Chapter 17 – Reviewing Reports

Overview

This chapter reviews all the information that you can expect to find relating to corporate financial statements. It looks particularly at annual reports and the myriad of commentary and tables that they contain. It also introduces two new financial statements: segment reports and value added statements.

Mastering financial reports

After reading this chapter, you should be able to answer the following questions:

• What constitutes a full set of financial statements?
• What is the main purpose of an annual report? The secondary purpose?
• Which parts of an annual report are required by regulators?
• Why might it be good for users if the operating and financial review is mandatory?
• What does the auditor’s report show?
• Is it better to have an unqualified or qualified auditor’s report?
• What is a segment report? What does it show?
• Will a company always report results for more than one geographical area? More than one industry sector or product line?
• What size segment has to be disclosed when reporting under international accounting standards?
• What is a value added statement? What does it show?