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【正文】 ance that the statements are free of material misstatements ? Auditors review accounting policies used by management and estimates used in preparing the statements Question? The SEC requires all publicly traded panies to have their financial statements audited. Prior to this requirement many panies voluntarily had their statements audited. Given the cost and inconvenience, why would they do this? Takeaways ? Financial statements that are produced are the result of one possible set of rules that have resulted from a political process. ? Users need to be aware of these limitations. ? Users should read the notes to the financial statements since these contain a lot of useful guidance to interpreting the statements. Financial Statement Limitations ? Assets are valued at historical cost less an estimated depreciation ? Other possibilities include cost, realizable value, replacement cost, price level adjusted ? Not all assets appear ? Human capital, internally generated goodwill ? Could be argued that approach is more conservative Financial Statement Limitations ? Not all liabilities appear ? Contingencies appear only in the footnotes ? Off balance sheet financing ? Other limitations include management biases and a lack of timeliness Financial Accounting: not an exact science ? GAAP allows panies choices in preparing financial statements (inventories, property, and equipment). ? Financial statements also depend on countless estimates. Financial Accounting in Context ? A pany’s financial statements only tell part of the story. ? You must continually keep in mind the world in which the pany operates. ? Financial statement analysis must be conducted within the framework of a thorough understanding of the broader forces which impact pany performance. Ethical Question ?See textbook 演講完畢，謝謝觀看！
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