Company Reporting & Auditing Flashcards
(47 cards)
Who has an interest in financial reports?
Stakeholders
Name at least five groups of stakeholders:
Customers Investors Employees Suppliers Creditors Governments General Public Analysts Media
Name the four main accounting standards:
- OR - Swiss code of obligations
- IFRS
- US-GAAP
- Swiss GAAP FER
What is the principle of prudence in accounting?
Meaning:
Reason:
Used by:
What is the True and Fair View?
Meaning:
Reason:
Used by:
Give a historic recap of the OR
The OR is a sovereign right that is state legislation.
There have been 4 revisions based on social and economic changes.
The last revision took place in 2013 and notably made regulations now apply to all ventures regardless of the legal form except for sole proprietorships and partnerships with revenues under 500,000CHF.
What are the two main objectives pursued with IFRS?
- International companies are provided with universally applicable accounting standards
- Countries that do not have their own standards have access to universally accepted ones
Who publishes the IFRS?
IASB (International Accounting Standards Board)
Describe the IASB:
IASB is a private non-profit that is funded notably by the EU and various national governments, accounting firms, and its own licenses and publications.
The IASB under the IFRS Foundation publishes the IFRS standards and various other materials for interpreting them.
Describe the US-GAAP
In our context only applies to large companies publicly traded on the US Stock exchange.
Extremely extensive and clearly rule-based
FASB is the responsible rule setter
Principle based
OR and Swiss GAAP FER
formed generally and serve more as guidelines
Rule based
IFRS and US-GAAP
cook book accounting; e.g. every single accounting issue must be regulated somewhere
General requirements
OR; you look for the principle or basic principle
Topical focus
IFRS, US GAAP, Swiss GAAP FER; look for the concrete details/facts
Swiss GAAP FER
For medium sized companies in Switzerland and follows accounting by true and fair view
Audit
comparison of reported information with its underlying real economic transactions
Mitigates the information asymmetry between investors and management, so most informed decision making is possible
Scope depends on size and financing of company
No statement regarding the quality of the management
Audit report
result of the comparison of reported information and underlying real economic transactions
Small company auditing
have a less extensive audit and under certain circumstances no audit at all
Large company auditing
must have an ordinary audit and listed companies are generally subject to the strictest audit
Internal audit
integral part of a company that audits in accordance with management guidelines
External audit
audits are on a contractual basis and is independent, coordinates with internal audit
Auditor
represents the interest of investors and are thus elected by the general meeting of shareholders (general assembly)
Big4
Deloitte, Ernst & Young, KPMG, pwc
Only about 50% of their business is auditing, the other 50% is management consulting, M&A, tax consulting, and legal advice
Mainly focus on large listed companies
Auditing standards
regulations that define exactly how an auditor must proceed while undertaking an audit
CH - PS or Prüfungstandards
International - ISA (International Standards on Auditing)
USA - GAAS (Generally Accepted Auditing Standards)
