Reading29. Financial Reporting Quality

最新推荐文章于 2021-01-24 19:46:26 发布

一个有梦想的叫花子！

最新推荐文章于 2021-01-24 19:46:26 发布

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分类专栏： CFA 文章标签： CFA Level - 1

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29.1 财务报告质量和盈利质量

Tend to decrease the company’s reported earnings and financial position for the current period.

Tend to increase reported earnings or improve the financial position for the current period.

Some managers employ conservative bias during periods when earnings are above target and aggressive bias during poor periods of below-target earnings to artificially smooth earnings.
Earnings smoothing is accomplished through adjustment of accrued basis that are based on management estimates.

Aggressive	Conservative
Capitalizing current period costs	Expensing current period costs
Longer estimates of the lives of depreciable assets	Shorter estimates of the lives of depreciable assets
Higher estimates of salvage values	Lower estimates of salvage values
Straight-line depreciation	Accelerated depreciation
Delayed recognition of impairment	Early recognition of impairments
Less accrual of reserves for bad debt	More accrual of reserves for bad debt
Smaller valuation allowances on deferred tax assets	Larger valuation allowances on deferred tax assets

动机（Motivations）
- Enhance manager’s reputation and compensation.
- Avoid violating debt covenants.
- Achieving particular benchmarks, including prior-year earnings and analyst’s forecasts, is very important.
- Equity market effect
  - Building credibility with market participants and positively affecting stock price.
- Trade effect, enhancing reputation with customers and suppliers.
机会（Opportunities）
- The company has weak internal controls.
- The board of directors provides inadequate oversight.
- Applicable accounting standards provide a large range of acceptable accounting treatments, provide for inconsequential penalties in the case of accounting fraud, or both.
自我合理化（Rationalization）

Market regulatory authorities
- Registration process for the issuance of new publicly traded securities.
- Specific disclosure and reporting requirements, including periodic financial statements and accompanying notes.
- An independent audit of financial reports.
- A statement of financial condition (or management commentary) made by management.
- A signed statement by the person responsible for the preparation of the financial reports.
- A review process for newly registered securities and periodic reviews after registration.
Auditors
- An unqualified or “clean” audit opinion is not a guarantee that no fraud has occurred but only offers reasonable assurance that the financial reports have been “fairly reported” with respect to the applicable GAAP.
- Limitation: detecting fraud is not the objective of audits.
- Internal control
Private Contracting
- loan agreements or investment contracts

Revenue growth out of line with comparable firms, changes in revenue recognition methods, or lack of transparency about revenue recognition.
Decreases over time in turnover ratios (receivables, inventory, total asset).
Bill-and-hold, barter, or related-party transactions.
Net income not supported by operating cash flows.
Capitalization decisions, depreciation methods, useful lives, salvage values out of line with comparable firms.
Fourth-quarter earnings patterns not caused by seasonality.
Frequent appearance of nonrecurring items.
Emphasis on non-GAAP measures, minimal information and disclosure in financial reports.

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