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Intermediate Accounting: Full Disclosure in Financial Reporting
Intermediate Accounting: Full Disclosure in Financial Reporting
Seventeenth Edition
Chapter 24
Full Disclosure in Financial Reporting
Reasons:
• Complexity of business environment.
• Necessity for timely information.
• Accounting as a control and monitoring device.
Common Notes
• Inventory
• Property, Plant, and Equipment
• Creditor Claims
• Equityholders’ Claims
• Contingencies and Commitments
• Fair Values
• Deferred Taxes, Pensions, and Leases
• Changes in Accounting Principles
Question
Revenue of a segment includes
a. only sales to unaffiliated customers.
b. sales to unaffiliated customers and intersegment
sales.
c. sales to unaffiliated customers and interest revenue.
d. sales to unaffiliated customers and other revenue
and gains.
Question
Revenue of a segment includes
a. only sales to unaffiliated customers.
b. sales to unaffiliated customers and intersegment
sales.
c. sales to unaffiliated customers and interest revenue.
d. sales to unaffiliated customers and other revenue
and gains.
Question
The profession requires disaggregated information in the
following ways:
a. products or services.
b. geographic areas.
c. major customers.
d. all of these.
Question
The profession requires disaggregated information in the
following ways:
a. products or services.
b. geographic areas.
c. major customers.
d. all of these.
Auditor’s Report
Unqualified Opinion – auditor
expresses the opinion that the
financial statements are
presented fairly in accordance
with GAAP. Other opinions:
• Qualified
• Adverse
• Disclaim
Auditor’s Report
Certain circumstances, although they do not affect the
auditor’s unqualified opinion, may require the auditor to
add an explanatory paragraph to the audit report.
• Going Concern
• Lack of Consistency
• Emphasis of a Matter
Auditor’s Report
Qualified opinion contains an exception to the
standard opinion. Usual circumstances may include:
1. Scope limitation.
2. Statements do not fairly present financial
position or results of operations because of:
a. Lack of conformity with GAAP.
b. Inadequate disclosure.
Auditor’s Report
Adverse opinion is required in any report in which the
exceptions to fair presentation are so material that in
the independent auditor’s judgment, a qualified
opinion is not justified.
1. The financial statements taken as a whole are not
in accordance with GAAP
a. Adverse opinions are rare.
b. The SEC will not permit a company listed on an
exchange to have an adverse opinion.
LO 3 Copyright ©2019 John Wiley & Sons, Inc. 44
Auditor’s and Management’s Reports
Disclaimer of an Opinion
Auditor’s Report
Disclaimer of an opinion is appropriate when the
auditor has gathered so little information on the
financial statements that no opinion can be
expressed.
Management’s Report
Management’s Discussion and Analysis
The SEC mandates inclusion of management’s discussion
and analysis (MD&A).
Management highlights favorable or unfavorable trends
related to liquidity, capital resources, and results of
operations and identifies significant events and
uncertainties that affect these three factors.