Financial Reporting and Analysis: Evaluating Financial Reporting Quality and Other Applications Flashcards

1
Q

Reporting Quality: Motivation: Over/Under Report Earnings

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2
Q

Reporting Quality: Motivations: Manipulation of B/S

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3
Q

Reporting Quality: Signs of Low Quality Earnings

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4
Q

Reporting Quality: The Fraud Triangle

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5
Q

Reporting Quality: Risk Factors: Economic, Industry, or Entity Operating Conditions

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6
Q

Reporting Quality: Risk Factors: Pressure on Management

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7
Q

Reporting Quality: Risk Factors: Directors’ financial position threatened

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8
Q

Reporting Quality: Risk Factors: Nature of entity/industry’s operations

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9
Q

Reporting Quality: Risk Factors: Ineffective monitoring of management

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10
Q

Reporting Quality: Risk Factors: Complex or unstable organizational structure

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11
Q

Reporting Quality: Risk Factors: Insufficient Internal Controls

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12
Q

Reporting Quality: Risk Factors: Rationalization

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13
Q

Reporting Quality: SEC Improper Practice

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14
Q

Reporting Quality: Warning Signs: revenue recognition

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15
Q

Reporting Quality: Warning Signs: Divergence of CFO and earnings, revenue

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16
Q

Reporting Quality: Warning signs: Inventory and non-recurring/operating items

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17
Q

Reporting Quality: Warning signs: expenses, operating leases, losses and expenses

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18
Q

Reporting Quality: Warning signs: LIFO liquidation, margins

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19
Q

Reporting Quality: Warning signs: Useful economic lives, Pension

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20
Q

Reporting Quality: Warning signs: Earnings surprises, Equity, Financing

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21
Q

Accounting Shenanigans: Cash Flow Measurement

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22
Q

Accounting Shenanigans: Motivations for Creative CF Reporting

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23
Q

Accounting Shenanigans: Stretching Out Payables

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24
Q

Accounting Shenanigans: Financing of Payables

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25
Q

Accounting Shenanigans: Securitization of Receivables

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26
Q

Accounting Shenanigans: Tax Benefits From Stock Options

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27
Q

Accounting Shenanigans: Buybacks to Offset Dilution

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28
Q

FSA - Applications: Evaluating Past Financial Performance

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29
Q

FSA - Applications: Projecting Performance

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30
Q

FSA - Applications: Forecasting Net Income and Cash Flow

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31
Q

FSA - Applications: Financial Forecasting Example

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32
Q

FSA - Applications: Credit Risk

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33
Q

FSA - Applications: Credit Scoring

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34
Q

FSA - Applications: Equity Investment Screening

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35
Q

FSA - Applications: Analyst Adjustments: Investments

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  • Adjust financial statements for differences in accounting choices (e.g., LIFO/FIFO, accelerated/straight line depreciation, revenue recognition criteria)
  • Adjust financial statements for differences in accounting standards (e.g., IFRS vs. U.S. GAAP)
36
Q

FSA - Applications: Analyst Adjustments: Inventory, PP&E, Goodwill

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37
Q

FSA - Applications: Analyst Adjustments: Off-balance-sheet finance

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