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Financial Reporting and Corporate Governance
Thomas A. Lee (Author)
9780470026816, Wiley
Paperback / softback, published 10 November 2006
320 pages
24.1 x 16.8 x 1.3 cm, 0.567 kg
"A major strength of Thomas Lee's book comes from the clear presentation of the main financial accounting issues." (International Journal of Accounting, April 2008)
The aim of Financial Reporting and Corporate Governance is to give non-accounting students a basic ability and confidence to read and use financial accounting reports and statements within their business or financial specialties. Many employees in business today are expected to be conversant with reported accounting information as part of their regular job responsibilities. However, they often have little formal training in using such information. This book is intended as a core textbook for non-accounting students who need some understanding of accounting. The students can be majoring in business either as undergraduates or graduates, or in non-business areas such as engineering, law and media. The theme of the book is financial reporting as an essential and significant part of corporate governance. The book can be used as a self-contained text to support a specific course or module. However, it is designed so that it can be built on in more advanced courses on the subject. For this reason, it may be used by specialist accounting students in introductory courses.
Lessons xi Glossary of Terms xv About the Author xvii About the Book xix Acknowledgments xxi Chapter 1 Corporate Financial Reporting 1 Learning Objectives 1 Introduction 1 Illustration 1 Good News at Flash Bang Wallop plc 1 Bad News at Flash Bang Wallop plc 2 Financial Play with Actors and Plot 3 Lessons to be Learnt 3 Companies 4 Corporate Managers 6 Corporate Governors 7 Corporate Financial Statements 8 Accounting Numbers 9 Creative Accounting 10 Corporate Auditing 11 Problems for Public Accountants 12 Financial Statement Users 13 General Purpose Financial Information 14 General Legal Requirements in UK 14 Learning Objectives 16 Exercises 1–6 17 Additional Reading 19 Chapter 2 Corporate Governance 20 Learning Objectives 20 Introduction 20 Defining Corporate Governance 21 Accountability or Stewardship 21 Legislative Developments in Corporate Governance 22 Non-accounting Regulations in Corporate Governance 24 Accounting Regulations in Corporate Governance 25 Auditing and Corporate Governance 27 Other Corporate Governance Developments 29 Audit Committees 33 Ineffective Audit Committees 34 US Developments in Corporate Governance 35 Internal Control and Internal Audit 38 Learning Objectives 40 Exercises 1–8 40 Additional Reading 42 Chapter 3 Corporate Financial Accounting 43 Learning Objectives 43 Introduction 43 Comprehensive Package 44 Investment Decisions 47 Illustration 2 What-a-Picture Ltd 50 Share Capital 52 Long-term Lending Decisions 53 Illustration 3 Down-the-Plughole Ltd 55 Other Decisions 56 Overview of Information Needs 57 Time and Corporate Financial Reports 58 Accounting Numbers 59 Illustration 4 Rambling-Sid-Deli Ltd 60 Accounting Costs and Fair Values 61 Illustration 5 Balance Sheet Numbers 62 Accounting Conventions 63 Legal and Regulatory Requirements 67 Learning Objectives 70 Exercises 1–5 70 Additional Reading 71 Chapter 4 Corporate Profit Statement 73 Learning Objectives 73 Introduction 73 Balance Sheet or Profit Statement Approach 74 The Profit Statement 74 Importance of Profit Statement 78 Earnings Per Share 79 Basic Relationship and Conventions 81 Illustration 6 Jam-Today Ltd 81 Basic Elements of Profit Statement 82 Illustration 7 Give-Me-A-Break Ltd 84 Exceptional Events and Transactions 90 Other Profit Statement Matters 91 Creative Accounting 93 Corporate Governance and Profit Statement 96 Other Legislative and Regulative Requirements 96 Learning Objectives 99 Exercises 1–8 99 Additional Reading 101 Chapter 5 Corporate Cash Flow Statement 103 Learning Objectives 103 Introduction 103 Illustration 8 Would-You-Believe-It Ltd 105 Solvency, Liquidity, Cash Flow, and Profitability 108 Illustration 9 Had-Enough Ltd 110 Illustration 10 Profitability, Liquidity, and Solvency 112 Illustration 11 Accounting Profit, Working Capital, and Operating Cash Flow 114 Cash Flow Reporting 114 Disclosure of Cash Flow Statements 118 Issues with Cash Flow Statements 120 Corporate Governance and Cash Flow Statements 122 Legislative and Regulatory Requirements 122 Learning Objectives 122 Exercises 1–6 123 Additional Reading 123 Chapter 6 Corporate Balance Sheet 125 Learning Objectives 125 Introduction 125 Basic Accounting Relationship 128 Illustration 12 Jim Jones Insurance Ltd 129 Balance Sheet Elements 130 Balance Sheet Numbers 132 Basic Balance Sheet 134 Illustration 13 Runalot Sports Ltd 134 Other Balance Sheet Matters 141 Issues in Balance Sheet Reporting 148 Creative Accounting 151 Corporate Governance and Balance Sheets 154 Other Legal and Regulatory Requirements 155 Learning Objectives 156 Exercises 1–7 157 Additional Reading 159 Chapter 7 Other Corporate Statements 161 Learning Objectives 161 Introduction 161 Secondary Financial Statements 162 Statements from Board and Others 168 Chairman’s Report 168 Report of Board of Directors 170 Operating and Financial Review 176 Other Statements and Corporate Governance 178 Legislative and Regulatory Requirements 179 Learning Objectives 180 Exercises 1–8 180 Additional Reading 184 Chapter 8 Corporate Auditing 185 Learning Objectives 185 Introduction 185 Corporate Audit Report 186 Illustration 14 Test, Tick, & Attest, Registered Auditors 186 Nature and Purpose of Corporate Audit 190 Feasibility of Corporate Auditing 194 Independent and Competent Auditors 196 Corporate Auditor’s Duty of Care 198 Responsible for What and to Whom? 199 Corporate Auditing and Fraud Detection 200 Audit Evidence 203 Corporate Auditing and Corporate Governance 204 Audit Expectations Gap 204 Legal and Regulatory Provisions for Corporate Auditing 205 Learning Objectives 208 Exercises 1–8 208 Additional Reading 210 Chapter 9 Creative Accounting 213 Learning Objectives 213 Introduction 213 Preliminary Definitions 214 Nature and Purpose of Creative Accounting 215 Acceptable Accounting Practice 216 Flexibility of Accounting 218 Creative Accounting in Practice 219 Creative Accounting and Reporting Issues 230 Creative Accounting and Corporate Governance 233 Learning Objectives 234 Exercises 1–6 234 Additional Reading 236 Chapter 10 Corporate Financial Statement Analysis 238 Learning Objectives 238 Common-size Analysis 239 Comparisons of Accounting Numbers 241 Nature and Purpose of Financial Ratios 246 Financial Ratio Criteria 249 Financial Ratio Limitations 250 Computation and Interpretation of Financial Ratios 252 Financial Ratios and Profitability 253 Financial Ratios and Liquidity and Cash Flow 257 Illustration 15 Just-In-Case Ltd and On-the-Button Ltd 268 Financial Ratios, Structure, and Performance 270 Learning Objectives 275 Exercises 1–11 275 Additional Reading 279 Index 280
Subject Areas: Finance & accounting [KF]
