Transcription of Financial reporting
1 Financial reportingReviewing Financial information PwCQuick of the document Assets = liabilities and results according to profit and loss statement should be transferred into equity accounts of balance of the company General: Assess the entity's Financial situation and ability to going concern Cash and cash equivalents: How long can the entity continue to operate / risk of running out of cash? Equity: Available earnings from prior years available or is there a loss carried forward? Net revenue: Positive or negative change to last year Gross margin: Positive or negative change to last year? Balance sheet: Significant changes to the previous year? Reasons? Profit and loss statement: Significant changes to the previous year? Reasons? All notes completed in accordance with the requirements of the disclosure according to Swiss Code of ObligationsVirtual Case ExperienceAssurance Academy2 PwCThe accounting frameworkIt is important to be familiar with the accounting framework the company uses for Financial reporting .
2 In most cases this will be the countries accounting standards and associated interpretations approved for use in the certain far as for-profit entities are concerned, the accounting standards follow local standards ( Swiss Law) and International Financial reporting Standards (IFRS). Where companies raise capital on foreign markets that do not accept IFRS-compliant reports, they may have to report in accordance with more than one gaap , or provide reconciliation from one gaap to Case ExperienceAssurance Academy3 PwCAnnual Financial reportsVirtual Case ExperienceAssurance Academy4 The role of the audit committee is to review the annual Financial report, including the appropriateness of accounting policies and disclosure requirements, and to assess whether these are complete and consistent with the information that is known to the audit committee. As audit committee members need time to conduct their review, a final draft, including supporting commentary by management, will be required at least three or four days in advance of any meeting.
3 Discussions with management and the external auditor about the reports, either together or in separate meetings, are annual Financial report consists of: Balance sheet (statement of comprehensive income (or separate income statement and statement of comprehensive income) Income statement of Financial position Notes to the Financial statements Directors proposal for unappropriated retained earningsPwCQuestions to understand causes in Financial statementsWhat to askWho to askWhat to look for in responseHow did management select and apply critical accounting policies, judgements and estimates?Management Has management articulated the critical policies and estimates? Do the judgements reflect the companies strategies?Were there any internal control issues in relation to the production of the Financial statements?Management/ internal auditors What impact could these issues have? How were they dealt with?What are the implications of expected changes in accounting policies due to new accounting standards and/or interpretations?)
4 Management Will the Financial statements look significantly different? Are there any capital management issues?Are any indicators of fraud present?Management Have these been addressed by management? Has the impact been assessed?Virtual Case ExperienceAssurance Academy5 Following questions can help to find and understand causes for changes or inconsistencies in balance sheets and should be considered to ask the management.
