1、The Framework of FRS1. Financial Accounting Standards Board (FASB)2. The Statement of Financial Accounting Standards (SFAS)3. Generally Accepted Accounting Principle(GAAP)Standard-setting bodies 1. International Accounting Standards Board (IASB)2. The International Accounting Standards (IAS)，The Int
2、ernational Financial Reporting Standards (IFRS)3. IFRSDesirable attributes of standard-setters:1. Observe high professional standards.2. Have adequate authority, resources, and competencies to accomplish its mission.3. Have clear and consistent standard-setting processes.4. Guided by a well-articula
3、ted framework.5. Operate independently while still seeking input from stakeholders.6. Should not be compromised by special interests.7. Decisions are made in the public interest.Regularly authorities The Securities and Exchange Commission (SEC) in the U.S. The Financial Service Authority (FSA) in th
4、e U.K. Most national authorities belong to the International Organization of Securities Commissions (IOSCO)A core objective of IOSCO is to ensure that markets are fair, efficient, and transparent.IOSCO are to:(1) protect investors; (2) ensure the fairness, efficiency, and transparency of markets; an
5、d(3) reduce systemic risk, and it has a goal of uniform financial regulations across countries.Barriers to developing one universally accept set of financial reporting standard： 1. Different standard-setting bodies and the regulatory authorities of different countries can and do disagree on the best
6、 treatment of a particular item or issue.2. Political pressures that regulatory bodies face from business groups and others who will be affected by changes in reporting standards.IASB conceptual frameworkFundamental principles for preparing F/S: AA CC FG MN R1. Going concern basis2. Accrual basis of
7、 accounting 3. Fair presentation4. Consistency5. Materiality：free of misstatements or omissions，重大性，重大的才是相关的6. Comparative information7. Aggregation：Aggregation of similar items and separation of dissimilar items.8. No offsetting，不允许相互抵消9. Reporting frequency： Coherent financial reporting framework：
8、1. Transparency； 2. Comprehensiveness； 3. ConsistencyBarriers to creating a coherent financial reporting framework：1. Valuation； 2. Standard setting： “principles-based“ approach （IFRS） ； “rules-based“ approach （GAAP） ；“objectives-oriented“ approach；3. Measurement： “asset/liability“ approach； “revenu
9、e/expense“ approach；GAAP 与 IFRS 的区别framework IASB：lists income and expenses as elements related to performanceFASB：Revenues, expenses, gains, losses, and comprehensive income.defines an asset IASB：a resource from which a future economic benefit is expected to flowFASB：future economic benefit， uses t
10、he word probablevaluation FASB：does not allow the upward valuation of most assets.revenue recognizedIASB：For sale of goods, revenue is recognized when:1. The risk and reward of ownership is transferred.2. There is no continuing control or management over the goods sold.3. Revenue can be reliably mea
11、sured.4. There is a probable flow of economic benefits.5. The cost can be reliably measured.For services rendered, revenue is recognized when:1. The amount of revenue can be reliably measured.2. There is a probable flow of economic benefits.3. The stage of completion can be measured.4. The cost incu
12、rred and cost of completion can be reliably measured.FASB：realized or realizable, and earnedSEC: 1. There is evidence of an arrangement between the buyer and seller.2. The product has been delivered or the service has been rendered.3. The price is determined or determinable.4. The seller is reasonab
13、ly sure of collecting money.B/S format IFRS 和 GAAP 都要求分别列示 current and noncurrent assets and liabilities。 IFRS 允许公司选择使用 liquidity-base format，主要用于 banking industryFinancial position Financial performance Change in financial positionThe balance sheet The income statement The cash flow statementAssets
14、 = liabilities + owners equityRevenue - Expenses = Net incomeOperating cash flowsInvesting cash flowsFinancing cash flowsNet cash inflow or outflow for the financial yearIS 表也被叫做 PL 表,profit and loss 财务比率一般是：存/存，流/存，流/流五大财务报表The balance sheet a point in time.Owners equity is the residual interest in
15、 the net assetsThe income statement over a period of time.The cash flow statement Operating cash flows include the cash effects of transactions that involve the normal business of the firm.Investing cash flows are those resulting from the acquisition or sale of property, plant, and equipment; of a s
16、ubsidiary or segment; of securities; and of investments in other firms.Financing cash flows are those resulting from issuance or retirement of the firms debt and equity securities and include dividends paid to stockholders.The statement of comprehensive income综合收益表reports all changes in equity expec
17、t for shareholder transactionscomprehensive income = other comprehensive income + Net incomeUnder IFRS： Income statement can be combined with “other comprehensive income“ （其它综合收益）and presented as a single statement of comprehensive income. Alternatively, the income statement and the statement of com
18、prehensive income can be presented separately.Under U.S. GAAP: firms can choose to report comprehensive income in the statement of shareholders equity.The statement of changes in equityThe statement of changes in equity reports the amounts and sources of changes in equity investors investment in the
19、 firm over a period of time.historical cost the amount originally paid for the asset 最初获得资产的时候花了多少钱会计的基本原理是历史成本amortized cost historical cost adjusted for depreciation, amortization, depletion, and impairmentD/A=折旧（有形资产）与摊销（无形资产，如专利） ，depletion 是矿产方面的current cost the amount the firm would have to pa
20、y today for the same asset如果今天买要多少钱realizable value the amount for which the firm could sell the asset 今天卖能卖多少钱，卖可能会有成本费用，即可实现净值present value the discounted value of the assets expected future cash flows 未来现金流的折现Measurement of financial elementsfair value the amount at which two parties in an arms-l
21、ength transaction would exchange the asset公允价值，非关联方的交易，充分信息交易，不一定是公允价值，所以要 arms-length transactionOther relevant informationFinancial statement notes (Footnotes)注解Are audited1. accounting methods, assumptions, and estimates 会计方法，会计假设和会计估计2. business acquisitions or disposal 收购兼并，资产处置3. legal actions
22、 法律行动4. employee benefit plans 员工福利计划 会兼法员客关公5. significant customers 重要客户6. sales to related parties 关联交易7. segments of the firm 公司分部Supplementary schedules补充信息1. Operating income or sales by region or business segment2. Reserves for an oil and gas company 石油储备3. hedging activities and financial in
23、strumentsManagements Discussion and Analysis (MD&A)管理层探讨与分析或叫做：management commentary，包括了以下：companys objectives, strategies and significant risks1. Providing an assessment of the financial performance and condition of a company from the perspective of its management2. trends in sales and expense 销售和费
24、用的趋势 3. trends in cash flow 现金流的趋势4. business overview based on known trends5. Material events and uncertainties 重大事项和重大不确定性Quarterly or semiannual reports updated information on the major financial statements and footnotesSecurities and Exchange Commission (SEC) filings1. Form 8-K 重大事项公告： Acquisiti
25、ons or disposals of major assets；Changes in its management；Changes in corporate governance2. Form 10-K 年报： Annual financial statements3. Form 10-Q 季报： Quarterly financial statementsAuditingObjective: auditor provides reasonable assurance that the financial statements are fairly presented.A principal
26、 agent relationshipUnqualified (clean) opinion: free from material errors, fraud, or illegal actsQualified opinion: if statements make any exceptions to the accounting principles, can issue qualified opinion and explain the exceptionsAdverse opinion: if not presented fairly or not materially conform
27、ing to accounting standards.The standard auditors opinionDisclaimer of opinion: If the auditor is unable to express an opinion (e.g., in the case of a scope limitation), a disclaimer of opinion is issued.Financial statement analysis frameworkPhase Sources of info Output1. Articulate the purpose and
28、context of the analysisNature Needs & concernGuidelinesStatement of purposes and objectivesA list of specific questionsTimetable & budgeted resources2.Collect dataFinancial dataDiscussionVisitsOrganized F/SFinancial data tableComplete questionnaires4. Form S-1： Registration statement filed prior to
29、the sale of new securities to the public5. Form DEF-14A： Proxy statementsProxy statements 1. require a shareholder vote2. Information about the board members, managements, compensation and the issuance of stock options.Corporate reports and press releases 新闻稿Public relations，如社会责任公告书Other necessary
30、information Information on economic conditions, industry and competitors.3.Process data Data from previous phaseAdjusted F/SCommon size statementsRatios & Forecasts4.Analyze/interpret the processed dataInput dataProcessed data Analytical results5.Conclusions & recommendations Analytical resultsAnaly
31、tical reportsrecommendation6.Follow up Periodically repeating Updated reports & recommendations各个科目Assets1. Cash and cash equivalents: Liquid securities with maturities of 90 days or less are considered cash equivalents2. Accounts receivable. Accounts receivable often have an “allowance for bad debt
32、 expense“ or “allowance for doubtful accounts“ as a contra account.3. Inventory4. Financial assets such as marketable securities.更长期的债券或股票5. Prepaid expenses，比如租金，是预付的6. Property, plant, and equipment （PP&E，即机器、厂房和设备）. Includes a contra-asset account for accumulated depreciation. 注意，美国土地是不折旧的，中国是要折旧
33、的。7. Investment in affiliates accounted for using the equity method. （投资比例大于 20%的，进这里，小于20%的，进 Financial assets）8. Deferred tax assets.9. Intangible assets. Such as patents, trademarks, licenses, and goodwill. Except for goodwill, these values may be reduced by “accumulated amortization.“Liability1.
34、 Accounts payable and trade payables.2. Financial liabilities such as short-term notes payable.3. Unearned revenue. Items that will show up on future income statements as revenues.4. Income taxes payable. The taxes accrued during the past year but not yet paid.5. Long-term debt such as bonds payable
35、.6. Deferred tax liabilities.7. Beginning balance allowance + Bad expenses write-offs = Ending balance allowance Bad debt 会增加 allowance for debtful accounts（contra-assets accounts）Bad debt 注销会减少 gross receivable and allowance accountOwnersequity1. Capital. Par value of common stock.2. Additional pai
36、d-in capital. Proceeds from common stock sales in excess of par value. （对比面值溢价的部分） (Share repurchases that the company has made are represented in the contra account treasury stock.)Capital 和 Additional paid-in capital 是股东最早出资的部分。若一个公司发行 1000 股，股票面值是 1 块，股票市场价值 20 块，那么 capital 就 20000，additional pai
37、d-in capital 就是 19000。3. Retained earnings. Cumulative net income that has not been distributed as dividends.4. Other comprehensive income.(主要是资产负债表里面有些项目以公允价值计量，造成的误差，这种误差不调利润表，直接调权益) Changes resulting from foreign currency translation, minimum pension liability adjustments, unrealized gains and lo
38、sses from cash flow hedging derivatives, or unrealized gains and losses from available-for-sale.组成 Other comprehensive income 的四个部分，在 GAAP 里面：1. Foreign currency translation：合并外国子公司报表时的货币转换导致的差异，如果是汇总形成的差异，叫做transaction，是进利润表。这个 translation 只进股东权益。2. Minimum pension liability adjustments(DB 在，DC 不在)
39、：养老金：DC，defined contribution, 社会来支付社保，跟公司没关系； DB, defined benefit，公司来支付养老金3. Unrealized gains and losses from cash flow hedging derivatives: 如果 unrealizedcash flow 有一个不符合，就进 Income Statement，与这里的 cash flow 相对的就是 fair value4. Unrealized gains and losses from available-for-sale: 金融资产分为三类，一是 available-
40、for-sale，二是 held to maturity, 三是 trading security在 IFRS 里面，还多了一项：certain changes in the value of long-lived assets that are measured using the revaluation model rather than the cost model总体来说，相对长期的进入 OCI，相对短期的进入 I/SExpenses1. Cost of goods sold(即 COGS)，主要包括原材料、工人工资等Sales Sales-COGS(含了生产过程的折旧和摊销) -CO
41、GS(不含 D&A 的)=gross profit -SG&A(不含 D&A 的)-SG&A(含了销售和管理过程的折旧和摊销) -D&A=operating profit =operating profit+Other income/expense +Other income/expense=EBIT =EBIT-Interest -Interest=EBT =EBT-Tax -Tax=net income =net income2. Selling, general, and administrative expenses（即 SG&A）. These include such expens
42、es as advertising, management salaries, rent, and utilities.3. Depreciation and amortization. To reflect the “using up“ of tangible and intangible assets. 固定资产是折旧，无形资产是摊销4. Tax expense.5. Interest expense.6. Losses. Decreases in assets from transactions incidental to the firms day-to-day activities.RevenueAssets =Liabilities+Contributed capital（这个 capital 是广义的）+Beginning retained earnings+ Revenue所有的 Balance sheet 科目，都符合 BASE 法则：B + A S = EBeginning + Addition Subtraction = Ending比如： 期初 RE + NI DIV（declare 的） = 期末 RE
