AFM123 Lecture Notes - Lecture 4: International Accounting Standards Board, Financial Audit, Financial Statement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM123
• Professor: David Lin

Document Summary

3 things need to exist for accounting fraud to exist (the fraud triangle) Accounting and financial statement prep for small companies applies to all companies. Public companies need to take 3 additional steps. Comparative financial statements report info for 2 or more time periods. Multiple step income statements display subtotals that provide measures of profit in addition to net income. Statement of shareholders equity shows changes in retained earnings and changes to contributed capital. The beginning and ending balances correspond to the balance sheet. External audit are conducted by professionally designed accountants who are independent of the company. Press release includes key figures, discussion of results, condensed income and balance sheet. All canadian public companies need to file various reports electronically. Debt to assets = total liabilities / total assets. 0. 217 - 21. 7% are being financed with debt (rest is with equity) Can see a number above 1 if they"re losing a lot of money.