Textbook Notes (368,666)
Canada (162,055)
MGAC01H3 (34)
Daga (20)
Chapter

A+ Notes: Ch 1-4

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Department
Financial Accounting
Course
MGAC01H3
Professor
Daga
Semester
Winter

Description
The Canadian Financial Reporting EnvironmentAccounting is1identification measurement commn of financial info2about economic entities3to interested partiesfinancial accountingfin reports to internalexternal usersmanagerial accountingfin info for internal users only financial reports BS IS statement of CF statement of SE or REnote disclosuresAccountingcapital allocationby providing info about firms performance investors can assess riskreturn in order to invest their resources through debtequity markets fin institutions such as banks effective capital allocation is critical for economycredit rating agencies also rely on accounting infoStakeholdersmgmtprepares fsjob bonus reputation access to capital for companyauditorsreviewsreputation profitsinvestorscreditorsrelies on fs to decide on investmentloanstandard settersset GAAPs to reduce mgmt biasreputationsecurities commissionsmonitorreputation effective marketplacecredit ratings agenciesanalyzereputationObjective of financial reporting provide info that is useful and relevant for decisionmakerscommunicate the firms economic resourcesthe claims to those resourceschanges in those resourcesclaimsManagement bias bias to present fs which shows co in best lightdue to bonus meet analyst expectations comply with covenants having certain ratiosaggressive fin rep practices compared to conservative fin repoverstate assetsNI underrate liabexp selected positive note disclosuresmgmt stewardship Accounting StandardsASPE vs IFRS since Jan 1 2011 IFRS is more global allows for global comparison for public coCdn GAAP for private allows less disclosure less complexUS GAAPs rulesbased approachprovincial securities commissions oversees fin reportingusing conceptual framework professional judgement ethicsSarbanesOxley ActChanging Nature of Economy knowledgebased economyhard to value intangible assets such as knowledge which is not on BS
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