There are three types of financial statements under U.S. Generally Accepted Accounting Principles. Each one reveals different, but equally important, information about your company’s financial performance. And, together, they can be analyzed to help owners, management, lenders, and investors make informed business decisions. Profit or loss The...
Businesses use two types of audits to gauge financial results: internal and external. Here is a closer look at how they measure up. Focus Internal auditors go beyond traditional financial reporting. They focus on a company’s internal controls, accounting processes, and ability to mitigate risk. Internal auditors...
Standard cost accounting does not necessarily work for lean operations. Instead, lean accounting offers a simplified reporting alternative that generates more timely, relevant financial data. But it is not right for every situation. What is lean manufacturing? Lean manufacturers strive for continuous improvement and elimination of non-value-added...
The accounting profession is largely self-regulated by the American Institute of CPAs (AICPA). Part of its mission involves the development and enforcement of a broad range of standards for the profession. Why do these standards matter to you? By having a little familiarity with the guidance...
An independent quality of earnings (QOE) report can be a valuable tool in mergers and acquisitions. It is important for both buyers and sellers to look beyond the quantitative information provided by the selling company’s financial statements. Quality matters There is a lack of guidance from the...
Financial statements present a company’s financial position as of a specific date, typically the end of the year or quarter. But sometimes events happen shortly after the end of the period that have financial implications for the prior period or for the future. Here is...
The Public Company Accounting Oversight Board (PCAOB) recently voted to finalize two related standards aimed at improving audits of accounting estimates and the work of specialists. Though the new, more consistent guidance would apply specifically to public companies, the effects would likely filter down to...
Distinguishing between liabilities and equity on a company’s balance sheet may seem straightforward. But difficulties arise when it comes to the terms of complex securities and financial contracts like redeemable equity instruments, equity-linked or indexed instruments, and convertible instruments. The good news is that the Financial...
In recent years, external auditors have focused more attention on related party transactions. Although related party transactions are not necessarily bad, they do raise some concerns about the risk of misstatement or omission in financial reporting. Three focal points Issues with related parties played a prominent role...
Securities and Exchange Commission (SEC) Chairman Jay Clayton recently said that public companies should not be required to disclose information concerning environmental, social, and governance (ESG) matters in their financial statements using a standardized format. Right now, these disclosures are voluntary and unstandardized. ESG issues The SEC...