Accounting.

Learning Objectives.

Introduction.

Comprehensive Package.

Investment Decisions.

Illustration 2 What-a-Picture Ltd.

Share Capital.

Long-term Lending Decisions.

Illustration 3 Down-the-Plughole Ltd.

Other Decisions.

Overview of Information Needs.

Time and Corporate Financial Reports.

Accounting Numbers.

Illustration 4 Rambling-Sid-Deli Ltd.

Accounting Costs and Fair Values.

Illustration 5 Balance Sheet Numbers.

Accounting Conventions.

Legal and Regulatory Requirements.

Learning Objectives.

Exercises 1–5.

Additional Reading.

Chapter 4: Corporate Profit Statement.

Learning Objectives.

Introduction.

Balance Sheet or Profit Statement Approach.

The Profit Statement.

Importance of Profit Statement.

Earnings Per Share.

Basic Relationship and Conventions.

Illustration 6 Jam-Today Ltd.

Basic Elements of Profit Statement.

Illustration 7 Give-Me-A-Break Ltd.

Exceptional Events and Transactions.

Other Profit Statement Matters.

Creative Accounting.

Corporate Governance and Profit Statement.

Other Legislative and Regulative Requirements.

Learning Objectives.

Exercises 1–8.

Additional Reading.

Chapter 5: Corporate Cash Flow Statement.

Learning Objectives.

Introduction.

Illustration 8 Would-You-Believe-It Ltd.

Solvency, Liquidity, Cash Flow, and Profitability.

Illustration 9 Had-Enough Ltd.

Illustration 10 Profitability, Liquidity, and Solvency.

Illustration 11 Accounting Profit, Working Capital, and Operating Cash Flow.

Cash Flow Reporting.

Disclosure of Cash Flow Statements.

Issues with Cash Flow Statements.

Corporate Governance and Cash Flow Statements.

Legislative and Regulatory Requirements.

Learning Objectives.

Exercises 1–6.

Additional Reading.

Chapter 6: Corporate Balance Sheet.

Learning Objectives.

Introduction.

Basic Accounting Relationship.

Illustration 12 Jim Jones Insurance Ltd.

Balance Sheet Elements.

Balance Sheet Numbers.

Basic Balance Sheet.

Illustration 13 Runalot Sports Ltd.

Other Balance Sheet Matters.

Issues in Balance Sheet Reporting.

Creative Accounting.

Corporate Governance and Balance Sheets.

Other Legal and Regulatory Requirements.

Learning Objectives.

Exercises 1–7.

Additional Reading.

Chapter 7: Other Corporate Statements.

Learning Objectives.

Introduction.

Secondary Financial Statements.

Statements from Board and Others.

Chairman’s Report.

Report of Board of Directors.

Operating and Financial Review.

Other Statements and Corporate Governance.

Legislative and Regulatory Requirements.

Learning Objectives.

Exercises 1–8.

Additional Reading.

Chapter 8: Corporate Auditing.

Learning Objectives.

Introduction.

Corporate Audit Report.

Illustration 14 Test, Tick, & Attest, Registered Auditors.

Nature and Purpose of Corporate Audit.

Feasibility of Corporate Auditing.

Independent and Competent Auditors.

Corporate Auditor’s Duty of Care.

Responsible for What and to Whom?

Corporate Auditing and Fraud Detection.

Audit Evidence.

Corporate Auditing and Corporate Governance.

Audit Expectations Gap.

Legal and Regulatory Provisions for Corporate Auditing.

Learning Objectives.

Exercises 1–8.

Additional Reading.

Chapter 9: Creative Accounting.

Learning Objectives.

Introduction.

Preliminary Definitions.

Nature and Purpose of Creative Accounting.

Acceptable Accounting Practice.

Flexibility of Accounting.

Creative Accounting in Practice.

Creative Accounting and Reporting Issues.

Creative Accounting and Corporate Governance.

Learning Objectives.

Exercises 1–6.

Additional Reading.

Chapter 10: Corporate Financial Statement Analysis.

Learning Objectives.

Common-size Analysis.

Comparisons of Accounting Numbers

Nature and Purpose of Financial Ratios.

Financial Ratio Criteria.

Financial Ratio Limitations.

Computation and Interpretation of Financial Ratios.

Financial Ratios and Profitability.

Financial Ratios and Liquidity and Cash Flow.

Illustration 15 Just-In-Case Ltd and On-the-Button Ltd.

Financial Ratios, Structure, and Performance.

Learning Objectives.

Exercises 1–11.

Additional Reading.

Index.