Y020015 1 86002485 Issues and Proposals for Improved Disclosure in Banking Gilbert, Gary G. Issues in Bank Regulation v9n2 PP: 21-24 Autumn 1985 ISSN: 0164-7725 JRNL CODE: IRG DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM The notion of promoting market discipline on excessive risk-taking by banks through public disclosure has received attention recently in federal deposit insurance studies. One disclosure method is the disclosure of examination-related data. Certain qualifications of this method to note are that: 1. it does not reveal the process of deterioration and potential for improvement of bank performance, 2. a regulatory judgment on a bank's condition could cause an undesirable overreaction in the market, and 3. legitimate concerns exist about the disclosure of too much information. Two alternative forms of disclosure are: 1. a standardized format for depositories to use to report financial ratios, trends, and performance, and 2. uniform guidelines for the disclosure of the diversification of domestic and foreign loans. References. Desc.: Financial reporting; Disclosure; Banking industry; Bank examinations; Proposals; Improvements CLASS. CODES: 8100 (CN=Financial services industry); 4120 (CN=Accounting policies & procedures) Y020015 2 86001052 Whosoever You Be Let Your Funds Flow Free Smith, Alan F. Management Accounting (UK) v63n10 PP: 25-28 Nov 1985 CODEN: MATGBA ISSN: 0025-1682 JRNL CODE: MAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM Funds flow statements are an accepted part of the financial reports presented to shareholders, but assessing their benefits can be difficult due to the use of different definitions of funds. Many feel that a standardized format encompassing a single definition of funds could solve this problem, but this requires a consensus as to which definition of funds is most acceptable. Since firms do not operate in a static state, many argue that net working capital funds flow cannot be equated with cashflows and, therefore, that the reporting of actual cashflows is a better method. However, this is correct only for certain circumstances. When evaluating a company's freedom to make significant financial decisions and to withstand adversity, overemphasis on the funds from operations can be misleading. The impact of past operations must clearly play a part in making these evaluations on the firm's strategies and current system. Management should be free to choose the definition of funds flow deemed most appropriate for the company's situation even to the point of eliminating it altogether if the information is redundant. Charts. References. Desc.: UK; Funds statements; Cash flow; Net; Working capital; Management accounting CLASS. CODES: 9170 (CN=Non-US); 4120 (CN=Accounting policies & procedures); 3100 (CN=Capital & debt management) Y020015 3 85039707 Governmental Fund Operating Results: 3 Formats -- Why the Order of Data Presentation and the Subtotals Matter Freeman, Robert J.; Shoulders, Craig D. Jrnl of Accountancy v160n5 PP: 110-121 Nov 1985 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 8 Pages AVAIL.: ABI/INFORM The Governmental Accounting Standards Board outlines 3 alternative formats for operating statements of state and local governments' funds. Although the first presentation is the only format that presents the excess of revenues over (under) expenditures, comparison of revenues and expenditures may not be significant in terms of an individual governmental fund or fund type and, in fact, may be misleading. Although the 2nd presentation is attractive in that only key operating subtotal reported can usually be compared appropriately with that of a specific governmental fund or fund type of other similar governments, it hinders the comparison of revenues and expenditures. The primary advantage of the 3rd presentation is its consistency with the typical logic and approach applied in governmental fund financial planning and budgeting. However, it not only hinders the comparison of revenues and expenses, it also does not report any operations subtotal that indicates success or failure during the period. Tables. Charts. Desc.: Governmental accounting; Accounting standards; Financial statements; Financial reporting; Accounting procedures CLASS. CODES: 9550 (CN=Public sector); 4120 (CN=Accounting policies & procedures) Y020015 4 85037652 Changes to Statement of Changes Marinucci, Sam CA Magazine (Canada) v118n10 PP: 68-72 Oct 1985 CODEN: CCHAA5 ISSN: 0317-6878 JRNL CODE: CCA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM New recommendations to amend Canada's statement of changes in financial position were recently approved. The recommendations focus on reporting cash and cash equivalents. Cash flows should be classified by operating, financing, and investing activities, although dividends may be disclosed separately. All financing and investing activities should be disclosed, including noncash transactions since they affect the capital and asset structure. The recommendations represent a change in presentation rather than a change in accounting policy. An exposure draft issued prior to approval of the recommendations gathered comments from various sources. Suggestions offered by respondents that were not incorporated in the new recommendations include: 1. disclosure of unused credit lines and cash flow restrictions within consolidated organizations, 2. disclosure of per-share figures, and 3. provision of examples. Tables. Desc.: Canada; Accounting procedures; Funds statements; Disclosure CLASS. CODES: 9170 (CN=Non-US); 4120 (CN=Accounting policies & procedures) Y020015 5 85034284 Taking the ''Numb'' Out of Numbers Konte, Sandra Hansen Association & Society Manager v17n6 PP: 18-19 Oct/Nov 1985 ISSN: 0004-5292 JRNL CODE: ASM DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM Both slides and overhead transparencies can be used effectively by association managers to enliven financial presentations made to members. However, presenting managers also should keep in mind certain basic rules: 1. Identify audience members' functions, motivations, familiarity with the subject matter, and expectations. 2. Outline key points for audience retention and the most effective modes of presentation. 3. Strive for a complex visual presentation through such techniques as highlighting, progressive disclosure, or graphs. 4. Ensure that the visual is large enough to be read by everyone in the audience, and avoid the mixture of horizontal and vertical slides. 5. Use color whenever possible, particularly bright, vibrant hues that aid audience comprehension. 6. Pad the presentation with title slides, transparencies, or material featuring textbook or magazine photographs to break the monotony. 7. Use special effects and supportive equipment to maximum benefit. Desc.: Associations; Presentation; Visual aids; Skills; Effectiveness CLASS. CODES: 2200 (CN=Managerial skills); 9540 (CN=Nonprofit institutions) Y020015 6 85034079 Preparing Financial Reports for Directors Anderson, Charles A.; Anthony, Robert N. Jrnl of Accountancy v160n4 PP: 153-159 Oct 1985 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM Financial reports prepared for directors should differ from those prepared for shareholders and managers because the information needs of directors are different. Directors need to evaluate company performance against plan, and their reports should: 1. be able to be quickly analyzed, 2. explain numbers, and 3. be frank. These needs can be met by reports that include the following elements: 1. breakdown of the organization into reporting units, 2. actual numbers compared with budgeted performance, 3. estimates for the whole year, 4. prior-year amounts if budget amounts are subject to uncertainty, 5. a focus on key income statement items, 6. all items that affect net income, 7. nonaccounting numbers only, 8. key balance sheet numbers, 9. breakdown of marketing variance into sales volume and marketing variances, 10. variances in discretionary cost items, 11. timely information, 12. no unnecessary written explanations, 13. concise unit reports, and 14. consistent format and content for unit reports. Charts. Desc.: Boards of directors; Financial reporting; Factors; Specifications; Requirements CLASS. CODES: 2110 (CN=Boards of directors); 4120 (CN=Accounting policies & procedures) Y020015 7 85033484 Trends in the Disclosure of Extraordinary Items and Cumulative Effects Herring, Hartwell C., III; Jacobs, Fred A. Ohio CPA Jrnl v44n3 PP: 11-14 Summer 1985 CODEN: OCPAA7 ISSN: 0030-0837 JRNL CODE: OCP DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM Determining where those reasonably rare cases of unusual gain or loss should be disclosed as an extraordinary item can be a complex process. The practitioner must be particularly alert not only to their occurrence, but also to the special presentation disclosure needed. Data studied in this area indicate a number of trends, including: 1. the marked increase in the number of debt extinguishing transactions, and 2. the disclosure of litigation settlement losses. The key to classification of these items is that they must meet the dual criteria in Accounting Principles Bulletin 30: 1. The item possesses a high degree of abnormality. 2. The item is of the type that would not normally be expected to occur. The cumulative effects of an accounting change and debt extinguishment transactions are clearly discretionary in nature. The frequency of those events, their noncash nature, and their almost universally favorable effect on net income have led to criticisms. For example, the noncash nature of these discriminatory transactions demand that they be reported in footnotes and that accounting changes be acceptable from a quality-of-earnings standpoint. Tables. References. Desc.: Financial reporting; Disclosure; Extraordinary items; Trends ; Cumulative; Effects; Studies CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 8 85031860 Financial Statements Help Promote Efficiency and Effectiveness in Government Sato, Frank S. Government Accountants Jrnl v34n2 PP: 41-42 Summer 1985 ISSN: 0014-9004 JRNL CODE: GAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: Assn. of Government Accountants, 727 S. 23rd St., Arlington, VA 22202 Financial statements are meant to provide information to users in making decisions about the allocation of resources and in assessing the effectiveness of implementing management decisions. Conceptual arguments against the use of financial statements for evaluating management performance within the government narrowly interpret the purpose of those statements. In government, financial statements have greater importance than in the private sector because of the number and variety of financial users. The information needs of these users include: 1. Under the goal of facilitating resource allocation decisions, interests turn on organizational and period allocations. 2. Under the goal of enabling an assessment of management's efficiency and effectiveness in resource allocation, information needs turn on appropriate use of resources. Also of interest is the level of information reporting within and between organizational lines and performance periods. The new General Accounting Office's Title 2 requirements for annual financial statements reflect the need for full disclosure through financial statements to enhance the effectiveness of agencies' operations. Desc.: Governmental accounting; Financial statements; Efficiency; Effectiveness; Government agencies CLASS. CODES: 9550 (CN=Public sector); 4120 (CN=Accounting policies & procedures) Y020015 9 85031859 Implementing Title 2 at the Department of Housing and Urban Development Sholedice, Thomas D. Government Accountants Jrnl v34n2 PP: 37-40 Summer 1985 ISSN: 0014-9004 JRNL CODE: GAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: Assn. of Government Accountants, 727 S. 23rd St., Arlington, VA 22202 As basic improvements to meet the needs of operational management have been accomplished over the years at the Department of Housing and Urban Development (HUD), the agency has begun an effort to improve its external financial reporting. The General Accounting Office's newly revised Title 2 provides a new challenge in this area. In addition, new directions for the agency financial management system have come from the Office of Management and Budget in the form of Circular A-127. Implementation by HUD of Title 2 and A-127 will be difficult, however, as questions remain concerning: 1. which entities should produce financial statements, 2. which principles the entities should follow, 3. what format the statements will take, and 4. which systems will be integrated to produce the financial information and how the systems will generate the required information. HUD's plans in each of these areas are reviewed. The system issues are most complex; HUD is reviewing the nature of its systems and their interrelationships so as to define the financial management system in accordance with A-127. Charts. Desc.: HUD; Case studies; Government agencies; Governmental accounting; Financial management; Financial reporting; Compliance; Requirements; Implementations; Financial statements CLASS. CODES: 9110 (CN=Company specific); 4120 (CN=Accounting policies & procedures); 9550 (CN=Public sector) Y020015 10 85031426 Contingencies and Unasserted Claims: Adequate Answers? Austin, Kenneth R.; Strawser, Robert; Mixon, Henry CPA Jrnl v55n9 PP: 48-58 Sep 1985 CODEN: CPAABS ISSN: 0732-8435 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM Attorneys are required to inform auditors of any possible impact of loss contingencies on the client's financial statements. If the attorneys fail to do so or the client fails to supply the attorneys with the proper information, the auditors may have to qualify their report. During an audit, a search for existing and potential claims is necessary to determine management's compliance with generally accepted accounting principles. Statement of Financial Accounting Standards (SFAS) 5 sets forth the financial reporting treatment of contingencies, whose distinction as ''probable'' or ''reasonably possible'' depends upon the auditor's judgment. Attorneys must act in a manner consistent with SFAS 5. In some cases, the courts have defined the auditor's responsibilities. In expressing an opinion, auditors should consider contingencies in terms of: 1. materiality and probability of occurrence, and 2. effect on the company's going concern. Probable or reasonably possible loss contingencies that could affect the going concern should receive a qualified opinion. Tables. Diagrams. References. Desc.: Contingencies; Unasserted claims; Accountants reports; Auditors opinions; Financial reporting; Requirements; Disclosure; Financial statements; GAAP CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 11 85030258 Letters for Underwriters Finan, Mary A. Corporate Accounting v3n3 PP: 71-73 Summer 1985 JRNL CODE: CAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM As a result of the Securities & Exchange Commission's (SEC) changes in disclosures and reporting forms for companies that will be going public, Statement of Auditing Standards (SAS) 49 was issued to deal with comfort letters. Comfort letters are those letters requested by underwriters to aid them in performing a due diligence review of the company that will be issuing securities. Some important changes are included in SAS 49. For shelf registration statements before an underwriter is selected, the accountant can issue a ''draft'' comfort letter to describe the accountant's procedures and list comments. For SEC Regulation S-X, which standardized pro forma information, the accountant should supply only negative assurance. Also included is a format for commenting on pro forma financial information. In addition, the accountant may comment on the form of interim or pro forma statements but may not comment on the compliance of information that is not a part of SEC financial statement requirements. Finally, SAS 49 endorses the use of summarized procedures and findings to reduce the length of comfort letters. Desc.: Stock offerings; Going public; Underwriting; Comfort letters ; Auditors opinions; Shelf registration (FIN); SEC registration; SECSX; Pro forma financial statements CLASS. CODES: 2310 (CN=Planning); 4310 (CN=Regulation); 4120 (CN=Accounting policies & procedures) Y020015 12 85030250 GAAP and the Privately Held Company Derieux, Samuel A. Corporate Accounting v3n3 PP: 29-33 Summer 1985 JRNL CODE: CAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM Financial statements of privately held companies are not required to conform to generally accepted accounting principles (GAAP); however, those companies that may go public or need outside credit should use GAAP. It is believed that the costs of compliance with GAAP exceed the benefits for small private companies. These companies may use income tax accounting as a basis for financial reporting, provided it is made clear that the report does not conform to GAAP. For privately held regulated industries, the regulatory basis of accounting may be used for all financial reporting purposes. Certain disclosure requirements of the Financial Accounting Standards Board do not apply to private companies, but measurement standards cause the greatest burden to these companies. The American Institute of Certified Public Accountants has recommended that GAAP provide 2 alternative methods for certain transactions that small companies encounter. Others have suggested the development of a new ''other comprehensive basis of accounting, '' which would be the same as GAAP except for a smaller number of issues. Desc.: Closely held corporations; GAAP; Compliance; Financial accounting standards; Financial statements; Financial reporting; Disclosure ; Regulations; FASB CLASS. CODES: 9520 (CN=Small business); 4120 (CN=Accounting policies & procedures) Y020015 13 85029175 How to Communicate Rock, Stephen Management Today (UK) PP: 80-82 Jul 1985 CODEN: MANTAI ISSN: 0025-1925 JRNL CODE: MTO DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM In 1983, the West Yorkshire Passenger Transport Executive addressed the fact that its workforce was not sufficiently meeting customer service needs and that trade union representatives had established themselves as the primary channel for communicating with the workforce. In order to boost employee morale and to reestablish supervision's position in the organization, the bus company adopted a new communications policy. Its cornerstone was an adaptation of the briefing group concept of the Industrial Society, which would allow managers and supervisors to communicate regularly with their staff on topics of interest. Despite union opposition, the briefing plan has been implemented together with a relaunching of the house Jrnl and publication of an annual report for employees. A monthly management bulletin is also planned. Despite some problems with briefing attendance and format, inspector morale has improved significantly. This project is a pioneering effort in the UK's public sector. Desc.: Transportation industry; Case studies; UK; Internal public relations; Communication; Employee relations programs; Employee morale; Employee attitude (PER) CLASS. CODES: 9550 (CN=Public sector); 8350 (CN=Transportation industry); 2400 (CN=Public relations) Y020015 14 85028611 Disclosure Practices in Offerings of Tax-Exempt Obligations: A Survey of Concerns Petersen, John E. Government Finance Review v1n3 PP: 15-19 Aug 1985 ISSN: 0091-4835 JRNL CODE: GOF DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM The Steering Committee on Municipal Disclosure was established in March 1984 to review current disclosure practices for offerings of state and local government obligations. The committee undertook a survey of those active in the field of municipal securities. Survey respondents were asked to rank 22 topical areas in order of importance, and additional comments and suggestions were solicited. Security enhancement devices were seen as the most important area, followed by financial reporting and accounting standards. Other areas that received high scores for importance were zero-coupon bonds, revenue bonds, put bonds, project-related information, and other financial information. Many respondents felt existing requirements were sufficient and that better observance of these requirements would eliminate most problems. Tables. References. Desc.: Disclosure; Municipal bonds; Surveys; Tax exempt securities Offerings; Issue; State government; Local government; Fair presentation (ACC) CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9550 (CN=Public sector) Y020015 15 85027526 Pension Accounting: A New Proposal Brownlee, E. Richard, II; Young, S. David CPA Jrnl v55n7 PP: 28-34 Jul 1985 CODEN: CPAABS ISSN: 0732-8435 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM The key accounting issues in dealing with pensions have remained largely unchanged and unresolved over the nearly 40 years during which an acceptable solution to the presentation of this information has been sought. The Financial Accounting Standards Board (FASB) made this issue an agenda item in 1974, but its conclusions, presented in 1982, were received negatively. The FASB continued work in the area and in 1985 released an Exposure Draft (ED) that significantly reduced the balance sheet effects from those proposed in 1974. The proposal for recognizing an intangible asset as the offset to its new pension liability was retained, but the ED mandates that the intangible asset cannot exceed the amount of unrecognized prior service cost. The most significant changes to current practices would affect the accounting for single-employer defined benefit pension plans. There will likely be major controversies over: 1. the decision to use different approaches for balance sheet and income statement purposes, 2. the width of the ''corridor'' for recognizing actuarial gains and losses, and 3. a proposed amendment to Accounting Principles Board Opinion 16. Chart. Desc.: Pension plans; Accounting procedures; Proposals; Accounting standards; Financial reporting; FASB exposure drafts; FASB statements; Disclosure CLASS. CODES: 3600 (CN=Pension fund management); 4120 (CN=Accounting policies & procedures) Y020015 16 85020290 The Internal Auditor's Interest In and Responsibility Regarding Summary Financial Statements Wesberry, James P., Jr. Government Accountants Jrnl v34n1 PP: 61-63 Spring 1985 ISSN: 0014-9004 JRNL CODE: GAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: Assn. of Government Accountants, 727 S. 23rd St., Arlington, VA 22202 In the public sector, regardless of whether an independent audit is conducted, internal auditors traditionally have not been expected to review or comment on the adequacy of annual summary financial statements. Internal auditors' interest in and responsibility for summary financial statements in the federal government is delineated by legislation, regulations, and auditing standards. Federal internal auditors need the overview provided by the summary financial statements to properly plan the scope and coverage of an agency's work. Furthermore, they have a vested interest in the disciplined environment that is forced upon the entire agency when timely reports are required. Internal auditors in the future should report the failure of any agency management to adhere to the practice of providing full disclosure to achieve accountability. These auditors must review the reliability and integrity of all data compiled for the statements, and are responsible for reporting the failure of the agency to comply with federal requirements mandating the issuance of summary financial statements. References. Desc.: Governmental accounting; Summary; Financial statements; Internal auditing; Client relationships; Responsibilities; Financial reporting CLASS. CODES: 9550 (CN=Public sector); 4120 (CN=Accounting policies & procedures); 4130 (CN=Auditing) Y020015 17 85020287 The 1984 Title 2 - How Different Is It from Its Predecessor and Current Practice? Michelson, Bruce; Pauley, Barbara Government Accountants Jrnl v34n1 PP: 40-50 Spring 1985 ISSN: 0014-9004 JRNL CODE: GAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 11 Pages AVAIL.: Assn. of Government Accountants, 727 S. 23rd St., Arlington, VA 22202 The revised Title 2, Accounting Principles and Standards, of the General Accounting Office's (GAO) Policies and Procedures Manual for Guidance of Federal Agencies, was issued in the autumn of 1984 after considerable due process and nearly 2 years of work by the GAO. Although the revised Title 2 appears to be very different from its predecessor (the 1978 version), the new requirements are not much different from those of the 1978 version and current practice. The revised version reflects 4 kinds of changes: 1. format, 2. focus on requirement for year-end reporting, 3. new subjects covered, and 4. changes to 1978 requirements. The 1978 version presented all kinds of standards in one main text, whereas the 1984 revision presents different types of standards in 3 appendices. The year-end reporting similar to that required in the 1984 version is currently, and has been, required by OMB and the Treasury. Many of the new subjects have been extensively covered by the accounting profession since 1978 or have been the source of many questions received by the GAO since that time. Some changes have been made to reflect current accounting practices and current research and GAO thinking. Tables. Desc.: Federal; Government; Governmental accounting; Accounting procedures; Financial reporting; Requirements; GAO-US CLASS. CODES: 9550 (CN=Public sector); 4120 (CN=Accounting policies & procedures) Y020015 18 85020285 Consolidated Financial Reporting: The GSA Experience Eisenhart, Larry Government Accountants Jrnl v34n1 PP: 28-36 Spring 1985 ISSN: 0014-9004 JRNL CODE: GAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 9 Pages AVAIL.: Assn. of Government Accountants, 727 S. 23rd St., Arlington, VA 22202 The National Electronic Accounting and Reporting System (NEAR) is the General Services Administration's (GSA) umbrella accounting system. With its versatility, it provides for: 1. labor distribution, 2. cost accounting for buildings and construction projects, 3. standard appropriation accounting, and 4. various other procedures. The system is modular with a common general ledger. The NEAR system arose from the need to develop a mechanism that could focus more attention on financial management of GSA as an operating entity and effectively communicate with a wide variety of interested parties about GSA's activities. The GSA made its first effort to address financial reporting problems in 1980. The agency's Operating Summary: 1983, which included the 1983 Consolidated Financial Statements, represented the first published presentation of GSA's activities in a format similar to a private firm's annual report. The 1984 statements are basically the same as those of 1983, except for improvements made to comply with the requirements of the new Title 2. Supplemental schedules have been added to present the 3 main statements in formats by fund type. Tables. Charts. Desc.: Federal; Government; Governmental accounting; Consolidated financial statements; Case studies; Government agencies; GSA; Accounting policies; Financial reporting CLASS. CODES: 9550 (CN=Public sector); 9110 (CN=Company specific 4120 (CN=Accounting policies & procedures) Y020015 19 85017359 Reports Can Be Boon for Risk Managers Kastiel, Diane Lynn Business Insurance v19n17 PP: 18 Apr 29, 1985 ISSN: 0007-6864 JRNL CODE: BIN DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 1 Pages AVAIL.: ABI/INFORM While the risk management report increases the visibility of the risk manager, leaving him open to criticism, the potential value of such a report outweighs the risk. It can demonstrate that the risk manager does more than buy insurance. Suggestions for preparing an effective report are: 1. Gear the format to senior management. 2. Keep the report simple. 3. Introduce and summarize the report with a clear, precise statement. 4. Omit details from the body of the report by appending them. 5. Keep graphics simple and easy to understand. 6. Make a brief oral presentation of the report. 7. Highlight failures as well as successes. 8. Include a section on ongoing activities. 9. Relate all activities to the objectives of the risk management department. 10. Be straightforward and avoid jargon. 11. Present the report to the highest management level possible, making it available to other levels as well. Desc.: Risk management; Annual reports; Writing; Management reports CLASS. CODES: 3300 (CN=Risk management); 2200 (CN=Managerial skills) Y020015 20 85012999 Auditing Corporate Management Siegel, Joel G.; Milich, Marvin F. Managerial Planning v33n5 PP: 8-10 Mar/Apr 1985 CODEN: MNPLBS ISSN: 0025-1941 JRNL CODE: MPL DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM Management (operational) auditing has become an issue recently. Although management audits do not conform to the conventional definitions of an audit, the US General Accounting Office description suggests that they do conform. The chief goal of an operational audit is to assess the effectiveness of managerial decisions. Four areas have been identified as essential to the development of a framework for the management audit: 1. establishment of criteria, 2. development of standards of managerial performance, 3. establishment of a method of reporting giving the auditor a structured means of disclosure, and 4. development of auditing procedures and standards of documentation supporting the issued report. As a result of the problems these areas cause, there still is no cohesive statement of reporting on operational audits. The restraints of an operational audit are time, knowledge, and cost. The management audit, when prepared by well-trained public accountants, can result in major cost savings as well as qualitative improvements. Moreover, the presentation of information about the audit to financial statement users will facilitate investment and credit decision making. References. Desc.: Management audits; Operation audits; Objectives; Procedures Auditors CLASS. CODES: 4130 (CN=Auditing); 2500 (CN=Organizational behavior) Y020015 21 85010313 Multinational Company Accounting Problems Dillon, Richard Management Accounting (UK) v63n2 PP: 39-40 Feb 1985 CODEN: MATGBA ISSN: 0025-1682 JRNL CODE: MAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM The complex financial control and reporting methods of multinational firms demand sophisticated computer support, but at a price which fits their tight budgets. International financial directors have a difficult problem in complying with exacting demands within a tight time and cost budget, while making sure that subsidiaries have the information necessary to manage local operations. Powerful microcomputers with advanced software are ideal for helping to solve these problems. Such advanced software is not readily available since most accounting packages are aimed at smaller companies. Finding software to handle more than one currency is an additional requirement, particularly if US multinationals are involved. The basic problem of the need to produce sophisticated reports quickly in more than one currency and in more than one format is examined. Special considerations include: 1. a flexible reporting structure, 2. language variation, and 3. the ease and speed with which users can operate the system. Desc.: Multinational corporations; Financial reporting; Problems; Foreign exchange translations; Accounting policies; Software packages; Automated accounting systems CLASS. CODES: 9510 (CN=Multinational corporations); 9180 (CN=International); 4120 (CN=Accounting policies & procedures); 5240 (CN=Software & systems) Y020015 22 85010036 The Ceiling Test for Oil and Gas Companies: Too Much Flexibility in Practice Lawrence, John E. CA Magazine (Canada) v118n2 PP: 40-45 Feb 1985 CODEN: CCHAA5 ISSN: 0317-6878 JRNL CODE: CCA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM Companies following the full cost method of accounting for exploration and production activities are reporting higher charges for write-downs of oil and gas properties because of Canadian government fiscal policies, the National Energy Program, and declining product prices. Canadian accounting practice has demonstrated great flexibility in the application of the ceiling test. The method of computing the ceiling amount in Canada is explored and the areas that cause difficulty are highlighted. They include: 1. the use of future or current prices, 2. the question of discounting, 3. income taxes, 4. purchased reserves, 5. land values, and 6. interest and general and administrative costs. A suggested format for calculating the ceiling test is outlined and the application of the test is discussed. Financial statements should disclose: 1. reserves used in the computation, 2. prices used in determining future cash flow, 3. the extent to which amounts have been discounted, and 4. income taxes included in the computation. Chart. Desc.: Oil; Gas; Companies; Accounting procedures; Cost accounting Reserves; Ceilings; Canada; Valuation; Disclosure; Financial statements CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9170 (CN=Non-US); 8510 (CN=Petroleum industry) Y020015 23 85009387 LIFO: What Should Be Disclosed? Bohan, Michael P.; Rubin, Steven Jrnl of Accountancy v159n2 PP: 72-77 Feb 1985 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM Although a substantial number of companies use the last in first out (LIFO) inventory method, authoritative literature provides almost no guidance on LIFO measurement or disclosure. More than 50 unresolved LIFO financial accounting and reporting issues have been identified. LIFO users have been guided by rules and requirements of government agencies, but they must also consider the Financial Accounting Standards Board (FASB) Statement Number 1. Disclosure of information relating to LIFO on financial statements is an unresolved issue. Those items that users should disclose include: 1. non-LIFO amount of LIFO inventories, 2. the extent of LIFO use, 3. effects of LIFO inventory liquidation on income, and 4. supplemental non-LIFO disclosures. Unnecessary disclosures include: 1. the basic LIFO approach used, 2. the approach used to price current increments, 3. the approach used in pooling arrangements, and 4. the approach used to price new items. Desc.: Inventory costing methods; LIFO; Disclosure; Financial reporting; Financial statements CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 24 85007551 Accounting and Financial Reporting for Nonprofit Organizations: An Overview McAdams, Robert M. Practical Accountant v18n1 PP: 29-42 Jan 1985 CODEN: PACNBD ISSN: 0032-6321 JRNL CODE: PRA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 11 Pages AVAIL.: ABI/INFORM Nonprofit organization (NPO) financial reporting is aimed at showing stewardship of funds rather than determining net profit. Important concepts applicable to NPO accounting include: 1. cash basis versus accrual basis, which involves consideration of accountability of funds and inflow and outflow of spendable resources, 2. fund accounting, which is organized to keep separate records of funds, 3. fixed asset accounting, in which many NPOs expense the costs of fixed assets in the year instead of capitalizing them, 4. fund transfers, which involve transfers between funds, 5. contributions, which can take such forms as restricted and unrestricted donations, grants, pledges, and noncash donations, and 6. functional reporting, which takes the traditional division of expenses and allocates them to the program and the management costs of the organization. Financial statements may be in columnar forms or in a layered format. Tables. References. Desc.: Nonprofit organizations; Financial reporting; Financial accounting standards; AICPA statements of position; FASB statements; Accrual basis accounting; Cash basis accounting; Fund accounting procedures (ACC); Fixed assets (ACC); Transfers; Donations; Balance sheets CLASS. CODES: 9540 (CN=Nonprofit institutions); 4120 (CN=Accounting policies & procedures) Y020015 25 85006290 New AICPA Chairman: Ray J. Groves Sees Opportunities in a ''Proud Profession in Transition'' Liebtag, Bill Jrnl of Accountancy v158n6 PP: 74-82 Dec 1984 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM Ray J. Groves, 1984-1985 chairman of the board of directors of the American Institute of Certified Public Accountants (AICPA), sees the accounting profession as one in transition. The keys to the future, says Groves, chairman of Ernst & Whinney, are commitments to be full participants in the free enterprise system, coupled with optimism, innovation, and quality in all the services. Acknowledging that there is diversity of viewpoints within the profession, he noted that this should not be allowed to keep accountants from pulling together toward common goals. At age 31, Groves was admitted to partnership at Ernst & Whinney, and at 42 he became chairman. Groves says the profession is aware of the need to further improve the effectiveness and efficiency of financial reporting. He suggests a study to develop a better format for communicating financial information to make it more effective in decision making and believes this may even effect standard setting. Desc.: AICPA; Directors; Personal; Profiles; Objectives; Self regulation CLASS. CODES: 2110 (CN=Boards of directors); 4110 (CN=Accounting firms & accountants); 9160 (CN=Biographical); 9540 (CN=Nonprofit institutions) Y020015 26 85006010 Personal Financial Statements - Suggestions for Improvement Bull, Ivan O. CPA Jrnl v54n12 PP: 38-45 Dec 1984 CODEN: CPAABS ISSN: 0732-8435 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM Guidelines included in the recently released Statement on Position (SOP) 82-1 of the American Institute of Certified Public Accountants significantly increase the usefulness of personal financial statements. The valuation model proposed by SOP 82-1 is supported and specific improvements suggested. The AICPA's new guidelines assume the basic purpose of personal financial statements to be for external use. Here, the primary user is assumed to be the subject person, and, based on that assumption, the content is enhanced to help the subject person make pertinent financial decisions, and at no loss of usefulness for outsiders. The suggested improvements are largely based on recommendations by Raymond J. Chambers, who advocated the use of exit values as the basic valuation model for external financial statements. Reasons for the superiority of exit values include: 1. They are pychologically satisfying to the subject person. 2. They present relevant information. 3. They can be prepared with acceptable reliability. Two further format changes to SOP 82-1 are outlined. References. Appendix. Desc.: Personal; Financial statements; AICPA statements of position ; Personal finance; Financial reporting; Changes; Suggestions CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9150 (CN=Guidelines) Y020015 27 85003170 Annual Report Credibility Anonymous Public Relations Jrnl v40n11 PP: 31-34 Nov 1984 CODEN: PREJAR ISSN: 0033-3670 JRNL CODE: PRJ DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM In a recent survey, 247 individual investors and 50 professional investors showed that investors often distrust annual reports. Of the individual investors, 32% do not trust what they read in annual reports and rate the reports low as a source of information for buying and selling stocks. In addition, 47.4% of the professional investors said they do not read, or only skim, annual reports. More than half of the individual investors found annual reports easy to read and understand. Professional investors thought the reports would be more useful if business was presented in a segment-by-segment format and if more information on management goals was provided. A study by the Graphic Arts Center shows that the average size of annual reports has risen to 40 pages plus covers. Annual reports and graphics in them are becoming more sophisticated as a result of advances in printing technology. Table. Graphs. Desc.: Annual reports; Credibility; Investors; Perceptions; Surveys ; Statistical data; Characteristics; Trends CLASS. CODES: 2400 (CN=Public relations); 9140 (CN=Statistical data) Y020015 28 85002801 Accounting for Certain Mortgage Banking Activities Kozub, Robert M.; Trebby, James P. Real Estate Review v14n3 PP: 105-110 Fall 1984 ISSN: 0034-0790 JRNL CODE RER DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM Statement of Financial Standards 65 sets the accounting and reporting standards for mortgage bank activities, including: 1. mortgage loans and mortgage-backed securities held for sale, 2. loan origination costs, 3. premiums paid for right to service loans, 4. loan origination fees, 5. loan commitment fees, 6. fees for services provided by others, 7. land acquisition, development, and construction loan fees, and 8. gap commitment fees. The statement also applies to mortgage banking operations of commercial banks and thrift institutions. When mortgage loans or mortgage-backed securities are acquired to be held for sale, purchase discounts should not be amortized as interest revenue. Those held for sale should be reported on the balance sheet by employing the lower of cost or market value method. If in the event of the sale of a loan, the agreed-upon servicing fee rate differs materially from the current servicing fee rate, the sales price of mortgage loans should be adjusted for purposes of determining gain or loss on the sale. The adjustment should provide for recognition of a normal servicing fee in subsequent years. In financial statement presentation, enterprises should distinguish between mortgage loans and mortgage-backed securities held for sale, and those held for investments. Desc.: Mortgage banks; FASB statements; Mortgages; Securities; Loans; Fees; Costs; Financial reporting; Disclosure; Financial accounting standards CLASS. CODES: 4120 (CN=Accounting policies & procedures); 8120 (CN=Retail banking) Y020015 29 85002139 Segmented Financial Data Can Improve Funds Flow Forecasts Ismail, Badr E.; Rue, Joseph C. Jrnl of Business Forecasting v3n3 PP: 11-13 Fall 1984 ISSN: 0278-6087 JRNL CODE: JBT DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM As businesses expand, the performance of several cash flow forecasting models worsens as the data are aggregated. Currently, each company can use its own definition of funds flow and there is no uniformity in the reporting formats used. The result is a jumble of data from which it is nearly impossible to predict a firm's ability to generate funds in the future on the basis of past performance. Much of the blame can be placed on the Financial Accounting Standards Board and the Securities & Exchange Commission. It is proposed that the reporting format for the changes-in-financial-position statement be altered to make it more useful. The statement should focus on the operating flow of the firm since the inclusion of nonoperating flows affects the quality of the forecast. Sources and uses should be divided into internal and external components. The usefulness of cash-flow segmented data in forecasting cash flows is demonstrated. Tables. References. Desc.: Funds statements; Forecasts; Improvements; Segmented; Financial reporting; Cash flow forecasting CLASS. CODES: 3100 (CN=Capital & debt management); 4120 (CN=Accounting policies & procedures) Y020015 30 84038043 Securities Alert: 'Cooked Books' Lancaster, Eliott Financial Planning v13n11 PP: 43-45 Nov 1984 JRNL CODE: FPN DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM The Securities & Exchange Commission (SEC) has brought an increasing number of accounting-related actions in recent years in an intensified campaign to eliminate what it calls ''cooked books.'' Increased emphasis on financial statements, in which many companies have been required to restate their earnings, has come about because financial statements have the greatest impact on the company, its stock and the judgments of investors, according to SEC enforcement director John M. Fedders. Financial Corp. of America's (FCA) stock declined 25% in August 1984 after SEC pressure on the firm to restate its earnings. FCA had to report a loss of $107.5 million, rather than a profit of $31.1 million for the first half of 1984. SEC auditors are examining the textual contents of annual reports, especially management discussion and analysis, along with financial statements. Misleading statements to investors are a primary target of the auditors. Desc.: SEC regulations; Financial statements; Financial reporting; Accounting policies; Disclosure CLASS. CODES: 4120 (CN=Accounting policies & procedures); 4310 (CN=Regulation) Y020015 31 84037852 Prospective Financial Statement Services Campbell, David R.; Campbell, Mary V. CPA Jrnl v54n11 PP: 54-64 Nov 1984 CODEN: CPAABS ISSN: 0732-8435 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM Practitioners who assist clients in the preparation of prospective information when applying for loans or when making general debt or equity offerings will be greatly affected by the American Institute of Certified Public Accountants' proposed guide and statement on auditing standard for prospective financial statements. The guide places prospective financial statements in 3 classifications: 1. financial forecast, 2. financial projection, and 3. multiple projection. Notes on presentation format and preparation guidelines contained in the guide are reviewed. The microcomputer is a likely aid in providing the client services in question, since software is now available to handle data storage, manipulation, and reporting in these situations. Spreadsheet packages can be used in preparing historic financial statements, forecasts, and projections. An example illustrates how to use a spreadsheet package to compile multiple projections. Tables. Desc.: AICPA; Proposed; Auditing standards; Prospective; Financial statements; CPAs; Impacts; Presentation; Accountants reports; Microcomputers; Applications; Financial statement forecasting CLASS. CODES: 4130 (CN=Auditing); 4120 (CN=Accounting policies & procedures) Y020015 32 84033603 Does Predictability Change When GAAP Change? Putnam, Karl; Thomas, Lynn Jrnl of Accounting, Auditing & Finance v8n1 PP: 15-23 Fall 1984 ISSN: 0148-558X JRNL CODE: JAA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 9 Pages AVAIL.: ABI/INFORM Attention is focused on the association of the effective dates of 2 accounting pronouncements - Accounting Principles Board (APB) Opinion 28 and Securities & Exchange Commission (SEC) Accounting Series Release (ASR) 177 - with changes in the predictive ability of an income statement data prediction model. Both pronouncements represent efforts to improve external quarterly financial reports. The present investigation involves: 1. identifying a reasonable prediction model, 2. using the model to generate predictions for 549 COMPUSTAT firms encompassing periods before and after APB 28 and ASR 177, and 3. analyzing the prediction errors to infer empirically whether APB 28 or ASR 177, or both, had an effect on the predictability of future financial data. In general, analysis suggests that APB 28 (issued May 1973) alone was unsuccessful with respect to improving the predictability of future quarterly financial statement data. After issuance of ASR 177 in September 1975, predictability apparently increased to its highest level; thus, APB 28 and ASR 177 operating in tandem seem to have been successful. Tables. Equations. References. Appendix. Desc.: Financial statements; Predictions; Models; Securities; Valuation; Accountants reports; Impacts; Financial reporting; Studies CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9130 (CN=Experimental/Theoretical) Y020015 33 84028707 Due Diligence: Prospective Financial Statements Rosenberg, David H.; Gilbreath, Laurel Wilks Financial Planning v13n8 PP: 119-122 Aug 1984 JRNL CODE: FPN DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM Since 1973, the Securities & Exchange Commission (SEC) has permitted companies to forecast profits in prospectuses and proxy materials. However, the SEC decided that a company using such projections should not be held liable if they do not turn out as predicted. Financial planners must use all information available to them, including filings with the SEC. Private placements, however, do not have to be registered with the SEC nor with state regulators in all cases. In such cases, financial planners carry even more responsibility to evaluate the offering. The American Institute of Certified Public Accountants (AICPA) recently circulated draft guidelines, Proposed Guide for Prospective Financial Statements, which offer certain basic provisions for an accountants' review. The review should include independent evaluation of: 1. preparation of the prospective financial statement, 2. support underlying the assumptions, and 3. presentation of the prospective financial statements for conformity with AICPA presentation guidelines. Desc.: Prospecti; Prospective; Financial statements; Financial statement forecasting; Projection; Stock offerings; SEC accounting policies CLASS. CODES: 3400 (CN=Investment analysis); 4120 (CN=Accounting policies & procedures) Y020015 34 84028693 Financial Reports for Employees Gourlay, Glen T. CA Magazine (Canada) v117n4 PP: 60-64 Apr 1984 CODEN: CCHAA5 ISSN: 0317-6878 JRNL CODE: CCA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM A recent survey of 45, 662 US and Canadian employees revealed that the employee financial report ranks in the middle with regard to where employees go for information on their companies. The employee report is generally a simplified version of the statutory financial statements. Its free-form design makes it an influential means of communicating with workers; however, there is concern that an oversimplified financial statement may lose its credibility by not adhering to format and content rules. If the report does not maintain some reasonable mixture of company and employee interests, it will be less effective. In this context, employees' possible areas of concern are: 1. job security, 2. chances for future pay increases, 3. prospects for promotion, and 4. changes in staffing levels. Certain items in a report, such as wage rates and comparisons of wages to those of competitors, can result in negative employee reactions. On the other hand, the pension fund is of great relevance to the employees and should be adequately covered in the report. Charts. Desc.: Employees; Annual reports; Communications; Objectives; Advantages; Organizational; Communication; Pension plans; Financial statements CLASS. CODES: 2400 (CN=Public relations) Y020015 35 84027810 Expansion of the Independent Accountant's Attestation Role to Pro Forma Information Serlin, Jerry E. Jrnl of Accounting, Auditing & Finance v7n4 PP: 374-382 Summer 1984 ISSN 0148-558X JRNL CODE: JAA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 9 Pages AVAIL.: ABI/INFORM Because of the dramatic effect that pro forma adjustments can have on an entity's financial statements, the pro forma presentation can be a highly significant piece of information. The Auditing Standards Board's proposed Statement on Auditing Standards (SAS) regarding the reporting of pro-forma financial information in Securities & Exchange Commission filings is examined. The proposed procedures require the accountant to: 1. Understand the transaction creating the pro forma presentation. 2. Be satisfied as to the reasonableness of the underlying assumptions. 3. Determine whether pro forma adjustments reflecting the effects of the transaction have been prepared using appropriate accounting principles. 4. Check the pro forma presentation for adequacy of disclosure and material correctness. 5. Obtain written representations from management. This proposed SAS is another example of the expansion of the accountant's attest role into new fields of information. Table. References. Desc.: AICPA; Auditors opinions; Financial statements; SEC filing requirements; Pro forma financial statements; Audit engagements CLASS. CODES: 4130 (CN=Auditing) Y020015 36 84027365 ''Going Concern'' Qualifications - Implications of SEC Policy Change Rader, M. Elizabeth CPA Jrnl v54n7 PP: 81-82 Jul 1984 CODEN: CPAABS ISSN: 0732-8435 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM The Securities & Exchange Commission (SEC) in Financial Reporting Release (FRR) 16 rescinded Accounting Series Release 115, which prohibited companies that accountants considered to have uncertain futures from offering securities. Now, if full disclosure is made of the firm's financial diffculties and plans for recovery, registrants will be able to sell securities despite a going concern qualification. Because the language of FRR 16 is subject to different interpretations in several areas, there has been considerable uncertainty about its real impact. The SEC staff seems to expect auditors to determine when liquidation-based statements are required and to prepare them even without some formal or informal plan of reorganization as a guide. This staff interpretation appears to go beyond Statement on Auditing Standards 34 which refers to liquidation basis statements only in the context of legal proceedings or a formal/informal plan of reorganization. Desc.: SEC accounting policies; Financial statements; Accountants reports; Going concerns; Disclosure; Client relationships; Auditors opinions; Auditing standards CLASS. CODES: 4130 (CN=Auditing) Y020015 37 84027353 Basics of On-Line Databases Anonymous Office Administration & Automation v45n8 PP: 57-59, 87 Aug 1984 CODEN: ADMAAF ISSN: 0745-4325 JRNL CODE: ADM DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM Increasing numbers of administrators are using online databases as tools to rapidly obtain the tremendous amounts of research often necessary for effective management decision making. In an interview, Thomas J. Niehaus, general manager of DunsPlus (Wilton, Connecticut), discussed the advantages, types, and costs of databases. The selection of the database should be based on the kind of information needed and the format used. Reference databases may be referral or bibliographic; source databases can be full-text, numerical, or textual-numeric. The largest reference business database is ABI/INFORM, which can provide information in a broad range of business-related areas, including finance, economics, technology, human resources, and data processing. Disclosure II, is a numeric source database with financial and statistical information on publicly-owned businesses. Dialog, CompuServe, and The Source are among the vendors offering access to databases. Niehaus stressed that beginning users can save money and make the best use of databases by selecting a helpful vendor, such as DunsPlus. Desc.: Online (DP); Data bases; Information; Industry; Costs CLASS. CODES: 5200 (CN=Communications & information management) Y020015 38 84027334 Dow Jones Utility Puts Stock in Your Spreadsheet Bryan, Shawn W. Business Computer Systems v3n7 PP: 128, 131 Jul 1984 ISSN: 0745-0745 JRNL CODE: BCS DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM The Dow Jones Spreadsheet Link tracks Dow Jones stock market information and eliminates all typing required to transfer it to the user's spreadsheet. The utility reads stock symbols from the spreadsheet and arranges them in a downloading protocol. The program then calls Dow Jones, extracts selective data, and drops it into the proper spreadsheet format. In addition to current Dow Jones stock quotations, the Link handles: 1. requests for historical quotes, 2. information on the disclosure abstracts available on Dow Jones, and 3. analytical and historical data from Media General Financial Services. The last cited capability is not accomplished as easily as the rest, and the information cannot be saved on disk for later review. Overall, the Link is a real money and time saving program. The price is $249. Desc.: Dow Jones-New York; Software packages; Data bases CLASS. CODES: 5240 (CN=Software & systems); 9120 (CN=Product specific) Y020015 39 84026541 The Annual Report: A Multipurpose Communication Tool Anonymous Small Business Report v9n7 PP: 27-30 Jul 1984 JRNL CODE: SBR DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM The annual report, in addition to providing financial information to shareholders, can serve as: 1. a sales tool, 2. a recruitment aid, 3. a public relations vehicle, and 4. an employee communications device. Smaller, private firms can use the annual report as an effective communication tool to: 1. disclose company financial data, 2. merchandise company products/services, 3. communicate management philosophy, and 4. promote management's social commitment. The primary purpose of an annual report is to explain and interpret the data included in a manner readers will understand. A format guideline is detailed giving suggestions for the following: 1. cover, 2. introduction, 3. shareholder letter, 4. body of the report, and 5. special sections. A strong, capable manager with direct access to the chief executive officer and other top managers should have complete responsibility. After the design concept is chosen, cost-control factors should be considered. Charts. Desc.: Annual reports; Shareholder relations; Communication; Cost control; Small business CLASS. CODES: 9520 (CN=Small business); 2400 (CN=Public relations) Y020015 40 84026478 Segment Earnings Disclosure and the Ability of Security Analysts to Forecast Earnings Per Share Baldwin, Bruce A. Accounting Review v59n3 PP: 376-389 Jul 1984 CODEN: ACRVAS ISSN: 0001-4826 JRNL CODE: ACR DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 14 Pages AVAIL.: ABI/INFORM Prior research has shown that time-series models were able to make better predictions of prospective earnings by utilizing segmented data. Those results suggest that humans may be able to utilize segmented data to improve their forecasts. In this study, analyst forecast accuracy was evaluated before and after the 1971 implementation of the SEC's line-of-business disclosure requirements. Three sample groups of companies were studied: multisegment firms that first reported segment earnings in 1971, multisegment firms that had voluntarily disclosed segment earnings data prior to 1971, and a group of single-segment firms that continued to report only on a consolidated basis. While it was found that both the mean and variance of forecast error decreased for all 3 groups, the most significant change was for multisegment firms without prior segment disclosures. Equations. Tables. Graphs. References. Desc.: Disclosure; Financial reporting; Earnings; Financial statement forecasting; Accuracy; Statistical analysis; Lines of business reporting CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9130 (CN=Experimental/Theoretical) Y020015 41 84022992 Financial Statement Disclosure for Nonpublic Clients: A Basic Review Hubbard, Thomas D.; Balke, Thomas E. Practical Accountant v17n7 PP: 48-59 Jun 1984 CODEN: PACNBD ISSN: 0032-6321 JRNL CODE: PRA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 10 Pages AVAIL.: ABI/INFORM Generally accepted accounting principles require that not only general disclosures be made but also that disclosures be made of information which, if omitted, would make the financial statements misleading. While the latter disclosures may be extremely important in evaluating a firm, they impose a burden on nonpublic firms. Common disclosure requirements cover: 1. accounting policy, 2. accounting changes, 3. income taxes, 4. leases, 5. pension plans, and 6. related-party transactions. Other disclosures are required on the statement of changes in financial position, the balance sheet, and the income statement. Using disclosure checklists helps to ensure appropriate disclosures in the financial statements and accompanying notes. Sources for these checklists include: 1. the American Institute of Certified Public Accountants (AICPA), 2. various state certified public accountant societies, and 3. commercial publishers. Charts. References. Desc.: Financial statements; Financial reporting; Disclosure; GAAP Requirements; Accounting changes; Accounting policies; Closely held corporations; Corporate income tax; Pension plans; Balance sheets; Income statements; Funds statements CLASS. CODES: 4120 (CN=Accounting policies & procedures); 4210 (CN=Institutional taxation); 9520 (CN=Small business) Y020015 42 84020246 A Review of Staff Accounting Bulletins 50 to 54 Finan, Mary A. Corporate Accounting v2n2 PP: 68-71 Spring 1984 JRNL CODE: CAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM Since 1975, the Securities & Exchange Commission (SEC) has issued staff accounting bulletins (SAB) describing SEC staff interpretations of federal securities laws in the examination of financial statements and disclosure adequacy. Five recently issued SABs are discussed: 1. SAB 50, March 1983, describing when financial statements and disclosures are required in the formation of bank holding companies, 2. SAB 51, March 1983, detailing consolidation accounting guidelines for parent and subsidiary firms when the parent's ownership percentage in the subsidiary changes as a result of subsidiary stock issuance to external parties, 3. SAB 52, May 1983, giving SEC views regarding accounting for gains from pension plan termination, 4. SAB 53, June 1983, detailing reporting and disclosure guidelines for when a parent guarantees the issuance of debt to a subsidiary, and 5. SAB 54, November 1983, describing SEC reporting requirements for a newly acquired firm using push-down accounting. Charts. Desc.: SEC accounting policies; Disclosure; Financial reporting; Acquisitions & mergers; Consolidated financial statements; SECSX; Overfunded pension plans; SEC filing requirements CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 43 84020243 SFAS No. 52 and the Funds Statement Choi, Frederick D. S.; Sondhi, Ashwinpaul Corporate Accounting v2n2 PP: 46-56 Spring 1984 JRNL CODE: CAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 11 Pages AVAIL.: ABI/INFORM In adopting Statement of Financial Accounting Standard (SFAS) 52, the Financial Accounting Standards Board established the validity of a local company perspective in the statement of foreign currency translations. Prior to SFAS 52, the operations of foreign subsidiaries were considered to be extensions of the domestic parent's operations, with the US dollar recognized as the functional currency for foreign operations. Under SFAS 52, consolidated funds statements reflect changes in financial position as measured in the currencies of the countries in which each subsidiary operates. However, examples using a hypothetical firm reveal that the provisions of SFAS 52 may generate misleading information as a result of exchange rate fluctuations and inflation. While a company may appear profitable in terms of local currency, it may actually have an unfavorable cash-flow position in terms of US dollars. A funds statement format is proposed for distinguishing the results of operational decisions from those of exchange rate changes. Tables. Charts. References. Desc.: FASB statements; Funds statements; Foreign exchange translations; Financial reporting; Financial statements; Annual reports; Consolidated financial statements; Foreign subsidiaries; Foreign exchange rates; Effects CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9510 (CN=Multinational corporations); 3500 (CN=Foreign exchange administration) Y020015 44 84020084 General-Ledger Package Keeps the Books Straight Anonymous ComputerData (Canada) v9n5 PP: 23 May 1984 ISSN: 0025-9535 JRNL CODE: CPD DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 1 Pages AVAIL.: ABI/INFORM Inglis Ltd. (Mississauga, Ontario) is a manufacturer of major home appliances. With 4 production plants, Inglis has a high-intensity accounting environment that requires a large database and a good software system. For 10 years, Inglis has used Software International's General Ledger (G/L) and Financial Reporting System. Inglis' G/L package produces hundreds of reports every month. In addition, it permits the formatting and development of simple and complex working papers that require much number-crunching. Last year, Inglis added online interactive capability, but its use is proceeding carefully. The G/L system allows users to control what is printed on reports. Normally, the staff can line-code and specify format on forms one day and receive a sample of the new report the next day. Desc.: Canada; Case studies; Automated accounting systems; Software packages; Applications CLASS. CODES: 9110 (CN=Company specific); 9170 (CN=Non-US); 4120 (CN=Accounting policies & procedures); 5240 (CN=Software & systems) Y020015 45 84019053 Fifty Years of Securities Regulation in Search of a Purpose Kripke, Homer San Diego Law Review v21n2 PP: 257-294 Mar 1984 ISSN: 0036-4037 JRNL CODE: SDL DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 38 Pages AVAIL.: San Diego Law Review Assn., Univ. of San Diego, San Diego, CA 92110 The Securities & Exchange Commission (SEC) has had the duty of regulating disclosure for more than 50 years. An examination is undertaken of the SEC's purposes in developing disclosure requirements since 1933, its disciplinary measures for violations, and its recent proposals to prohibit insider trading on private information. Even though the SEC went beyond its proper authority in the area of disciplinary measures in the 1970s, much of the overextending has subsided. Proposed legislation is still too vague to meet the legitimate requirements of the business community. New challenges associated with today's legislative and nonlegislative restructuring of the financial community will take all of the strengths of that community, the Bar, the courts, and the SEC. References. Desc.: SEC regulations; SEC; Disclosure; Financial statements; SEC accounting policies; SEC filing requirements; SEC 34; Securities trading; Insider trading CLASS. CODES: 3400 (CN=Investment analysis); 4310 (CN=Regulation 4120 (CN=Accounting policies & procedures) Y020015 46 84014713 Proposed: A New Statement of Changes Bryant, Julie V. Management Accounting v65n10 PP: 49-52 Apr 1984 CODEN: MGACBD ISSN: 0025-1690 JRNL CODE: NAA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM The Statement of Changes in Financial Position (SCFP) was first required by Accounting Principles Board (APB) Statement 19 in 1971. Financial analysts have gradually been losing confidence in the SCFP. A statement format was not defined by APB 19, so there are now 3 formats in use - cash, working capital, and all-inclusive. The failure of the SCFP of W. T. Grant & Co. to demonstrate the company's inability to generate cash is one example of the uselessness of the SCFP. The working capital shown in the SCFP for W. T. Grant had shown stability, while the company was a net user of cash. The presentation of working capital information under APB 19 can be confusing because it incorporates additional information. An expanded format for the SCFP has been proposed. The present statement can be expanded to include both cash flow and working capital information. The proposed format provides information based on all 3 possible formats and also provides comprehensive and integrated reports on all changes in financial position. Chart. Tables. Reference. Desc.: Funds statements; Cash flow; Working capital; Information; Financial reporting; Presentation CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 47 84010323 Software Plots Airline's Finances Anonymous Canadian Datasystems (Canada) 16n2 PP: 63 Feb 1984 ISSN: 0008-3364 JRNL CODE: CAD DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 1 Pages AVAIL.: ABI/INFORM Financial planning and analysis is important for Air Canada for both present operations and future growth. Air Canada now has a financial reporting system using the G/L Plus general ledger financial analysis system from McCormack & Dodge. In addition, several large software subsystems developed in-house also run on the Honeywell DPS 8 or on an IBM 4341. Since the airline already had automated processing systems, it did not want to adapt its automated Jrnls to the McCormack & Dodge format; rather, it used G/L Plus to interface the various systems and subsystems. The airline uses G/L Plus to capture key information needed for profitability reporting. G/L Plus is also used for comprehensive financial reporting distributed to 27 operating locations and for other financial functions, such as financial statement production. A 4-host concept with more IBM-type mainframes is planned. Desc.: Airline industry; Case studies; Software; Financial planning ; Financial reporting; Canada CLASS. CODES: 9170 (CN=Non-US); 9110 (CN=Company specific); 3100 (CN=Capital & debt management); 5240 (CN=Software & systems) Y020015 48 84009720 Cash Flow: Why It Should Be Stressed in Financial Reporting Golub, Steven J.; Huffman, Harry D. Financial Executive v52n2 PP: 34-40 Feb 1984 CODEN: FIEXAW ISSN: 0015-1998 JRNL CODE: FEX DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 7 Pages AVAIL.: ABI/INFORM The Accounting Principles Board's Opinion 19, Reporting Changes in Financial Position requires that companies presenting financial statements must also present funds statements of financing and investment activities. Traditional funds statements focus on a company's working capital, but flows of working capital may not be indicative of cash flow. Both the Financial Accounting Standards Board (FASB) and the Financial Executives Institute (FEI) have encouraged the use of the cash flow format for a funds statement, which offers a presentation of cash from operations, focuses on cash and cash equivalents, and segregates the firm's activities into the main sources and uses of funds. Cash flow and earnings are relevant in assessing future cash flow. Funds reported in a funds statement should be based on cash and cash equivalents. The net-change-in-funds is a useful format for presenting a cash-flow oriented funds statement. The format may be based on either sources and uses of funds, or on the classification of funds. The changes in financial position on a cash flow funds statement include cash transactions, noncash transactions, and accrual-basis entries. Tables. Desc.: Cash flow; Financial reporting; Funds statements; Financial management; Earnings; APB; Accounting policies CLASS. CODES: 3100 (CN=Capital & debt management) Y020015 49 84009645 Loan Evaluations Under Accounting Disclosure Alternatives Reeve, James M. Jrnl of Bank Research v14n3 PP: 234-236 Autumn 1983 ISSN: 0021-9215 JRNL CODE: JBR DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM Commercial loan officers must generate loan business and screen unwanted business. In screening business, the officer relies on the character, liquidity, and solvency of the loan applicant. Examined is the information processing ability of loan officers with respect to a loan evaluation task. The study is based on the responses of 28 commercial loan officers in 4 major US commercial banks. Each loan officer was asked to evaluate financial statements that were identical except for the disclosure format of a project financing agreement. In one statement, the project financing arrangement was disclosed as a footnote liability; in the other, it was in the body of the financial statement. This difference in disclosure format had an effect on the officers' assumptions on probability of default and on which loan they would prefer to select. Tables. References. Desc.: Commercial banks; Loan approval procedures; Bank officers; Performance evaluation; Studies; Commercial credit CLASS. CODES: 8110 (CN=Commercial banking) Y020015 50 84009063 Settling Accounts Monk, J. Thomas; Landis, Kenneth M. Business Computer Systems v3n2 PP: 17-21 Feb 1984 ISSN: 0745-0745 JRNL CODE: BCS DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM In its first 6 years of operation, Wyn-Tec, a chemical products distributor, grew into a holding company consisting of 6 diverse operating units. Each month figures from each unit had to be assimilated and translated into a format that would permit management to monitor the business' current and future health. As a result, more than 11 days each month were spent performing this task. The staff was consistently behind schedule. To solve the problem, Wyn-Tec purchased an Apple IIe computer with a dot-matrix printer and 2 disk drives. A software package called Quickfile was implemented. Within 3 months of the system's installation, the translation process was taking less than 4 days per month, and the staff was ahead of schedule in other areas. Within 6 months of the system's installation, Wyn-Tec had both reduced bad-debt losses by $8, 000 and decreased the amount of time spent creating management information without adding employees. Desc.: Case studies; Chemical industry; Automated accounting systems; Financial statements; Financial reporting; Microcomputers; Applications; Computer based; Credit management CLASS. CODES: 9110 (CN=Company specific); 8640 (CN=Chemical industry); 5240 (CN=Software & systems) Y020015 51 84008516 Public Companies Have to View Themselves as Publishers: The Annual Report Is a Periodical Ruchti, Ulrich; Wasserman, Norman Public Relations Qtrly v28n4 PP: 9-13 Winter 1983 ISSN: 0033-3700 JRNL CODE: PRQ DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM If more public companies thought of their annual reports as an annual publishing event and a highlight of the corporation's year-long communications program, more annual reports would have the excitement, innovation, and professionalism that characterize successful periodicals. The basic information in annual reports is mandated by the Securities and Exchange Commission (SEC), but there is much room for attractive, interesting material to effect a positive impact on stockholders. The majority of annual reports tend to be passive, uninspiring, and ritualized. They can be improved by following 7 guidelines: 1. Definitively identify the company using theme, format, and unique, forward-looking copy. 2. Employ good graphics - including photography, art, and typography - to hold the report together. 3. Create continuity from page to page and from issue to issue. 4. Seek professional publishing expertise from outside the company to give an objective viewpoint. 5. Use surveys in the annual reports to obtain feedback and keep in touch with the opinions of shareholders. 6. Convey the company's permanence and its continuity into the future. 7. Attempt to break the standard annual report mold and try a measured degree of daring. Desc.: Annual reports; Public companies; Guidelines CLASS. CODES: 2400 (CN=Public relations); 9150 (CN=Guidelines) Y020015 52 84006068 Tighter Guidelines Needed on Directors' Transactions Andrews, David R.; Hancock, Paul H. Accountancy (UK) v94n1084 PP: 109-110 Dec 1983 CODEN: ACTYAD ISSN: 0001-4664 JRNL CODE: ACE DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM It is the duty of the directors of a company to disclose in the financial statements all the information required by the Companies Act, while the auditors' duty is to determine whether all the information is disclosed. When a lack of disclosure exists with regard to transactions with directors, auditors must include in their report a statement giving the required particulars. The Companies Act 1980 sets out this requirement, the interpretation of which poses the problems for directors and auditors. The disclosure requirements under the Companies Act may not be limited to those transactions in which the director derives an unfair benefit at the expense of the company. Any transaction in which the director has a material interest must be shown. A possible future amendment to company law could exempt from disclosure those transactions that are in the ordinary course of business of the company and are at full arm's length basis with respect to the terms and consideration. Chart. Desc.: UK; Financial statements; Financial reporting; Disclosure; Auditing; Requirements; Directors; Transactions CLASS. CODES: 4130 (CN=Auditing); 9170 (CN=Non-US) Y020015 53 84005936 Accounting and Financial Reporting Developments Affecting the Banking Industry Haugh, James W. Magazine of Bank Administration v60n1 PP: 14-18 Jan 1984 CODEN: MBAAA5 ISSN: 0024-9823 JRNL CODE: BAD DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM Continued deregulation of the banking industry has raised issues regarding how banks are to account for and report the results of the operations and financial condition to their shareholders. There were some important accounting and reporting developments affecting banking organizations during 1983, including: 1. The Securities & Exchange Commission (SEC) has adopted rules amending the requirements regarding the form and content of bank holding company financial statements; the new rules call for presenting net income in a ''one-step'' format, increase the scope of persons to be included as related parties for purposes of loan disclosure, and require condensed financial information for the parent company only to be disclosed on consolidated financial statements. 2. The Financial Accounting Standards Board (FASB) has specified the method and period for amortizing goodwill to expense in purchase acquisitions of banking and thrift institutions. 3. The Bank Industry Audit Guide sets forth revised principal accounting and reporting recommendations and outlines recommended treatment for initial adoption. Desc.: Banking industry; Financial reporting; Financial statements Financial condition statements (ACC); SEC regulations; Goodwill; FASB exposure drafts; Portfolio investments CLASS. CODES: 8100 (CN=Financial services industry); 4120 (CN=Accounting policies & procedures); 3400 (CN=Investment analysis); 4310 (CN=Regulation) Y020015 54 84004701 Practical Solutions to Six Troublesome - And Common - Reporting and Disclosure Problems Herskovitz, Jerry Practical Accountant v17n1 PP: 56-70 Jan 1984 CODEN: PACNBD ISSN: 0032-6321 JRNL CODE: PRA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 13 Pages AVAIL.: ABI/INFORM Disclosures are often thought to be limited to the footnotes of financial statements. However, disclosure also relates to the form, arrangement, and content of the financial statements with their appended notes. Forms of disclosures include a basic concept, the presentation of a required statement of changes in financial position, and, of course, footnotes. The presentation of any financial information whose omission would tend to make the financial statements misleading is encompassed in the requirement for adequate disclosure. The most common reporting and disclosure problems encountered by practitioners include: 1. contingencies, 2. going concern, 3. extraordinary items, 4. refinancing short-term debt, 5. related party transactions, and 6. development stage enterprises. Suggested solutions and application examples are provided for each of these problems. Charts. References. Desc.: Financial reporting; Financial statements; Disclosure; Accounting policies; Contingencies; Going concern assumption (ACC); Extraordinary items; Refinancing; Short term debt; FASB statements CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 55 84004148 Writing a Better Annual Report Jensen, Arnold E.; Mulligan, Isabel Canadian Business Review (Canada) v10n4 PP: 25-27 Winter 1983 CODEN: CBREDT ISSN: 0317-4026 JRNL CODE: CAB DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM The annual report is intended to give shareholders and other investors the facts they need to evaluate a company. The report should be geared first to the individual investor, then to the sophisticated securities analyst, and only then to other audiences, such as employees or regulators. A good format should be adopted and used consistently. The cover should be informative and get across an important fact, such as the corporate mission. The first 4 pages are crucial; they should comprise a corporate profile describing the company and its financial highlights. The shareholder letter from the chief executive officer should explain concisely what happened during the year and how these events affect the company's financial position and its outlook for the future. The report's body may be organized by divisions, product groups, major markets, or other lines. Creative, experienced designers and a realistic production schedule can take much of the hassle out of producing an annual report. Desc.: Annual reports; Objectives; Audiences; Information; Writing Guidelines CLASS. CODES: 2400 (CN=Public relations); 9150 (CN=Guidelines) Y020015 56 83032730 Standards Overload - No Simple Solution Mosso, David Jrnl of Accountancy v156n5 PP: 120-138 Nov 1983 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 12 Pages AVAIL.: ABI/INFORM The Financial Accounting Standards Board (FASB) has addressed the problem of standards overload in invitations to comment in 1980 and 1981. The FASB has also sponsored 2 independent research studies. The American Institute of Certified Public Accountants (AICPA) has addressed the problem by special committee 3 times. Some tentative conclusions have been reached through the use of FASB findings and responses from small firms, companies, and creditors of small companies. Standards overload is not a one-dimensional problem. It involves cost-benefit problems, the quality of professional practice, professional solidarity, and communication and understanding between auditors and bankers. Therefore, the solution to standards overload involves a combination of 4 answers: 1. Generally accepted accounting principles (GAAP) need to be simplified. 2. One or more comprehensive alternative bases with standardized disclosure requirements are needed. 3. A need exists for differential GAAP. 4. More GAAP departures with modified opinions are needed. The FASB, the AICPA, and their various constituencies must combine efforts in order to overcome standards overload. Graphs. References. Desc.: Accounting standards; Problems; GAAP; Financial reporting; Financial statements; Costs; Accounting firms; CPAs; Quality CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 57 83032402 Treasurer's Role in a Leveraged Buyout/Checklist for the Parent Company's CFO/Checklist for the Subsidiary's CFO Katcha, Robert J. Cash Flow v4n9 PP: 36-40 Nov 1983 ISSN: 0196-6227 JRNL CODE: CFL DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM A leveraged buyout may offer the best opportunity for all parties when a multi-unit corporation sells a subsidiary to that subsidiary's management. Once the subsidiary convinces the parent to sell the operation to existing management, the subsidiary's treasury manager and the firm's investment bankers must work together to finance the acquisition. The finance person must provide information and coordination so that it becomes clear to the investment bankers and the unit managers that the unit can stand alone. The financial manager also should require the investment banker to develop a presentation for prospective lenders. Parent company chief financial officers (CFOs) should set deadlines to consumate the deal, insist that the prospective owners retain their own advisers and bankers, keep all dealings at arm's length, ensure full disclosure to buyers, and take notes. The subsidiary's CFO should insist on a contingency fee arrangement, acknowledge the importance of personal chemistry, and follow outside professionals' advice. Desc.: Financial management; Executives; Roles; Subsidiaries; Divestiture; Acquisitions & mergers; Corporate finance; Financing; Arrangements CLASS. CODES: 3100 (CN=Capital & debt management); 2330 (CN=Acquisitions & mergers); 2130 (CN=Executives) Y020015 58 83030745 The Effect of Auditor Involvement on the Predictive Capacity of Interim Financial Information Edmonds, Thomas P. Jrnl of Business Finance & Accounting (UK) v10n3 PP: 429-441 Autumn 1983 ISSN: 0306-686X JRNL CODE: JBF DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 13 Pages AVAIL.: ABI/INFORM Current practices regarding auditor association with interim financial statements were affected by the Securities & Exchange Commission's (SEC) issuance of Accounting Series Release (ASR) Number 177. The report requires registrants to include interim data in a footnote to their annual reports. The findings of an empirical study designed to test for the presence of anticipated improvements in the predictive capacity of interim data are reported. Data were obtained through 486 analyzable responses from companies. The data indicate that no statistically significant differences exist between the mean vectors of forecast error terms when the performance of a limited review was introduced as the independent variable. Auditor association with interim data does not statistically affect the predictive capacity of such data. The findings weaken the SEC's contention that auditor association will improve the predictive capacity of interim data. Equations. Tables. Appendix. References. Desc.: Interim financial statements; Auditors; Roles; Interim audits; Effects; Form 10-Q; SEC filing requirements; Studies; Predictions; Models; Hypotheses CLASS. CODES: 4130 (CN=Auditing); 9130 (CN=Experimental/Theoreti- cal); 3400 (CN=Investment analysis) Y020015 59 83027713 Early Implementation of New Foreign Currency Rules: An Evaluation of Annual Reports Benjamin, James J.; Grossman, Steven D.; Wiggins, Casper E., Jr. Akron Business & Economic Review v14n3 PP: 37-40 Fall 1983 CODEN: ABERDF ISSN: 0044-7048 JRNL CODE: ABE DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM In recent years, foreign currency translation has been a controversial accounting issue. In a review of its position on foreign currency translation, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 52, ''Foreign Currency Translation, '' in December 1981. An effort was made to analyze the effect on the financial statements of multinational corporations that voluntarily adopted the provisions of SFAS 52 and to examine the foreign currency disclosures for these firms. The study evaluated the annual reports of 93 companies that chose to use the new rules in their 1981 financial statements. Results showed that application of SFAS 52 resulted in an increase in reported net income. However, conformity was not always found in the disclosure requirements of SFAS 52. Tables. Desc.: FASB statements; Foreign exchange translations; Disclosure; Annual reports; Financial reporting; Financial statements CLASS. CODES: 3500 (CN=Foreign exchange administration) Y020015 60 83026367 The Materiality Principle: Problems and Possible Solutions Pattillo, James W.; Morris, Michael H.; Nichols, William D. Corporate Accounting v1n3 PP: 44-51 Summer 1983 JRNL CODE: CAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 8 Pages AVAIL.: ABI/INFORM Although the materiality concept has had a place in accounting for nearly 40 years, few guidelines exist to assist preparers of financial statements. A prospective of the materiality concept is provided in order to point the way toward possible solutions in the application of the problem. A format for materiality guidelines is proposed. Results of a study by the Financial Executives Research Foundation (1976) are discussed, concluding that: 1. different perceptions exist of what threshold is appropriate in particular cases, and 2. not enough is known about various group's decision models. The major components of materiality judgments include: 1. objectives of the decision maker, 2. relevant factors, 3. weights assigned to factors, and 4. form of the decision model. Materiality decision factors are outlined. Materiality judgments often are made inconsistently within and among firms without identification and consideration of relevant factors or the needs of users. Charts. Desc.: Accounting policies; Materiality (ACC); Disclosure; Financial reporting; FASB statements; Financial statement notes CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 61 83022424 Completeness - The Elusive Assertion Whittington, Ray; Zulinski, Marilyn; Ledwith, James W. Jrnl of Accountancy v156n2 PP: 82-92 Aug 1983 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 7 Pages AVAIL.: ABI/INFORM An auditor gathers and evaluates evidential matter when forming an opinion on financial statements. There is some concern about the gathering of evidence when the auditor is not certain that all of the client's transactions are recorded and accumulated as a part of the financial statement balances. There have been several questions on practice raised by auditors when using Statement on Auditing Standards (SAS) Number 31, Evidential Matter. SAS No. 31 identifies completeness of transactions and balances as one of the categories of assertions embodied in financial statements. There are 5 broad categories of assertions embodied, explicitly or implicitly, in financial statements that are identified by SAS No. 31: 1. existence or occurrence, 2. completeness, 3. rights and obligations, 4. valuation or allocation, and 5. presentation and disclosure. There are a variety of viewpoints on the nature of evidence necessary to substantiate the completeness of financial statement balances. The completeness controls involve: 1. methods to count source documents, 2. procedures to determine that the methods have been properly applied, and 3. methods to assure the accuracy of the initial recording. References. Desc.: Accounting records; Internal accounting control; Audit evidence; Auditors opinions; Exceptions; Accounting standards; Financial statements CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 62 83019448 IUS EasyBusiness Series Knight, Sherry D.; Yoder, Steven E. Interface Age v8n7 PP: 107-113 Jul 1983 ISSN: 0147-2992 JRNL CODE: INA: DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM The EasyBusiness Series from Information Unlimited Software (IUS) includes accounts receivable and payable, order entry, inventory control and analysis, and general ledger and financial reports software packages. The general ledger and financial reports package includes such good features as its documentation, reporting capabilities, and the general ease of use in daily operations. It does have, however, some of the weaknesses commonly found in the small accounting programs, including a lack of system access controls. This program offers no built-in system security, although IUS (Sausalito, California) has promised to add a security systems upgrade later in the year. IUS has placed the formatting function for financial reports in a separate report generating program; this allows the user to obtain only the desired information in the preferred format. The program is adaptable to many printers, and the user can select paper size and print mode and halt any printing operation in progress. The IUS documentation appendices cover many items usually avoided, including example reports, a command summary, a good coverage of error situations and messages, capacity guidelines, printer configurations, hard disk implementations, and some data input forms. Monthly budgets for each account are provided for budgeting capability, and remaining disk capacity is displayed continuously. Desc.: Accounting; Software packages; Financial planning; Design; Security CLASS. CODES: 5240 (CN=Software & systems); 4100 (CN=Accounting; 9120 (CN=Product specific) Y020015 63 83018465 Another Step in the March Toward Current Value Accounting Krasnoff, Mitchell M. Corporate Accounting v1n2 PP: 53-57 Spring 1983 JRNL CODE: CAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM Statement of Position (SOP) 82-1 of the American Institute of Certified Public Accountants (AICPA) establishes estimated current value rather than historical cost as the required basis of presentation for personal financial statements. The action is a continuation of the trend toward current value accounting begun by Securities & Exchange Commission (SEC) Accounting Series Release 190 and the requirements of Statement of Financial Accounting Standards 33 from the Financial Accounting Standards Board (FASB); both rules pertain to the broad application of current value accounting to general corporate financial reporting and disclosures. SOP 82-1, dealing with all aspects of personal finance reporting, presents detailed guidelines for the determination of estimated current values. The SOP requires making provision for income taxes on the appreciation in value of assets held. The provision is not classified as a liability on the statement of financial condition, but is shown as a separate major component of the statement between liabilities and net worth. General reaction to the SOP favors the use of current value, but considerable opposition has arisen to the income tax computation provision. Reference. Desc.: AICPA statements of position; Current cost accounting; Accounting procedures; Personal finance; Financial reporting; Financial statements CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 64 83017099 Oil and Gas Disclosures - The FASB Reacts Grossman, Steven D.; Mayper, Alan G.; Welker, Robert B. CPA Jrnl v53n5 PP: 24-29 May 1983 CODEN: CPAABS ISSN: 0732-8435 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM The Securities and Exchange Commission (SEC) requested that the Financial Accounting Standards Board (FASB) develop a disclosure package for enterprises engaged in oil and gas producing activities. The FASB has issued an Exposure Draft and a Statement of Financial Accounting Standards (SFAS) 69. SFAS 69 is designed to: 1. develop disclosure requirements that are useful, and 2. to consider cost-benefit relationships of alternative disclosures and to reduce the quantity and cost of existing disclosures. The Board requires historical cost-based information and nonfinancial information. The standardized measure of discounted future net cash flows relating to proven oil and gas reserves is to be disclosed and reported in the aggregate and for each geographic area. The specific information required is outlined. The subject of oil and gas disclosures has been controversial for many years, and it is unlikely that SFAS 69 will reduce discussion on the issue. Desc.: Financial accounting standards; Disclosure; Petroleum industry; Financial statements; FASB statements; SEC accounting policies CLASS. CODES: 4120 (CN=Accounting policies & procedures); 8510 (CN=Petroleum industry) Y020015 65 83017015 Has the SEC Taken All the Dead Wood Out of Its Disclosure System? Kripke, Homer Business Lawyer v38n3 PP: 833-853 May 1983 ISSN: 0007-6899 JRNL CODE: BLW DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 21 Pages AVAIL.: Business Lawyer, American Bar Assn., 1155 E. 60th St., Chicago, IL 60637 Regulation D replaces the private placement rule 146 and the small offerings rules 140 and 142, but problems remain in the Securities & Exchange Commission's (SEC) integrated disclosure system and the new Regulation D exemptions. The definition of ''accredited investor'' in Rule 502 (e) excludes the very persons who with greatest certainty fit the concept. The rules implementing the ''integration doctrine'' may result in a combined offering not meeting the standards of any of the registration exemptions under the Securities Act of 1933. The SEC has failed to extend to secondary offerings of $500, 000 or less registered under the 1933 Act the reduction of restrictions on secondary resales already provided in Rule 502. The SEC should continue to eliminate redundancies by taking the following steps: 1. Promulgate a rule exempting from disclosure certain secondary sales. 2. Abolish the notice of Rule 503. 3. Treat exemption requirements on a par with registrations. 4. Abandon overdrafting and multiplication of conditions to certain exemptions. 5. Recognize the inadvertent and immaterial error defense. References. Desc.: SEC; Regulation D; SEC regulations; Sales of securities (private); SEC registration; Exemptions; Disclosure; Information; Requirements; Financial statements; Accounting procedures CLASS. CODES: 3100 (CN=Capital & debt management); 4120 (CN=Accounting policies & procedures); 4310 (CN=Regulation) Y020015 66 83013375 Financial System Speeds Processing Anonymous Computerworld v17n16 PP: 41, 46 Apr 18, 1983 CODEN: CMPWAB ISSN: 0010-4841 JRNL CODE: COW DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM Weldon J. Montgomery, finance manager at Pritchard Services Inc. (PSI), used a shopping list when searching for an in-house financial management information system. The firm had previously used outside service bureaus. To find an alternative, Montgomery made a lengthy study. Consideration was given to nearly every financial information requirement of the firm. The study then examined 15 configurations of hardware and software. The company needed expandable software that was usable without modifications. The financial products of Software International Corp. (SI) were selected. The hardware chosen by PSI was an IBM 4331. The Variable Report Writer (VRW) from SI permits users to formulate and produce reports in any desired format. Desc.: Internal; Financial; MIS (MAN); Information systems; Case studies; Financial statements CLASS. CODES: 4120 (CN=Accounting policies & procedures); 5240 (CN=Software & systems); 9110 (CN=Company specific) Y020015 67 83013043 Individual vs. Group Processing of Accounting Data - A Field Study Reeve, James M. Accounting & Business Research (UK) v13n49 PP: 49-55 Winter 1982 JRNL CODE: ACB DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 7 Pages AVAIL.: ABI/INFORM Research on the use of accounting data has indicated that individuals are inefficient in the use of accounting data although users in aggregate are efficient. A study was conducted to determine the differences in data-use efficiency between individuals and small groups of users. A sample of 28 commercial loan officers were presented with financial statements for 2 hypothetical firms applying for project financing. The firms had equally favorable loan risks, but differed in their format of disclosure, either by balance-sheet disclosure or footnote disclosure. Subjects: 1. evaluated the applications individually and in groups of 2, 2. assigned an interest rate for the loan and a probability of default, and 3. choose between the 2 applicants for loan approval. Both individuals and groups were found to process data inefficiently, generally favoring the firm with footnote disclosure over the firm with balance-sheet disclosure. Individuals tended to assign the interest rates for the loans incorrectly, while groups tended to assess default probability incorrectly. Chart. Tables. References. Appendices. Desc.: Financial reporting; Accounting; Data; Studies; Users; Information processing; Groups; Financial statements CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9130 (CN=Experimental/Theoretical) Y020015 68 83012630 Management's Discussion and Analysis Berger, Peter E. CPA Jrnl v53n4 PP: 81-85 Apr 1983 CODEN: CPAABS ISSN: 0732-8435 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM The Securities & Exchange Commission (SEC) has made public its concern that the current economic pressures may tempt some companies into diluting the quality of their financial reports. This may be done by filtering out unfavorable news in an attempt to sanitize the information provided investors. The SEC is also concerned with the relatively high volume of one-time elective transactions during 1982. These transactions appear to have provided companies with ''nonrecurring'' profits to offset operational losses. The importance of the management's discussions and analysis (MD&A) as a means of informing the investor of such occurrences has been emphasized by the SEC. The regulations concerning MD&A require management discussion and analysis to be on a realistic enough basis so that the reader is provided with an understanding of the company's financial condition, changes in financial condition, and results of operations. The main requirements for discussion topics are: 1. liquidity, 2. capital resources, 3. results of operations, 4. impact of inflation and changing prices, 5. interim periods, and 6. foreign currency translation. Desc.: SEC regulations; FASB statements; Financial reporting; Financial statements CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 69 83012623 Personal Financial Statements - Benefits of Experience Raymond, Robert H.; Ellison, David J. CPA Jrnl v53n4 PP: 14-23 Apr 1983 CODEN: CPAABS ISSN: 0732-8435 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM The 1968 American Institute of Certified Public Accountants (AICPA) Industry Audit Guide, Audits of Personal Financial Statements, is now being revised and divided into 2 pronouncements. The accounting portion was released on October 1, 1982, as Statement of Position (SOP) 82-1. This portion, Accounting and Financial Reporting for Personal Financial Statements, will apply to the accounting and reporting for personal financial statements dated June 30, 1983, and later. The previous audit provisions were expanded to emphasize different levels of service. Fundamental changes in SOP 82-1 that differ from the 1968 Guide are: 1. Financial statements present estimated current values of assets and report liabilities at the discounted amount of cash to be paid. 2. The historical cost column is dropped in favor of some disclosure of tax basis. Many practitioners are concerned with serving the users of their product and SOP 82-1 is user oriented. A set of data is required by the statement that nearly every user of personal financial statements appears to want. Additional data that the user desires can be readily included. There is a wide range of flexibility permitted in the format. Table. References. Desc.: Personal finance; Financial statements; AICPA; Accounting standards CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 70 83012557 Streamlining Small Business Performance Reporting Liao, Woody M. Management Accounting v64n10 PP: 24-27 Apr 1983 CODEN: MGACBD ISSN: 0025-1690 JRNL CODE: NAA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM A small business, like a large business, needs information for planning and control of its operations. A performance report summarizes and compares actual results with goals or budget plans, and it provides a useful tool for evaluating the extent to which a company's budgets, planned goals, and objectives have or have not been attained. Performance reporting also has proven useful for many companies by: 1. providing feedback for future planning, 2. motivating employees, 3. assisting better achievement of plans, and 4. providing a medium for communication. Small businesses need meaningful and effective performance reporting systems. The performance report must be tailored to the characteristics of the individual firm in order to be meaningful and effective. There are 4 special considerations involved in the design and implementation of a performance report: 1. the special characteristics of the business, 2. necessary information for effective management control, 3. procedures and format for desired information, and 4. the implementation of the system to make management control more systematic and objective. The performance report of a small business should be simple and relevant. Table. Figure. Desc.: Small business; Performance; Reports; Financial budgets; Feedback; Financial planning; Financial reporting CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9520 (CN=Small business) Y020015 71 83012042 Do Analysts Use Inflation-Adjusted Information? Results of a Survey Berliner, Robert W. Financial Analysts Jrnl v39n2 PP: 65-72 Mar/Apr 1983 CODEN: FIAJA4 ISSN: 0015-198X JRNL CODE: FIA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 8 Pages AVAIL.: ABI/INFORM A recent survey of members of the Financial Analysts Federation was undertaken by Arthur Young & Co. in order to determine whether financial analysts use the inflation-adjusted accounting information required by Financial Accounting Standards Board (FASB) Statement Number 33. Of 500 analysts randomly selected, 244 responded to the questionnaire. Only half of the respondents use the Statement No. 33 information. There are 3 especially strong reasons for the nonuse of the information: 1. the ''noncomparability'' of the information, 2. doubt as to the information's intrinsic value, and 3. the information's redundancy. Responses from both users and nonusers suggest that analysts might find the information more useful if the requirements were amended so as to make inflation-adjusted disclosures more comparable across companies. In addition, removal of the ''experimental'' label and presentation of the information in financial statement format might also enhance analysts' perception of the information's utility. Tables. Desc.: FASB statements; Inflation accounting; Surveys; Financial; Analysts; Information; Price level financial statements (ACC) CLASS. CODES: 4120 (CN=Accounting policies & procedures); 3400 (CN=Investment analysis) Y020015 72 83012037 Applications of Inflation-Adjusted Accounting Data Norby, William C. Financial Analysts Jrnl v39n2 PP: 33-39 Mar/Apr 1983 CODEN: FIAJA4 ISSN: 0015-198X JRNL CODE: FIA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 7 Pages AVAIL.: ABI/INFORM Financial Accounting Standards Board (FASB) Statement Number 33, Financial Reporting and Changing Prices, has for the most part, like other inflation-adjusted accounting data, not been found decision-useful by financial analysts. Applications of inflation-adjusted data in the investment community fall into 3 categories: 1. specific company evaluation of risk and growth, 2. portfolio decisions on selection of particular securities, and 3. macroanalyses of the entire securities market. Statement Number 33 should be given a fair trial, but it should be simplified and improved by making these changes: 1. adoption of only the current cost method, 2. clarification of current cost measurements and adoption of the comprehensive income concept, 3. expansion of presentation to include more balance sheet and funds statement items, 4. prescription of a single presentation format, 5. retention of the 5-year trend table of key items deflated to a constant dollar basis, with the addition of current cost data in nominal terms, 6. reconsideration of company coverage, and 7. inclusion of specific information on price trends in sales and costs. Tables. Appendix. Desc.: FASB statements; Inflation accounting; Discounted cash flow Return on investment; Stock prices; Portfolio management; Models; Studies CLASS. CODES: 4120 (CN=Accounting policies & procedures); 3400 (CN=Investment analysis); 9130 (CN=Experimental/Theoretical) Y020015 73 83010998 Life Company GAAP Internal Reporting Silins, Edward S. Best's Review (Life/Health) v83n11 PP: 22, 25-26 Mar 1983 CODEN: BRLHB5 ISSN: 0005-9706 JRNL CODE: BIH DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM There are many times when internal financial statements for life insurance companies based on generally accepted accounting principles (GAAP) give inadequate or even misleading information. The financials provide little insight into why results were as reported when this occurs. These statements also offer very little guidance for future decisions. A more meaningful internal report prepared under GAAP is available by following a suggested general format. The benefit and expense reserve factors should provide gross premium and the portion of gross premium required for benefits, commission, and acquisition expenses. The investment income attributable to the reserve balance should be approximately the same as the GAAP reserve interest assumption. A proper matching of revenues with expenses shows this reserve interest amount as a reduction of policy benefits. Expenses for the ordinary line of business should be separated into 3 components: 1. acquisition costs, 2. policy maintenance costs, and 3. overhead costs. The actual and expected underwriting results for each component of the gross premium should be compared. The development of necessary information will vary from company to company. Tables. Desc.: Life insurance companies; GAAP; Internal; Financial reporting; Financial statements; Investment income; Underwriting (INS); Gains CLASS. CODES: 8210 (CN=Life & health insurance); 4120 (CN=Accounting policies & procedures) Y020015 74 83009736 An Empirical Examination of the Impact of Limited Review on Equity Prices Fabozzi, Frank J.; Fonfeder, Robert; Casabona, Patrick Jrnl of Business Finance & Accounting (UK) v10n1 PP: 127-138 Spring 1983 ISSN: 0306-686X JRNL CODE: JBF DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 12 Pages AVAIL.: ABI/INFORM The US Securities & Exchange Commission (SEC) required in Accounting Series Release 177 (1975) that auditors examine selected quarterly data of certain registrants. By requiring a limited review of the last 8 quarters, the SEC was trying to discourage management from manipulating quarterly data. The SEC assumes this limited review will offer investors improved information, so it should have an impact on the expectations of market participants and the price behavior of securities. Findings suggest that investors do not perceive announcements subjected to limited review as improved information compared to earlier announcements with no review. No difference in investor reaction should be expected because of the reviews, but investors do react to quarterly and annual announcements, usually within a 4-day trading period. Tables. Equations. References. Desc.: SEC regulations; Quarterly reports; Interim financial statements; Auditing standards; Studies; Limited review (ACC); Investors; Stock prices CLASS. CODES: 4130 (CN=Auditing); 4310 (CN=Regulation); 9130 (CN=Experimental/Theoretical); 3400 (CN=Investment analysis) Y020015 75 83007746 Statement of Changes: In Need of a Change? Clark, Richard S. CA Magazine (Canada) v116n2 PP: 26-30 Feb 1983 CODEN: CCHAA5 ISSN: 0317-6878 JRNL CODE: CCA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM The Financial Executives Institute Canada (FEIC) has suggested that the focus should be on cash and not working capital in funds statements. The way companies deal with the FEIC proposal will depend on how the professional accountant approaches this financial reporting problem. To really improve the funds statement, the format used to present cash-flow information will have to be upgraded. A massive campaign to force operating managers to pay closer attention to cash flow helped General Electric show business executives that cash-flow information offers a significant financial opportunity. Companies that manage cash flow outperform those that do not. The cash-flow analysis proved to be a powerful analytic tool for financial analysts. A study by Kidder, Peabody & Co. has demonstrated the importance of cash-flow information. Discretionary cash flow was invented by Kidder and was used to describe the cash left over after a company set aside enough money to replace plant and equipment and to pay dividends. A statement that shows the effects of inflation on cash flows has been recommended by the Ontario Government Committee on Inflation Accounting. It shows cash available for distribution and expansion after the effects of inflation are taken into account. Graph. Table. Appendices. Desc.: Accounting procedures; Financial reporting; Funds statements ; Working capital; Cash; Liquidity; Canada CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 76 83007091 Reducing the Burden of Government - The SEC's Role Powers, Ollie S. National Public Accountant v28n2 PP: 20-23 Feb 1983 CODEN: NPACAI ISSN: 0027-9978 JRNL CODE: NPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM The control of business and government regulation has increased dramatically in the US over the past several decades. Many politicians have recently become concerned with this matter. The requirements of the Securities & Exchange Commission (SEC) have had a significant effect on accountants. The SEC is now doing its part to reduce the federal burden through the relaxation and simplification of some of its demands. The current SEC Chairman appears to be emphasizing self-regulation of the accounting profession and is less concerned with corporate governance. The SEC's objectives include a withdrawal of outmoded and redundant regulations, improvement in clarity, and reduction of the burden of public disclosures by a simplification of regulations. Some of the recent changes in SEC requirements involve: 1. the integrated disclosure system, 2. Form S-15, 3. the revised interim reporting rules, 4. separate financial statements, 5. a streamlined registration process, and 6. exemptions for small issues and issuers. These changes may be interpreted as an indication that those in authority truly intend for the SEC to make its contribution to reductions in the burden of government. References. Desc.: SEC; Self regulation; Disclosure; SEC 34; SEC 33; GAAP; Form 10-K; Financial reporting; Form 10-Q; Interim financial statements; SEC registration; SEC regulations CLASS. CODES: 4310 (CN=Regulation); 4120 (CN=Accounting policies & procedures) Y020015 77 83006940 Why Should We Care? Kovener, R. R. Healthcare Financial Mgmt v37n2 PP: 26-28, 32-33 Feb 1983 CODEN: HFIMAK ISSN: 0018-5639 JRNL CODE: HFM DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM The Financial Accounting Standards Board (FASB) has issued 2 statements establishing basic objectives for all financial accounting and reporting decisions, one dealing with objectives for business enterprises and the other with nonbusiness enterprises. The distinction between business and nonbusiness has special significance for health care financial management, and the significance focuses on: 1. report format, and 2. performance evaluation. This analysis reviews these issues, with the overall conclusion reached being that health care financial managers should be concerned with any action that creates artificial differentiation between health care enterprises of different ownership types. Differentiation on the basis of ill-defined enterprise characteristics is not prudent, and the preferable system would be for all enterprises to have financial reports prepared according to universally applicable rules. The FASB itself could help this confusing state of affairs by stating that all enterprises, regardless of ownership, are subject to the same accounting principles and by ceasing to issue further statements for nonbusiness organizations. Desc.: FASB; Financial reporting; Health care; Financial management ; Tax planning; Tax exempt organizations CLASS. CODES: 4120 (CN=Accounting policies & procedures); 8320 (CN=Health care industry) Y020015 78 83004099 The Dominant Role of Management Accounting Banyard, Cyril Management Accounting (UK) v60n11 PP: 14-16 Dec 1982 CODEN: MATGBA ISSN: 0025-1682 JRNL CODE: MAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM The International Federation of Accountants Congress (IFAC) includes organizations that cover 90% of the world's qualified accountants. The majority of these accountants are in industry, commerce, government service, education, and consultancy. The IFAC has adopted the term ''management accounting'' to cover the activities of those accountants not engaged in audit practice. Management accounting involves the presentation of accounting data in such a way as to assist management in its functions of promoting maximum efficiency and of formulating and coordinating future plans and measuring their execution. The fields covered by the management accountant are: 1. policy formulation, 2. identification and measurement, 3. planning and budgeting, 4. recording and presenting, 5. interpretation and control, 6. procurement of finance, 7. appropriate use and security of resources, 8. assurance of accountability, 9. independent appraisal and evaluation, and 10. disclosure and communication. The major function of a management accountant involves: corporate planning, financial accounting, cost accounting, treasurership, internal auditing, and information systems. Management accounting is becoming the central or core activity of the accounting profession. Desc.: Management accounting; UK; External; Auditing; Roles CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9170 (CN=Non-US) Y020015 79 83003699 Long-Term Supply Agreements: A New Albatross? Eaker, Mark R.; Ferris, Kenneth R. Financial Analysts Jrnl v38n6 PP: 70-73 Nov/Dec 1982 CODEN: FIAJA4 ISSN: 0015-198X JRNL CODE: FIA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM Unreported obligations such as long-term supply agreements (LTSA) are increasingly posing financial liabilities for companies who may be unable to later fulfill them. Current reporting requirements for these commitments and contingencies should force further disclosure to enhance decision making for securities analysts, as well as for investors, customers, and management. Financial Accounting Standards Board (FASB) Statement Number 5 and Interpretation No. 14 cover reporting of these uncertainties. Yet, since LTSAs may involve no immediate exchange of assets, they need not be disclosed until such time as the terms of the agreement are satisfied. This poses great risk, as it did for Westinghouse Electric Co. in 1975 when it could not meet its LTSAs to provide utility customers with agreed-upon amounts of uranium. Westinghouse made these commitments between 1966 and 1973 but they were not revealed in financial statements until 1976 and directors were not informed of the company's exposure until 1974. The potential liability facing Westinghouse was initially estimated to run as high as $2.5 billion. References. Desc.: Financial statements; Financial reporting; Disclosure; Contingent liabilities (ACC); Supply; Agreements; FASB statements; Accounting procedures; Case studies; Westinghouse Electric-Pittsburgh CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9110 (CN=Company specific); 3400 (CN=Investment analysis) Y020015 80 83003055 Accounting Disclosures of Strikes and Lockouts Nelson, M. Cost & Mgmt (Canada) v56n6 PP: 30-32 Nov/Dec 1982 CODEN: CSTMA9 ISSN: 0010-9592 JRNL CODE: RIA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM A survey of annual reports of Canadian companies for the years 1978-1980 was done to see how the cost of work stoppages was accounted for. Of the companies which acknowledged work stoppages in their annual reports, only a very few revealed the cost of such stoppages, and none showed this cost in the income statement. Yet, the CICA Handbook requires information necessary for a fair presentation of operational results to be revealed in the financial statement. Where extended work stoppages occur, their costs require examination on the disclosure of the effects. Those reporting such a cost indicated that it was attributable to depreciation and other costs normally tabbed to production. Another question arises as to whether work stoppages should be considered ordinary or extraordinary costs. If no benefit results from a work stoppage, shareholders might well question management's actions which led to the stoppage. Tables. Appendix. References. Desc.: Canada; Strikes; Lockouts; Work stoppages; Financial reporting; Disclosure; Costs; Annual reports; Financial statements CLASS. CODES: 9170 (CN=Non-US); 4120 (CN=Accounting policies & procedures) Y020015 81 83002815 The Funds Flow Statement: Striving for Greater Accuracy Clemente, Holly A. Financial Executive v50n12 PP: 27-32 Dec 1982 CODEN: FIEXAW ISSN: 0015-1998 JRNL CODE: FEX DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM Examination of the Statement of Funds Flow presentations in 1981 annual reports indicates that many companies are altering the statement with innovations that more closely reflect a firm's financial health. In 1982, the Financial Executives Institute (FEI) sponsored a survey on the Statement of Funds Flow, which revealed the following: 1. Of the almost 1, 200 respondents, 79% used a Source and Use format, and 13% segregated the sources and uses into activities. 2. A total of 25% who adopted a cash basis presentation defined funds as cash, while 57% defined funds as cash and short-term investments. 3. The majority of those companies which reconciled the statement to the change in cash, or in cash and equivalents, usually added beginning cash to arrive at a bottom line which agreed to the year-end balance for cash or cash equivalents. 4. Many companies give an indication as to where funds come from and where they go, and whether funds generated from operations are sufficient to cover expenditures. 5. The placement of gains and losses on foreign currency translation was as varied as the captions used. Tables. Desc.: Funds statements; Financial management; Corporate finance; Surveys; Working capital CLASS. CODES: 3100 (CN=Capital & debt management) Y020015 82 82029301 Streamlined SEC Registration System Zell, Gary A. CPA Jrnl v52n11 PP: 18-22 Nov 1982 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM The final stage of the Securities & Exchange Commission's (SEC) integrated disclosure system replaces Forms S-7 and S-16 with Forms S-2 and S-3, and adopts a temporary procedural rule for registering securities offered and sold on a delayed or continuous basis. The new forms may impose severe restraints on the time auditors need to demonstrate that an adequate subsequent events review has been made, particularly if a post-effective amendment to a shelf registration statement is required. The shelf registration statements affect the timing and the number of comfort letters that auditors give to underwriters. Companies using Forms S-1 or S-2 for a shelf registration statement may face some special problems associated with the requirement that a post-effective amendment updating the financial information must accompany the form. The Form S-2 prospectus may be abbreviated as an option. The problem in choosing the option lies in the availability of the latest financial statements and the delivery of the information that is required by Part 1 of Form 10-Q. Some of the same problems affect Form S-3, which may include more information than is required. Unaudited quarterly information and trend information may create special problems with interim information in Forms S-1 and S-2. Desc.: SEC registration; Registration statements; Sales of securities (public); Financial statements; Auditors; Comfort letters; Responsibilities CLASS. CODES: 4130 (CN=Auditing); 3400 (CN=Investment analysis) Y020015 83 82028674 A Special GAAP for Banks? Or Is It Just Accounting Sleight of Hand? Henry, F. Howard; Macpherson, Donald M. CA Magazine (Canada) v115n10 PP: 34-39 Oct 1982 CODEN: CCHAA5 ISSN: 0317-6878 JRNL CODE: CCA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM Most industrialized countries have, in recent years, developed accounting principles and conventions for preparing financial statements that are comparable and generally understood and accepted by investors and the business community. In Canada, most financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Canadian Institute of Chartered Accountants (CICA) Handbook exempts banks from GAAP that could otherwise override the regulatory reporting requirements banks are subject to under governing statutes. Canada's Bank Act specifies the financial statement format that banks must present to their shareholders and the public. The December 1980 revisions to the Bank Act involve full consolidation and equity accounting requirements, as well as uniform footnote disclosure. This was an effort to bring bank financial statements into closer alignment with the accounting practices and disclosure standards of commercial industries, international banking, and with GAAP; the revised Bank Act continues to support departures from GAAP in bank accounting. There are sound industry and regulatory reasons for recognizing special GAAP for banks. Bank accounting practices, put into their proper perspective, can simply be understood as special GAAP for banks. Desc.: Canada; GAAP; Banking industry; Accounting procedures; Financial statements; Income Tax Act-Canada CLASS. CODES: 9170 (CN=Non-US); 4120 (CN=Accounting policies & procedures); 4210 (CN=Institutional taxation); 8100 (CN=Financial services industry) Y020015 84 82027248 Banking and the Video Connection Sullivan, Michael P. Bankers Magazine v165n5 PP: 55-57 Sep/Oct 1982 CODEN: BNMGBD ISSN: 0005-545X JRNL CODE: BZE DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM Television provides banks with new communications capabilities. Video has been a popular training device for some time, but its uses go far beyond that application. Some of these new applications include: 1. Video can be put to use to help a prospective corporate customer at a distant location understand a new product or service via a videotape cassette sent from the bank. 2. Corporate video can be used in news broadcasts for employees, and the Bank of America is already using video and videocassette players in its branches. 3. The First Union National Bank (Charlotte, North Carolina) has used the technology in preparing its first employee electronic annual report. Video's potential uses lie with the news media, the community, corporate business relationships, communication with special market segments, and employee communications. Video permits a bank to tell the story it wants in an exciting and visual format. Its uses are both internal and external, limited only by the imagination of the user. Desc.: Banks; Videotape; Television broadcasting; Communications CLASS. CODES: 8100 (CN=Financial services industry); 5250 (CN=Telecommunications systems) Y020015 85 82026924 For Financial Information, Execs Are 'Making The Connection' Soura, Marshall Data Mgmt v20n10 PP: 20-21 Oct 1982 CODEN: DTAMBZ ISSN: 0148-5431 JRNL CODE: DMG DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM Realizing the need within the corporate community for timely financial information, many banks have gradually instituted sophisticated cash management services which increase the availability of funds and improve the accuracy of information used by financial executives in their decision making. The Girard Connection, a cash management system developed by Girard Bank (Philadelphia, Pennsylvania) and available through the General Electric Information Services Co., ascertains the needs of the executive, and in what format, and then custom designs the system and programs it specifically to that customer's needs. The Girard Connection includes 3 basic information reporting options: 1. a computer terminal, 2. a touchtone telephone for information delivery, and 3. TELEX/TWX for distribution reports. The funds transfer system permits a corporation to wire funds from one bank to another, on a pre-authorized basis. The system also offers a deposit concentration capability. Desc.: Cash; Management; Strategic; Planning; Financial management Bank services; Banks CLASS. CODES: 3100 (CN=Capital & debt management) Y020015 86 82025220 Proxy Rules and Pro Forma Statements Anonymous CPA Jrnl v52n9 PP: 88-91 Sep 1982 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM Pro forma financial information is mainly used to reveal the effect of: 1. significant planned or consummated transactions or other events which occur after the date of the historical financial statements, or 2. certain significant transactions which have occurred during the year. Pro forma financial information is generally given in proxy statements and other filings made with the Security & Exchange Commission (SEC). Rules 3-07 and 3-08 of S-X and Regulation 14A of the proxy rules pertain generally to situations where business combinations are planned or have occurred. If securities are being offered as all or part of the consideration, both historical and pro forma presentations of capitalization, selected financial data, balance sheets, and per share amounts of earnings, dividends, and book values have to be presented in the proxy statement. In a pooling of interests, a 5-year presentation plus presentation of any comparative interim periods is required for selected financial data, including earnings and dividends per share. In a purchase, only data for the most recent fiscal year and interim periods are needed. Desc.: Pro forma financial statements; SEC regulations; Acquisitions & mergers; Proxy statements; Business combinations CLASS. CODES: 4310 (CN=Regulation); 4120 (CN=Accounting policies & procedures) Y020015 87 82024894 S.B.C.S. - General Ledger Version 4.0 Exner, Ron Interface Age v7n10 PP: 122-123 Oct 1982 ISSN: 0147-2992 JRNL CODE: INA: DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM The General Ledger Version 4.0, from Small Business Computer Systems (SBCS of Lincoln, Nebraska), is a sophisticated and user-friendly system. It requires a 48K-byte Apple II or II+, 2 disk drives, monitor, and 80-column printer. It is made up of several modules: 1. introduction, 2. data entry, 3. practice session, 4. setting up the chart of accounts, 5. program modules, 6. error recovery, 7. financial reports, 8. accounting terminology, and 9. glossary. The system can hold up to 500 accounts and produces standard financial statements plus a user-designed special report. It has 2 levels of password security and allows up to 9 departments. Two negative areas are the awkward input format of the Transaction Entry section, which produces a barely adequate audit trail, and unnecessary repetition caused by the Jrnl Entry section. The system sometimes seems unnecessarily complicated. If a great deal of flexibility is required, the trade-off of easy set-up and input for flexibility will be worthwhile. Desc.: Software packages; Automated accounting systems; Functions CLASS. CODES: 5240 (CN=Software & systems); 9120 (CN=Product specific) Y020015 88 82021639 SEC Integrated Disclosure - The Pervasive Effect Andrews, Wesley T., Jr.; Dodd, Jane Woman CPA v44n3 PP: 9-12 Jul 1982 CODEN: WCPAAR ISSN: 0043-7271 JRNL CODE: WCP DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM During the last 3 years, the Securities and Exchange Commission (SEC) has been moving steadily to implement what are commonly called ''Integrated Disclosure Rules.'' There appear to be 3 purposes to this effort: 1. to standardize reporting and disclosure requirements across all types of filings with the Commission, 2. to require additional desirable disclosure, and 3. to secure uniformity of required disclosures between annual reports to stockholders and filings with the Commission. This effort's impact is likely to be more pervasive than its effect on the annual reports of registrants. The principal regulation governing reporting for financial statements, footnotes, and schedules is Regulation S-X, adopted in 1940. This regulation integrates all accounting requirements into a single codification. The requirements are applicable to filings under all securities acts. One avenue for future development of generally accepted accounting principles might be for the SEC to require additional disclosures. All practitioners should be aware of the expanded disclosure required by the SEC and consider the impact of potential increased disclosure requirements on all engagements. Appendix. Desc.: SEC registration; Integrated; Disclosure; Rules; SECSX; Financial statements; Annual reports; Auditors opinions; Internal accounting control CLASS. CODES: 4120 (CN=Accounting policies & procedures); 4130 (CN=Auditing); 4310 (CN=Regulation) Y020015 89 82021535 Other Comprehensive Bases of Accounting: Alternatives to GAAP? Alderman, C. Wayne; Guy, Dan M.; Meals, Dennis R. Jrnl of Accountancy v154n2 PP: 52-55, 58-62 Aug 1982 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 7 Pages AVAIL.: ABI/INFORM Recently, financial statements prepared in accordance with other comprehensive bases of accounting (OCBOA) have generated substantial interest among certified public accountants (CPAs) for several reasons. The Economic Recovery Tax Act of 1981 made numerous changes in the tax law that further separated tax accounting from generally accepted accounting principles (GAAP). These changes are encouraging companies to consider preparing financial statements on the income tax basis of accounting rather than on the GAAP basis. Statement on Auditing Standards (SAS) no. 14 decides the reporting criteria when an independent auditor is associated with financial statements prepared in accordance with a comprehensive basis of accounting other than GAAP. The auditor's report should contain 3 paragraphs. The first paragraph should identify the financial statements examined and state whether the examination was made in accordance with generally accepted auditing standards. The second should: 1. state the basis of presentation of the financial statements on which the auditor is reporting; 2. refer to the note to the financial statements that describes how the basis of presentation differs from GAAP; and 3. state that the financial statements are not in conformity with GAAP. Also, the auditor's opinion should be expressed on whether the financial statements are presented fairly. References. Desc.: Financial statements; Auditing standards; Alternative; GAAP Tax basis; Accounting; Cash basis accounting; Disclosure CLASS. CODES: 4130 (CN=Auditing) Y020015 90 82020814 How Managers Can Use Color Graphics to Improve Financial Performance Keepper, Lester H., Jr.; Purcell, W. R., Jr. Manage v34n3 PP: 6-9 Jul 1982 ISSN: 0025-1623 JRNL CODE: MAN DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM At most businesses, the financial reports tend to omit data that managers need most and instead give them mountains of data that they do not need, presented in formats that they cannot easily understand or use. As a result, most managers end up managing without the financial information they really need because they have learned to ignore most of the data they receive. Color graphics, produced on microcomputers, can solve this problem. Color graphs can be understood and used more quickly and effectively than tables. Microcomputers are low in cost, easy to use, and available. Their capacities are continually being developed. The decision graph is a new type that is especially useful in showing clearly how potential changes would affect a company's business. Within 3 years, most businesses will use color graphics from microcomputers as the standard format for financial reports and planning. Here are 6 steps to make better use of financial information through color graphics on microcomputers: 1. Get a color-graphic microcomputer system now. 2. Develop and test some graphs. 3. Demand the information you need. 4. Look ahead: develop color graphs showing where the company is going as well as where it has been. 5. Get numerous what-if analyses of the future. 6. Develop decision graphs for your business. Desc.: Color; Computer graphics; Financial; Information; Microcomputers; Graphs; Computer based modeling CLASS. CODES: 3100 (CN=Capital & debt management); 5230 (CN=Computer hardware); 5240 (CN=Software & systems) Y020015 91 82020410 Breaking the Financial Time-Bind Yaeger, Holly Financial Executive v50n7 PP: 14-16 Jul 1982 CODEN: FIEXAW ISSN: 0015-1998 JRNL CODE: FEX DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM As the quantity of reports required by business and regulatory agencies increases, the time available to produce each report decreases, production costs rise, and quality diminishes. Cost and time spent in report preparation can be analyzed via: 1. number of personnel and cost involved in generating a report, 2. hours related to completing calculations and rechecking data, 3. hours spent in translating the document into a functional report for management, and 4. hours spent by personnel needed elsewhere. These time-cost factors must be multiplied by number of reports. A 13-point program for producing a high quality report includes speed and efficiency, facility, and clearly delineated audit trails. These reports can be produced via 3 systems: 1. manual reporting, which is slow, error prone, costly, and cumbersome, 2. in-house data processing, which has problems in format and calculation changes, possible manual rechecking, and repetitious input for each report, and 3. consolidated financial reporting systems offered by timesharing firms, which are time and cost effective, free up in-house data processing, and are highly responsive to customers' needs. Desc.: Financial reporting; Time; Reports; Quality; Criteria; Data processing; Timesharing (DP) CLASS. CODES: 4120 (CN=Accounting policies & procedures) Y020015 92 82019282 Is Your Annual Report a True Mirror of Your Organization? Neilson, Winthrop C. Jrnl of Communication Mgmt v11n1 PP: 9-11 1981 ISSN: 0162-5659 JRNL CODE JOC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM Annual reports are a persistent problem. In the 1970s, the annual report entered a new and healthy phase as writers started to worry about conveying a message. Graphics supported the report's theme, and writers started to consider the audiences' needs. Nevertheless, reports still had virtually the same format. However, the late 1970s saw a new focus - a move toward more and more disclosure. Several factors should be explored as annual reports are written: 1. discussion of strategies, 2. recognition of problem areas and explanation of the response to them, 3. review of objectives, 4. humanizing the firm, 5. indicating an appreciation of the company's investors, 6. simple but credible analysis of financial figures, 6. dividend discussion, 7. discussion of the company's industry, combined with a frank assessment of the company's performance compared with that of its peers. Tables. Desc.: Annual reports; Readership; Surveys; Reader interest CLASS. CODES: 2400 (CN=Public relations) Y020015 93 82016028 Selected 1981 Trends in Financial Accounting and Reporting Anonymous CPA Jrnl v52n6 PP: 74-76 Jun 1982 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM The standards-setting institutions continued their efforts to ease financial reporting and regulatory burdens of private and small public companies in 1981. The standards-setting institutions involved in these efforts were: 1. the Securities and Exchange Commission (SEC), 2. the Financial Accounting Standards Board (FASB), 3. the American Institute of Certified Public Accountants (AICPA), and 4. the Financial Executives Research Foundation. The financial statements in the annual reports of public companies are now required to have supplementary financial information. The important items that should be included with the financial statements are inflation accounting, as well as management's discussion and analysis. Inflation has caused increased attention to be given to the reporting of liquidity and cash flows. The issuance of an FASB Exposure Draft recommends the adoption of the cash-flow concept for the funds statement. The Financial Executive Institute has urged its members to take a leadership role in encouraging their companies to voluntarily change the format of the funds statement, where applicable, to focus on cash, including short-term investments and the components of cash flow. Desc.: Financial reporting; SEC; FASB; AICPA; Small business; Inflation accounting CLASS. CODES: 4120 (CN=Accounting policies & procedures); 9520 (CN=Small business) Y020015 94 82014347 Funds Statements Under CCA Cooke, Terry Accountancy (UK) v93n1064 PP: 95-96, 98 Apr 1982 CODEN: ACTYAD ISSN: 0001-4664 JRNL CODE: ACE DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM A company using current cost accounting (CCA) for its main accounts should prepare its funds statement on a compatible basis. Companies may find it informative to present a funds statement based on the CC convention even when producing supplementary CCA accounts. Two examples of alternative presentations of funds statements under CCA are in the Guidance Notes. Both alternative presentations have merit, but an additional alternative format is probably the most simple. The first alternative presentation highlights the problems involved in trying to maintain capital intact in an inflationary environment. This is particularly useful to the recipients of financial statements. The most simple way to prepare the funds statement involves the alternative format not included in the Guidance Notes. It adds back the CC adjustments to the current cost profit and proceeds as under the historic cost convention. The first alternative presentation in the Guidance Notes is probably the most informative. Tables. Desc.: UK; Funds statements; Current cost accounting; Financial statements; Accounting procedures CLASS. CODES: 4100 (CN=Accounting) Y020015 95 82014111 What Analysts Want to Hear Werba, Gabriel Public Relations Jrnl v38n4 PP: 18-20 Apr 1982 CODEN: PREJAR ISSN: 0033-3670 JRNL CODE: PRJ DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM Members of the Financial Analysts Society of Detroit were surveyed about preferences as to a financial presentation's content and style. Results include: 1. Analysts want more information than is made available in company reports. 2. They prefer presentations with a team approach. 3. They prefer visual presentations. 4. They want all available information, but want it distributed before and after the presentation. 1981 results were compared to results of a similar survey in 1974. Guidelines for giving analysts what they want include: 1. Cover the subjects vital to the interests of the analysts. 2. The CEO and key officers should make important presentations. 3. Use visuals in making the presentation. 4. List participants and a discussion outline on invitations. 5. Send out financial statements before the presentation. 6. Provide financial kits at the presentation. 7. Make speech reprints available. Tables. Desc.: Shareholder relations; Financial; Information; Presentation Preferences; Surveys CLASS. CODES: 2400 (CN=Public relations) Y020015 96 82013304 SEC Issues Guidelines for Management's Discussion and Analysis of Financial Condition and Results of Operations Anonymous Woman CPA v44n2 PP: 21-23 Apr 1982 CODEN: WCPAAR ISSN: 0043-7271 JRNL CODE: WCP DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM The Securities and Exchange Commission (SEC) adopted a sweeping revision of the mandatory business and financial disclosure requirements applicable to most US publicly-held companies in 1980. This major revision is commonly known as the Integrated Disclosure System. It standardized requirements for the form, content, and timing of financial statements required by the 1933 and 1934 Securities Acts. One of the major changes was in the requirements of Regulation S-K, Item 11, for management's discussion and analysis of financial condition and results of operations. The management's discussion and analysis of operations (MD&A) reporting has developed into a highly mechanistic and uninformative commentary on percentage variations. Examples of disclosures made by registrants under the new requirements are also provided by Accounting Series Release (ASR) 299. ASR 299 can be an invaluable aid to those who are responsible for complying with the disclosure requirements of Regulation S-K, because it contains numerous illustrations and suggestions. MD&A disclosures are expected to continue to improve with time, and the SEC intends to continue to review the MD&A disclosures, perhaps providing additional guidance in subsequent releases. Desc.: Financial statements; Information; Disclosure; SEC; Requirements; Liquidity; Working capital; Financial reporting CLASS. CODES: 4100 (CN=Accounting) Y020015 97 82013240 Reporting Practices for Union Accounting Hull, Rita P.; Burrows, Ronnie J. CPA Jrnl v52n5 PP: 89-92 May 1982 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM The current membership of national labor unions and employee associations in the US is in excess of 24.2 million workers, who are covered by almost 200, 000 collective bargaining agreements. The accounting and reporting practices of these labor unions are substantially behind those of corporations. The US Department of Labor (DOL) has authority over the financial and reporting practices of labor unions. This authority was derived from the Labor-Management Reporting and Disclosure Act of 1959. The financial statements required by the DOL do not appear to be governed by effective accounting or reporting standards and there is no independent audit requirement. There are a variety of changes recommended for the audit reporting practices of union accounting, including: 1. a need for clarification, 2. a need to identify the financial statements audited, 3. a reference to generally accepted auditing standards, 4. correct reference to generally accepted accounting principles, 5. the inclusion of financial statements in the body of the audit report, 6. a reference to consistency, 7. an independent auditor, and 8. appropriate comments. All of these recommendations suggest that reporting practices for unions are substandard. The lack of attention given to nonprofit entities in general by the accounting profession is the probable cause for the substandard reporting. Desc.: Unions; Financial reporting; GAAS; Accounting standards; Financial statements CLASS. CODES: 6300 (CN=Labor relations); 4100 (CN=Accounting) Y020015 98 82011211 The Two-Worksheet Method of Accounting Control Documentation Forsyth, G. Jane Internal Auditor v39n2 PP: 32-34 Apr 1982 CODEN: ITAUAB ISSN: 0020-5745 JRNL CODE: IAU DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM The auditor of a company must be able to demonstrate competence in understanding and evaluating accounting controls. The definition of accounting control includes 3 major elements: 1. proper authorization of transactions, 2. maintenance of reasonably accurate financial records, and 3. safeguarding assets. The documentation method of control is based on 2 worksheets. Worksheet A presents a list of transactions to audit and is in a Jrnl-entry format. Worksheet B describes each type of transaction and how it is processed through the accounting system. The first step of the method requires the identification of all necessary types of transactions and the recording of the transactions in Worksheet A. The next step is to document how each transaction is processed. Worksheet B documentation should include: 1. authorization, 2. source document, 3. input, 4. input-verification controls, 5. computer processing, 6. output, and 7. output-verification controls. When implementing this method, the training should be structured to meet the needs of the audit department. The worksheet method helps auditors recognize the transaction-flow points at which accounting controls are necessary. Charts. Desc.: Foreign Corrupt Practices Act 1977-US; Internal accounting control; Documentation; Procedures; Financial reporting CLASS. CODES: 1300 (CN=International trade & foreign investment) 4300 (CN=Law); 4100 (CN=Accounting) Y020015 99 82010381 Not-for-Profit Organizations-More Disclosure Required? Armishaw, Daniel P. Cost & Mgmt (Canada) v56n1 PP: 55-57 Jan/Feb 1982 CODEN: CSTMA9 ISSN: 0010-9592 JRNL CODE: RIA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM The reporting of budgeted and actual expenditures and performance in external financial reports for not-for-profit organizations (NPO) would provide information which would enable current and potential resource providers to make more informed decisions. An NPO is defined as an organization which is set up for purposes other than the earning of profit. Users of NPO financial reports include: 1. foundations, 2. government funding bodies, 3. individual donors, 4. banks, and 5. other grantors of credit. The program budget, which is a useful format for external reporting of resource allocation by NPOs, is simply a budget which reports expected spending on specific needs or services and in aggregate. The subjective nature of many NPO objectives makes reporting of performance a complicated issue, often requiring the use of narratives. Additional research to develop more useful measuring techniques will be an ongoing process as NPOs develop their external budget reporting systems. Charts. References. Desc.: Nonprofit organizations; Canada; Financial reporting; Budgeting; Budgets; Financial statements CLASS. CODES: 4100 (CN=Accounting); 3100 (CN=Capital & debt management) Y020015 100 82010231 Let's Look at Financial Reporting by Smaller Businesses Hildebrand, Glendon R. Management Accounting v63n10 PP: 42-47 Apr 1982 CODEN: MGACBD ISSN: 0025-1690 JRNL CODE: NAA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM Many certified public accountants (CPAs) feel that the financial statements of small companies include information which is not needed by statement users. In November 1981, the Financial Accounting Standards Board (FASB) issued an Invitation to Comment designed to identify differences between large and small businesses that might point to a need for changes in financial reporting. Some CPAs have proposed that certain measurement requirements be eliminated for smaller companies. However, if measurements were to differ because of a company's ownership or size, there might be confusion about the rules that have been applied by various companies, and there would be less comparability of information among companies. The AICPA Special Committee on Accounting Standards Overload is considering the development of an alternative comprehensive basis for accounting and has issued a discussion paper for public comment. Desc.: Small business; Financial reporting; Requirements; Financial statements; GAAP; Information; Disclosure; FASB statements CLASS. CODES: 4100 (CN=Accounting) Y020015 101 82007980 New SEC Rules Affecting Insurance Companies Pluschau, Dick Best's Review (Prop/Casualty) v82n11 PP: 82-86 Mar 1982 CODEN: BRPLB3 ISSN: 0161-7745 JRNL CODE: BIP DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM The Securities & Exchange Commission (SEC) has recently promulgated new rules that significantly reduce and streamline financial statement filing requirements for insurance firms. The rules are set forth in Accounting Series Releases 301 and 302. In the former, the SEC revised Article 7 and eliminated Article 7A of Regulation S-X. The revised rules govern the form and content of financial statements which have to be filed by insurance firms for fiscal years ending after December 15, 1981. ASR 302 greatly reduces the number of instances where separate financial statements of the parent company and insurance company subsidiaries will be required. Insurance companies should benefit from the changes. For example, previously, separate financial statements were required for unconsolidated subsidiaries and 50% or less owned persons meeting the significant subsidiary test. Under the new rules, separate statements are not required, although certain footnote disclosures may be. Desc.: Insurance companies; SEC filing requirements; Changes; Financial reporting; Financial statements; SECSX; Consolidated financial statements; Unconsolidated subsidiaries CLASS. CODES: 8200 (CN=Insurance industry); 4300 (CN=Law); 4100 (CN=Accounting); 2300 (CN=Planning & strategy) Y020015 102 82007697 Association with Financial Statements SAS 26 Munter, Paul; Ratcliffe, Thomas A. Massachusetts CPA Review v56n1 PP: 11, 13, 15, 17-18 Winter 1982 ISSN: 0025-4770 JRNL CODE: MCP DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM Statement on Auditing No. 26 (SAS 26) requires a straight disclaimer of opinion when an accountant has an association with financial statements of US public entities which have neither been audited nor reviewed. If the statements are audited, an audit report is issued. The review of a financial statement of a public entity for an interim period requires the filing of interim information by Securities & Exchange (SEC) registrants, making it incumbent upon the accountant to issue an accompanying review report. SAS 26 harmonizes many of the reporting requirements for both public and nonpublic clients. Association with financial statements not audited nor reviewed, with those prepared on a comprehensive basis of accounting other than generally accepted accounting practices (GAAP), or those on which an independent opinion cannot be expressed, require a disclaimer of opinion by the accountant. Material departures from GAAP, including inadequate disclosure, require a modified disclaimer of opinion, or withdrawal from the engagement. An exception to the issuance of a disclaimer is when unaudited statements are presented in comparative form with audited statements in documents filed with the SEC. Negative assurances should generally not be given in conjunction with a disclaimer of opinion. Chart. Desc.: Auditing standards; Financial statements; Audited financial statements; Interim financial statements; Unaudited financial statements; Disclaimers of opinion (ACC) CLASS. CODES: 4100 (CN=Accounting) Y020015 103 82005986 Requirements Reduced for Filing Separate Parent/Subsidiaries Statements Kent, Adelaide B. CPA Jrnl v52n2 PP: 75-76 Feb 1982 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM The latest step in the Securities and Exchange Commission's (SEC) efforts to simplify and improve disclosure requirements, Accounting Series Release (ASR) 302, modifies requirements for the inclusion of parent company financial information and that of unconsolidated subsidiaries and 50% or less owned equity-method investee companies. Additional footnote disclosures describing the nature and sources of the restrictions and the aggregate amount restricted relative to total consolidated net assets at the end of the fiscal year are necessary where restricted net assets of subsidiaries plus the parent's equity in the undistributed earnings exceeds 25% of total consolidated net assets. A separate Schedule III disclosing the financial position, changes in financial position, and results of operations of the parent is to be supplied where the additional disclosures are required. The SEC has established requirements to be followed in the absence of guidance from the Financial Accounting Standards Board (FASB). These requirements include: 1. Summarized data as to assets, liabilities, and results of operations are to be provided as of the same time for which the consolidated financial statements are presented. 2. Disclosure of current and noncurrent assets and liabilities are required where classified balance sheets are shown. The ASR 302 is effective for years ending after March 15, 1982. Desc.: Parent companies; Subsidiaries; Separate; Financial statements; Financial reporting; Disclosure; Unconsolidated subsidiaries CLASS. CODES: 4100 (CN=Accounting); 2300 (CN=Planning & strategy) Y020015 104 82005984 Some Significant Differences in U.S. and U.K. Reported Net Income Barfuss, Francois R.; Musson, Roger D.; Bennett, David C. CPA Jrnl v52n2 PP: 44-48 Feb 1982 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM The influence of multinational corporations has brought increasing attention to the differences between US accounting principles and UK accounting practices, which sometimes results in a significant difference in reported net income. Every US accountant involved with UK companies' financial statements should be aware of these differences. When changing a UK net income to comply with the US generally accepted accounting principles (GAAP), the amount must be adjusted for deferred taxes and depreciation on revalued assets. The UK approach to inflation accounting may produce great differences in the financial statements. The UK inflation accounting standard permits the use of current cost financial statements as the primary financial statements of a company with the disclosure of very minimal historical cost information. Differences in presentation that could be confusing to the US accountant are: 1. UK dividends are shown as a deduction from the current year's earnings. 2. All operations to the date of discontinuance are combined on the UK income statement. The US accountant should be able to avoid most misunderstandings by reading the principles footnote or the UK consolidation instructions. Tables. Desc.: US; UK; Comparative analysis; Financial reporting; Net income; Accounting procedures; Income statements; Differences; Accounting standards; Accounting policies CLASS. CODES: 4100 (CN=Accounting) Y020015 105 82005433 Communicating Results of Audit Work Orr, Elaine L. International Jrnl of Government Auditing v9n1 PP: 1 Jan 1982 CODEN: IJGADG ISSN: 0047-0724 JRNL CODE: IGA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 1 Pages AVAIL.: ABI/INFORM The reporting of audit findings in a meaningful way is just as important as performing the audit work itself. Regardless of how significant audit work results are, if they do not reach the appropriate audience on time and in an understandable format, the results will not be used effectively. The overall reporting methods of countries may need to change as these nations conduct audits which address the efficiency and effectiveness of government activities. In terms of report timing, options include: 1. annual reports, 2. semiannual or quarterly reports, 3. annual reports supplemented by periodic reports as major audits are completed, and 4. reports prepared as individual audits are completed. The Supreme Audit Institutions (SAIs) may have chosen a method that best suits their needs. However, occasionally the report timing is dictated by statute and legislative mandate must be sought to alter it. One advantage of the annual report is that the staff is devoted to the report's preparation for only a portion of the year and can return to other areas of concern when the audit is completed. The report's audience and the use of the information are important considerations when changing or selecting audit reporting methods. Periodically, it is worthwhile to reflect on how well a report meets its users' information needs. The responsibility for evaluating audit reporting methods rests with the SAI because it is in the best position to suggest alternatives to the current process. Desc.: Audits; Accountants reports; Timing; Annual reports; GAO-US Governmental accounting CLASS. CODES: 9550 (CN=Public sector); 4100 (CN=Accounting); 2400 (CN=Public relations) Y020015 106 82004421 The Funds Statement as a Management Tool: Forecast, Budget, and Feedback Fahnestock, Robert T. Woman CPA v44n1 PP: 12-14 Jan 1982 CODEN: WCPAAR ISSN: 0043-7271 JRNL CODE: WCP DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM The funds statement, because of its content and its flexible format, lends itself readily to preparing forecasts to be used by investors and creditors as well as the company and its management. Since it displays a wide variety of financial information, the funds statement can be used also in the budgeting process. Although the statement in its common form presents historical information, with proper design, the information can be used to reflect an operating plan of the entity as a whole. The funds statement summarizes operational activity as the net inflow of resources from operations. Since the investing activity is the allocation of available resources to productive activity, the funds statement can be used as the logical starting point for financial forecasting. If the funds statement prepared at the end of an operating period is compared to the projected funds statement, the differences could be analyzed on a ''management by exception'' basis. This operational feedback could be used in controlling operating, financing, and investing activities. Each business organization should formulate suitable ratios for use on the funds statement that would enable management to obtain informational trends. Table. Reference. Desc.: Funds statements; Financial planning; Forecasting; Budgeting ; Financial management CLASS. CODES: 4100 (CN=Accounting); 3100 (CN=Capital & debt management) Y020015 107 82004420 New Light on Investors' Information Sources: Financial Statements vs. Financial Jrnls Chang, Lucia S. Woman CPA v44n1 PP: 8-11 Jan 1982 CODEN: WCPAAR ISSN: 0043-7271 JRNL CODE: WCP DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM In a recent survey of individual and institutional investors and financial analysts, it was suggested that investors should be stratified into at least 3 groups: 1. the standard user, who is capable of understanding financial statements, 2. the sophisticated user, who can assimilate more complex and detailed data, and 3. the unsophisticated user, who may not read the financial statements at all, or who does not understand them even when read. All 3 groups consider the corporate annual reports as the most important source of investment information. The financial statements, together with the summary of operations, are the most important elements in decision-making. It is suggested that corporations should review the nature and the extent of the additional information requirements of the sophisticated public. In providing the added information, corporations should take steps to ensure that this public is not unduly privileged. It is also believed that corporate disclosure requirements aimed at meeting the information needs of the unsophisticated user are likely to incur social costs without any social benefits. References. Tables. Desc.: Investors; Information; US; UK; New Zealand; Form 10-K; Financial statements; Financial analysis; Comparative studies CLASS. CODES: 4100 (CN=Accounting); 3100 (CN=Capital & debt management) Y020015 108 82001802 ED29-Accounting for Leases and Hire Purchase Contracts/Guidance Notes on ED29: Accounting for Leases and Hire Purchase Contracts Anonymous Accountancy (UK) v92n1059 PP: 117-144 Nov 1981 CODEN: ACTYAD ISSN: 0001-4664 JRNL CODE: ACE DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 17 Pages AVAIL.: ABI/INFORM Over the past 5 years more companies have begun financing a greater proportion of their fixed assets through lease agreements. The growth of leasing as a source of finance for industry and commerce has made it necessary to consider the implications for financial reporting. There are many kinds of leases, two main categories are finance leases and operating leases. The details of this exposure draft (ED) for a new standard for lease accounting include: 1. accounting by lessees, 2. accounting by lessors, 3. sale and leaseback transactions, 4. deferred tax, 5. disclosure requirements by lessees and lessors, and 6. the dates when leases are effective. The Guidance Note recommends practical methods to assist companies in complying with the Standard. The problem areas in accounting for leases include: 1. deferred taxation, 2. regional development grants, 3. bad debts, 4. land and buildings, 5. sale and leaseback, 6. leasing by manufacturers or dealers, and 7. long term leases. Hire purchase accounting involves procedures concerning accounting by finance companies and purchasers and proper disclosure. A simple approach to capitalizing finance leases for use by small companies is explained through general principles, arithmetic, balance sheet presentation and note disclosures. Tables. Desc.: UK; Leases; Accounting procedures; Installment purchases; Financing leases; Capitalization; Operating leases; Lessees; Lessors; Balance sheets; Financial reporting; Rule of 78; Actuarial cost methods (ACC); Deferred; Taxation CLASS. CODES: 4100 (CN=Accounting); 3100 (CN=Capital & debt management); 4200 (CN=Taxation) Y020015 109 81027972 Pension Liabilities: Now You See 'Em, Now You Don't! Much, Marilyn Industry Week v211n4 PP: 72-78 Nov 16, 1981 CODEN: IWEEA4 ISSN: 0039-0895 JRNL CODE: IW DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 5 Pages AVAIL.: ABI/INFORM Although pension funds are powerful and could represent 50% of all US business equity capital by 1985, the soundness of individual pension plans has become an issue. A related issue concerns how a potential investor can judge whether or not a particular company's pension liabilities constitute an excessive burden. The total pension assets of the top 1, 000 US corporations are estimated at $244 billion, with obligations of an estimated $320 billion, which leaves a total unfunded liability of around $76 billion. What is needed is a commonly accepted methodology to ensure the information supplied by companies enables one to make an accurate diagnosis of the health of their pension plans. Current disclosure requirements offer little decisional help to readers of financial statements. A 1980 rule set by the Financial Accounting Standards Board (FASB) provides companies facing serious shortfalls with methods of masking potential problems. Some companies, such as Bethlehem Steel Corp., present both their own and FASB computations, to clarify the figures. The FASB is expected to issue further pension-fund reporting standards, addressing employer accounting for pensions and post-employment benefits. According to the FASB, once its accounting project is completed, current confusion should be cleared. Charts. Desc.: Pension costs; Pension plans; Unfunded; Liability; FASB statements; Disclosure; Requirements; Financial reporting; Actuarial assumptions (ACC); Financial statements; Manycompanies CLASS. CODES: 3600 (CN=Pension fund management); 6400 (CN=Employee benefits & compensation); 4100 (CN=Accounting) Y020015 110 81027214 Statement of Financing and Investing Activities Swanson, Edward P.; Vangermeersch, Richard CPA Jrnl v51n11 PP: 32-40 Nov 1981 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 7 Pages AVAIL.: ABI/INFORM The statement of changes in financial position is the present funds statement. It is required when a balance sheet and income statement are presented. However, criticism has arisen concerning the purpose of the statement. Loyd C. Heath suggested that the statement should be discontinued and replaced with 3 new statements. However, a revised version of the present-day funds statement, retitled Statement of Financing and Investing Activities (SFIA), was proposed which would overcome the most important of Heath's criticisms as well as incorporate important new subtotals which may be useful in predicting future cash flows. The SFIA has other advantages as compared to the present funds statement: 1. A single concept of funds is required (cash). 2. The format is mandatory. 3. Information on internal financing through operations, external financing, investing, and dividends is presented in 4 separate sections. 4. Changes in operating receivables and payables and inventories, which may indicate impending liquidity problems, are highlighted. Tables. References. Desc.: Financial reporting; Financial statements; Funds statements Disclosure; Objectives; Statements; Financing; Investment; Activity; Cash flow CLASS. CODES: 4100 (CN=Accounting); 3100 (CN=Capital & debt management); 3400 (CN=Investment analysis) Y020015 111 81026654 Financial Reporting Checklist Anonymous Practical Accountant v14n11 PP: 41-56 Nov 1981 CODEN: PACNBD ISSN: 0032-6321 JRNL CODE: PRA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 16 Pages AVAIL.: ABI/INFORM The requirements for disclosure in accountants' reports are in a process of evolution as the American Institute of Certified Public Accountants (AICPA), the Financial Accounting Standards Board (FASB), and governmental regulatory agencies increasingly promulgate new rules. To help the accounting firm keep current on the myriad of disclosure requirements buried throughout the various pronouncements, the Auditing Standards Committee of the Washington Society of Certified Public Accountants (CPAs) prepared the Financial Reporting Checklist. The checklist, presented here, is intended as an aid for the accounting firm which has not developed its own checklist. Desc.: Financial reporting; Guidelines; Disclosure; Accountants reports; Financial statements; Balance sheets; Income statements; Funds statements CLASS. CODES: 4100 (CN=Accounting) Y020015 112 81026249 Accounting and Auditing for Drilling Funds Baggett, Monte R.; Dole, Richard D.; Short, Jack E. CPA Jrnl v51n9 PP: 27-37 Sep 1981 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 8 Pages AVAIL.: ABI/INFORM Within the last decade, industry has been confronted with an unprecedented demand for oil and gas products. Developers have been forced to adopt even riskier and costlier measures to find and recover oil and gas reserves. One method of raising funds to pay for the cost of exploration and development is to form limited partnerships between investors and experienced oil and gas developers. Private investors are usually only liable for the amount they agree to contribute to the partnership. The general partner has unlimited liability, as well as full control over the partnership's operations. Under the Securities Act of 1933, limited partnership interests that constitute a security must be registered with the Securities & Exchange Commission (SEC) before they are eligible for a public offering. Financial statements of limited partnerships must be presented on the basis of Generally Accepted Accounting Principles (GAAP). The equity section of a public partnership's financial statements should disclose separately the equity attributable to the general partner and the equity attributable to the limited partners. Other reports and disclosure requirements are necessary. Charts. Desc.: Oil exploration; Natural gas exploration; Oil drilling; Funds; Limited partnerships; Financial statements; Sales of securities (public); SEC registration; SECSX; Accounting standards; Reserves; Accounting procedures; Disclosure; Requirements CLASS. CODES: 8510 (CN=Petroleum industry); 4100 (CN=Accounting; 3100 (CN=Capital & debt management); 4300 (CN=Law) Y020015 113 81020877 Revisions to Form 10-Q Anonymous CPA Jrnl v51n5 PP: 64-66 May 1981 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM Form 10-Q Quarterly Report has been revised by the Securities and Exchange Commission (SEC) in order to encourage and facilitate integration of formally filed quarterly reports with informal reports furnished to shareholders and to make some disclosure requirements for interim periods consistent with revised disclosure requirements for fiscal periods. Item II of Regulations S-K was also amended to set requirements for management's discussion and analysis of interim financial information. The Form 10-Q revisions are intended to make it easier for those registrants who wish to combine the financial information sections of Form 10-Q with an informal quarterly report to shareholders. In addition, the instruction pertaining to footnote disclosure accompanying interim financial statements was revised to make it clear that certain disclosures are required to supplement the financial statements. Another amendment requires that Form 10-Q be signed on the registrant's behalf by a duly authorized officer of the registrant and by the chief accounting officer. Desc.: SEC; SECSX; Quarterly reports; Interim reports; Stockholders ; Disclosure; Interim financial statements; Requirements CLASS. CODES: 4300 (CN=Law); 4100 (CN=Accounting) Y020015 114 81020677 How to Broaden the Horizons of the Small Company Annual Report Miller, Martin; Pagani, Frank Public Relations Jrnl v37n8 PP: 12-13 Aug 1981 CODEN: PREJAR ISSN: 0033-3670 JRNL CODE: PRJ DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM Recommendations designed to help a company get maximum return on an investment for annual reports are offered. The first tactic is to order more copies. Larger quantities will bring down the per-unit cost while making more copies of the report available for wider applications. The main reason for upgrading the annual report is to increase the chances of the company getting noticed in the marketplace. To do that effectively, the report needs photos, captions, headings, charts, graphs, financial tables, and text that stand out. An expanded format enables readers to follow the information with greater ease and to distinguish pertinent facts. Efficient production models should be used. Ease of information retrieval should be aimed for, along with visual impact to help keep that information fresh in the audience's mind. To get maximum value for annual reports, enough pages are needed to properly convey the company's message and enough copies of the report to successfully market that message. Desc.: Small business; Annual reports; Planning CLASS. CODES: 2400 (CN=Public relations) Y020015 115 81020676 ''Predictable'': The Watchword for 1980 Reports Dyer, Janet Public Relations Jrnl v37n8 PP: 9-10 Aug 1981 CODEN: PREJAR ISSN: 0033-3670 JRNL CODE: PRJ DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 2 Pages AVAIL.: ABI/INFORM Of over 100 annual reports from 1980, about 75% were profusely illustrated with 4-color photographs, had a text format of 2-3 columns per page, used a sans-serif typeface-usually Helvetica 12 point or larger, and floated all in abundant white space, shot through with bold rules. The recent heavy emphasis on readability has virtually mandated one change: the conversion to the slick, magazine-like format. Photograph-inflated reports threaten to glut the market, and size has become, in some cases, more important than quality or pertinence. The most common layout used one large, usually full-page, bleed balanced by several smaller photos. Changes to watch for include more and better use of stocks, especially to differentiate between the financial section and other sections, and more use of ''perfect'' binding, which permits flexibility in using special stocks. Cover styles fell into 3 categories: 1. microcosms of corporate image, 2. ''beautiful'' expressions of the company ''soul'', and 3. words. Desc.: Annual reports; Trends; Changes CLASS. CODES: 2400 (CN=Public relations) Y020015 116 81020387 Research-Disclosing Non-Financial Information Denman, John H. CA Magazine (Canada) v114n6 PP: 64, 66-67 Jun 1981 CODEN: CCHAA5 ISSN: 0317-6878 JRNL CODE: CCA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 3 Pages AVAIL.: ABI/INFORM An increasing demand for disclosures in annual reports and financial statements of information that is non-financial in nature is relevant to the interpretation and understanding of the financial statements. Disclosures fall into the following categories: 1. labor and employment, 2. production, 3. investment programs, 4. organizational structure, 5. environmental measures, and 6. value-added information. An assessment of the need for guidelines involving disclosures in corporate reports is outlined in the issues discussed in the categories. Canadian companies will be required to comply with disclosure requirements and standards recommended by external agencies, if further steps are not taken by Canadian authorities to set standards involving disclosure. Tables. References. Desc.: Annual reports; Financial statements; Information; Disclosure; Canada CLASS. CODES: 2400 (CN=Public relations); 4100 (CN=Accounting) Y020015 117 81020365 Cash Flow and Return on Investment-A Supplement to FAS 33 Patrick, William F. CPA Jrnl v51n3 PP: 29-35 Mar 1981 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM A supplement to Statement 33, Financial Reporting and Changing Prices, is needed to bridge the gap between historical cost accounting and inflation accounting. The supplement should highlight cash flow and return on investment (ROI) in order to help investors understand how a company's operations are affected by inflation. The format of the hypothetical supplement should include information on sales and profitability for a 5-year period to show whether a company whose costs have been rising due to inflation has been able to maintain acceptable gross margins and net income. This depends heavily on having a flexible pricing mechanism. The supplement should also focus on cash flow to determine whether a company is generating enough cash flow from operations to pay dividends and finance capital expenditures. The last part of the supplement would indicate a company's return of investment or cash flow relative to total investment. This supplement is illustrated using US Steel as an example. Charts. Desc.: FASB statements; Financial reporting; Inflation accounting; Information; Capital expenditures; Capital budgeting; Cash flow; Return on investment CLASS. CODES: 4100 (CN=Accounting); 3100 (CN=Capital & debt management) Y020015 118 81020125 New SEC Rulings Change Annual Reports and Other Forms Marshall, Charles Jrnl of Accountancy v152n1 PP: 84-92 Jul 1981 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 6 Pages AVAIL.: ABI/INFORM The Securities & Exchange Commission (SEC) has amended disclosure requirements for annual reports to shareholders and 10-K forms. A ''module'' of minimum disclosure information has been mandated for both documents, and the focus of management discussions and analysis (MDA) has been switched to financial condition and results. Inclusion of annual report information in the 10-K is optional. Further, 3 years' audited income statements and changes in financial condition are required. The most significant change is that the MDA must stress financial results of operations, explaining the facts behind the numerical disclosures, rather than just spotlighting operations. The new MDA should include: 1. financial data or statistical data that help the reader understand a company's financial condition and changes in such, 2. material events that could negate the predictive value of current results, 3. material changes in line items in the financial statements, 4. cash-flow or balance sheet income indicative of liquidity position, and 5. impact of inflation and changing prices. Desc.: Annual reports; Form 10-K; SEC filing requirements; Changes Financial statements; Financial reporting CLASS. CODES: 2400 (CN=Public relations); 4300 (CN=Law); 4100 (CN=Accounting) Y020015 119 81020122 Emerging Trends in Financial Reporting Burton, John C. Jrnl of Accountancy v152n1 PP: 54-66 Jul 1981 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 9 Pages AVAIL.: ABI/INFORM The financial reporting environment is changing in many ways, and these changes should be carefully monitored. One major change is the erosion of importance of financial statements, as evidenced by the proliferation of supplemental reports and the emphasis on interpreting results. Financial statements will increasingly focus on presenting objective data without expounding on its relevance. A second major trend is the emphasis placed on the future-oriented objectives of financial reporting, as financial data are used increasingly for predictive purposes. According to the Financial Accounting Standards Board (FASB), financial reporting's objective should be to help investors predict the amount, timing, and uncertainty of future cash flows. The second trend has led to a third-greater attention to liquidity and the problems of reporting funds flows in business. A fourth trend in financial reporting is greater concern over inflation accounting; much attention is being given to developing measurement techniques to show the effect of inflation on financial statements. Other major areas of change involve: 1. pension plan accounting, 2. foreign currency translation, and 3. municipal accounting. Desc.: Financial reporting; Trends; Changes; FASB statements; SEC accounting policies; Financial statements; Inflation accounting; Pension costs; Foreign exchange translations; Governmental accounting; Financial accounting standards CLASS. CODES: 4100 (CN=Accounting); 3600 (CN=Pension fund management); 3500 (CN=Foreign exchange administration); 9550 (CN=Public sector) Y020015 120 81016654 Financial Reporting in an Inflationary Environment Edwards, James Don; O'Keefe, W. Timothy Business Horizons v24n4 PP: 21-29 Jul/Aug 1981 CODEN: BHORAD ISSN: 0007-6813 JRNL CODE: BHO DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 9 Pages AVAIL.: ABI/INFORM In an effort to reflect the effects of inflation in the financial statements of a business, several industrial countries have adopted new financial reporting requirements. Several alternatives to the historical cost method of accounting have been suggested: 1. constant dollar accounting, 2. constant or current purchasing power, 3. current cost accounting, 4. replacement cost, and 5. current cash equivalents. The Financial Accounting Standards Board (FASB) adopted both a current cost and a constant dollar approach in Statement 33. This results in reporting of the effects of both general inflation (constant dollar adjusted) and inflation associated with specific assets (current cost adjusted). The specific format for presenting this information has been left to the preparer. It is important that the user of the reported financial information understand the supplemental information. This information can give investors valuable insights into the actual performance of corporations during inflation. Corporations will also benefit because investors will have more realistic expectations regarding dividends. Better knowledge of the effects of inflation on corporations may lead to much needed tax reform. Charts. Desc.: Financial reporting; Inflation accounting; Current cost accounting; FASB statements; Financial statements; Supplemental; Information CLASS. CODES: 4100 (CN=Accounting) Y020015 121 81016530 Establish a System for Contractor Proposal Evaluation Cressman, Kenneth R. Cost Engineering v23n3 PP: 153-156 Jun 1981 CODEN: ACEBB6 ISSN: 0161-6315 JRNL CODE: ACO DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM A 2-pronged approach has been developed to enable cost engineers to evaluate proposals of outside contractors. The first phase involves summarizing and evaluating all of the proposal's financial aspects in depth by using the Financial Analysis Form. This form includes such items as total estimated costs, total manhours, estimated subcontractor costs, etc. The financial information should have the same format and detail for all contractors' proposals. The second phase uses a proposal evaluation form to quantify the technical and project control aspects of the proposal. Typical categories in this part of the evaluation include: 1. commercial aspects, 2. the responsiveness of the contractor to the bid invitation, 3. contractual aspects of the proposal, 4. technical approach to the work's scope, 5. specification of project control, and 6. any added clarification needed from the contractor. The project evaluation team meets beforehand to establish a grading system. After evaluation, a list of bidders is developed based upon the ranking. These bidders are then interviewed, ranked again, and the final contractor selected. Illustrations. Desc.: Proposals; Evaluation; Systems; Cost; Engineering; Contractors; Contract proposals CLASS. CODES: 3100 (CN=Capital & debt management); 8370 (CN=Construction industry) Y020015 122 81016006 Should Smaller Companies Have Separate Standards for Financial Reporting and Disclosure? Stanger, Abraham M. Corporation Law Review v4n3 PP: 268-271 Summer 1981 JRNL CODE: COR DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM Exclusion from some of the requirements of the Financial Accounting Standards Board (FASB) is on the basis of nonpublic status, while exclusion from some others is on the additional basis of size. When the rationale for this situation is sought, one must conclude that it has been created on an ad hoc basis. There is no clear justification for the difference between requirements for financial statement reporting as opposed to supplemental disclosure. It would be more reasonable to make the distinctions in reporting requirements on the basis of financial statement framework information as opposed to analytical and predictive information. Size as a distinguishing characteristic may lead to shifting standards. Until the FASB's Conceptual Framework Project is completed and rationally based standards are promulgated, the FASB should recommend that all entities, regardless of exemption, should use the existing standards where they are material. References. Desc.: Financial reporting; Financial statements; Information; Disclosure; Criteria; Differences; FASB; Financial accounting standards CLASS. CODES: 4100 (CN=Accounting) Y020015 123 81013209 A New Focus on the ''Bottom Line'' and Its Components Strauss, Norman N.; Arcady, Alex T. Jrnl of Accountancy v151n5 PP: 66-69, 72, 74, 76 May 1981 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 8 Pages AVAIL.: ABI/INFORM The Financial Accounting Standards Board (FASB) is conducting several projects to improve the quality of reporting earnings so that users of financial statements can better assess cash flows. The most important project is its Discussion Memorandum (DM) ''Reporting Earnings''. This DM recommends expanding disclosures which would not only be costly due to changes that would be required in accounting systems, but would increase audit costs. It would also release information that could put companies at a competitive disadvantage. Further, there has been no demonstrated proof that present financial statements do not meet users' needs. The DM seeks to establish whether categories of revenue, expense, gain, and loss should be disclosed separately to help evaluate cash flows. Classifying items as regular and irregular, as proposed, would be difficult. The DM also suggests a multiple-step income statement format and that some items be handled as direct adjustments to stockholders' equity rather than shown in the income statement. Chart. Desc.: FASB; Projects; Financial reporting; Earnings; Proposed; Changes; Financial statements; Income statements CLASS. CODES: 4100 (CN=Accounting) Y020015 124 81012233 Influence of Company Debt Burden on Reported Replacement Cost Values Hartman, Bart P.; Lee, Johng Y. Jrnl of Bank Research v12n1 PP: 56-59 Spring 1981 ISSN: 0021-9215 JRNL CODE: JBR DOC TYPE: Jrnl Paper LANG.: ENG. LENGTH: 4 Pages AVAIL.: ABI/INFORM The Securities and Exchange Commission (SEC) now requires certain nonfinancial firms to disclose current replacement costs of inventories and productive capacity and their related effects on the cost of goods sold and depreciation. An investigation was made of the possibility that reporting companies could introduce bias in the determination of replacement cost because of the variation allowed in computation methods. A comparison was made of the historical cost debt/equity ratios of 185 firms in 9 major manufacturing industries with their replacement cost debt-equity ratios. The mean comparison technique was utilized for the analysis, and the firms were split into 2 groups: Group A, which had historical cost debt-equity ratios below the industry average, and Group B, whose ratios were above the industry average. Results indicate that there was no difference in the reported replacement cost values between firms with high and low debt-equity ratios, so the hypothesis that historical cost debt-equity ratios affected reported replacement cost values does not appear valid for the industries tested. Also, no bias was observed in reported values resulting from different debt burdens of firms. Chart. Desc.: SEC; Requirements; Information; Disclosure; Financial statements; Replacement costs; Inventory; Debt to equity ratio; Financial institutions; Bank loans; Decision making CLASS. CODES: 4100 (CN=Accounting); 3100 (CN=Capital & debt management); 8100 (CN=Financial services industry) Y020015 125 81007994 Accounting Developments: The Annual Report-New Financial Disclosure Provisions Stanger, Abraham M. Corporation Law Review v4n2 PP: 183-186 Spring 1981 JRNL CODE: COR DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM Securities & Exchange Commission Releases No. 33-6231, 33-6233, and 33-6234 change requirements of financial disclosures in the annual report to security holders. The releases encourage, but do not require, incorporation of the annual report into the new Form 10-K. The 5 year summary of operations has been eliminated in favor of requiring audited balance sheets as of the end of the 2 most recent fiscal years, and a table of selected information for a 5 year period. A major change is the new ''Management's Discussion and Analysis of Financial Condition and Results of Operation, '' which emphasizes trends, events, and uncertainties regarding liquidity. The impact of inflation and changing prices must also be discussed. This requirement may impose a heavy burden on issuers who were not previously required to provide this information. There is some flexibility in format, so that readability can be enhanced. The annual report is not transformed by the releases into the primary document. Only the financial statements appear therein, with other schedules being a part of Form 10-K. Much improved disclosure will result from the new rules, but many of the requirements may be very burdensome, particularly for smaller companies. References. Desc.: Changes; Financial statements; Financial reporting; Disclosure; Integration; Form 10-K; Annual reports; Summary of operations; SEC; Requirements CLASS. CODES: 4100 (CN=Accounting); 2400 (CN=Public relations) Y020015 126 81007644 How to Use the Cash-Basis Funds Statement as an Analytical Tool Briner, Russell F.; Fahnestock, Robert T. Practical Accountant v14n3 PP: 37-41 Mar 1981 CODEN: PACNBD ISSN: 0032-6321 JRNL CODE: PRA DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The statement of changes in financial position can be prepared in either the cash or the working-capital format. The less popular cash format can often provide: 1. more qualitative and less confusing information, 2. more complete disclosure in the body of the statement, and 3. an easier concept for statement users to understand. The 2 formats for showing funds provided by operations are the indirect format and the direct format. Accounting Principles Board Opinion No. 19 notes that the direct format is an acceptable procedure. It also provides the information as desired by the Financial Accounting Standards Board through Statement on Financial Accounting Concepts No. 1. The cash-basis funds statement can offer management and third parties information that can be used: 1. to control operating, financing, and investing activities, 2. to evaluate business performance by a comparison of the end-of-the-period statement to the budgeted funds statement, and 3. to develop ratios that can indicate potential cash flow problems. Tables. Desc.: Funds statements; Cash flow; Working capital; FASB; Cash basis accounting; Statistical data; Financial analysis; Guidelines CLASS. CODES: 4100 (CN=Accounting); 3100 (CN=Capital & debt management) Y020015 127 81007501 Are Litigation Disclosures Inadequate? Dennis, David M.; Keith, Robert M. Jrnl of Accountancy v151n3 PP: 54-60 Mar 1981 CODEN: JACYAD ISSN: 0021-8448 JRNL CODE: JAC DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM Footnotes describing lawsuits appear frequently in the financial statements of American businesses. An examination of the litigation reporting practices of nearly 200 companies indicates that both the existing footnote disclosure requirements and compliance with those requirements are severely deficient. Companies should report more data on the nature of the case, its filing date and status, damages sought and the opinions of management and legal counsel regarding the case's likely outcome and potential impact on the company's financial future. Financial Accounting Standards Board Statement No. 5, Accounting for Contingencies, requires that when a company estimates and accrues a loss to recognize a contingent risk, it may also have to disclose the accrual's nature and amount to ensure fair presentation. It does not require disclosure of a lawsuit's progress, but it does require that the footnote disclose the possible loss or loss range or include a statement that no estimate is possible. Tables. Desc.: Litigation; Disclosure; FASB statements; Financial reporting ; Financial statement notes; Financial accounting standards; Compliance; Trends; Studies CLASS. CODES: 4300 (CN=Law); 4100 (CN=Accounting) Y020015 128 81005363 New Integrated Disclosure System Gillis, John G. Financial Analysts Jrnl v37n1 PP: 14-15, 80 Jan/Feb 1981 CODEN: FIAJA4 ISSN: 0015-198X JRNL CODE: FIA DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The Securities and Exchange Commission (SEC) is implementing an integrated disclosure system which addresses reporting requirements under the Securities Acts of 1933 and 1934 and shareholder reports and annual financial statements to see that the latter are uniform. The aim of this system is to: 1. upgrade disclosures to investors, and 2. erase barriers to combining required SEC filings and informal security holder communications. The documents covered in this new system are the following: 1. proxy statements mandated under proxy rules of the Exchange Act, 2. annual report on Form 10-K, 3. Regulation S-K covering nonfinancial statement disclosure, and 4. Regulation S-X covering the content, form, and requirements of financial statements. The basic information package required under this system includes: 1. audited uniform financial statements, 2. management discussion and analysis of company financial conditions and operations, and 3. certain financial data spanning a 5-year period. Many changes to shareholder annual reports are required, such as greater management analysis, and a change to Form 10-K's format. Some new registration statement forms are also proposed. Desc.: SEC; Disclosure; Systems; Changes; Financial reporting; Financial statements; SEC filing requirements; Form 10-K; Form 10-Q; Amendments; Annual reports CLASS. CODES: 4100 (CN=Accounting); 4300 (CN=Law); 2400 (CN=Public relations) Y020015 129 81005070 For CCA, Now Read 'Clear Cuts Concise Accounts' Ross, David Accountancy (UK) v91n1048 PP: 56-60 Dec 1980 CODEN: ACTYAD ISSN: 0001-4664 JRNL CODE: ACE DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM Current cost accounts (CCA) will help all users of financial statements to a better understanding of the results of the period, the state of affairs at the period endings, and the trends. When the employee, lay shareholder, or ''expert-in-a-hurry'' is trying to understand the company's annual report, he has 3 real problems: 1. the sheer volume of the information, 2. the diversity of accounting policies and methods of presentation adopted by different companies, 3. the validity of accounts based on the historical cost framework in periods of rapidly-changing price levels. The simplified ''supplementary'' CCA report should include a narrative review, notes describing the accounts and accounting policies, a balance sheet, a profit and loss account and value added statement, a funds flow statement, and trend and interpretation information. The CCA might be supplemented by graphics and fully descriptive headings. Tables. Desc.: UK; Current cost accounting; Information; Financial statements; Disclosure CLASS. CODES: 4100 (CN=Accounting) Y020015 130 81005062 An Examination of the Current Status of Segment Reporting Munter, Paul; Ratcliffe, Thomas A. Ohio CPA Jrnl v40n1 PP: 30-34 Winter 1981 CODEN: OCPAA7 ISSN: 0030-0837 JRNL CODE: OCP DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The December 1976 issuance of Statement of Financial Accounting Standards (SFAS) No. 14, entitled ''Financial Reporting for Segments of a Business Enterprise'', by the Financial Accounting Standards Board (FASB) represents one of the few recent instances whereby an authoritative rule-making body in the accounting profession has issued a pronouncement that results in a tendency to disaggregate financial statement information. SFAS 14 requires disclosure of information relating to operations in different industries, foreign operations and export sales, and major customers. Since SFAS, the FASB has issued 4 additional SFASs that impact the current status of segment reporting. SFAS No. 18 eliminates segment reporting requirements for interim periods. SFAS No. 21 eliminates reporting requirements applicable to earnings per share and segment information for nonpublic enterprises. SFAS No. 24 eliminates segment reporting requirements in some financial statements when present with consolidated statements. SFAS No. 30 redefines major customer, so that reportable customer units are determined in the same way as other reportable major customers. Tables. Desc.: FASB statements; Financial statements; Segment; Financial reporting; Information; Disclosure; Reporting; Requirements CLASS. CODES: 4100 (CN=Accounting) Y020015 131 81004269 SEC's Disclosure Rules Find Some CPI Support Anonymous Chemical Week v128n4 PP: 28 Jan 28, 1981 CODEN: CHWKA9 ISSN: 0009-272X JRNL CODE: CEM DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM As a result of the Securities and Exchange Commission's (SEC) revisement of corporate reporting requirements, investors, security analysts, and competitors will get a more detailed look at the financial data of most companies in the chemical process industries (CPI) this year. Shareholders will be the major beneficiaries. They will now receive the type of data traditionally used primarily by analysts and bond-rating agencies. Changes by the SEC include: 1. enhanced importance of the annual report, 2. restructured 10-K, and 3. standardized information presented to potential investors in registration statements. Obsolete or duplicative requirements are eliminated. Most CPI financial executives consider the changes worthwhile, however, 2 possible areas of confusion are: 1. inflation analysis, and 2. some of the management discussion, such as on liquidity. The companies should save money and time by being permitted to present key financial data in one format that can be used in 3 separate reports. Chart. Desc.: SEC; Changes; Financial; Information; Disclosure; Requirements; Chemical industry CLASS. CODES: 8640 (CN=Chemical industry) Y020015 132 81004096 Annual Report Addressed Investors and the Future-and Won Awards Pearson, Donald W. Telephony v200n3 PP: 58, 61 Jan 19, 1981 CODEN: TLPNAS ISSN: 0040-2656 JRNL CODE: TPH DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM Rochester (N.Y.) Telephone Corp.'s 1979 annual report received the National Assn. of Investment Clubs' Nicholson Award and Financial World's silver and bronze awards in separate categories for its effectiveness in meeting both the needs of individual and institutional investors. The report, whose theme was ''Tomorrow's Telephone Company, '' emphasized the company's future prospects for the benefit of individual shareholders while providing in-depth information for institutional investors. In deciding what investors wanted to know, Rochester Telephone analyzed the best annual reports of 1978, as judged by Financial World. A proposed format was developed and submitted to a 5-member focus group of security analysts covering the communications industry. Among the points favored were: the emphasis on looking ahead, highlighting significant quotes to facilitate skimming, and including a special section on detailed financial information. Desc.: Case studies; Planning; Annual reports; Telephone companies CLASS. CODES: 9110 (CN=Company specific); 2400 (CN=Public relations); 8330 (CN=Broadcasting & telecommunications) Y020015 133 81003370 The Disclosure of Replacement Cost Accounting Data and Its Effect on Transaction Volumes Ro, Byung T. Accounting Review v56n1 PP: 70-84 Jan 1981 CODEN: ACRVAS ISSN: 0001-4826 JRNL CODE: ACR DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The Securities and Exchange Commission's (SEC) Accounting Series Release No. 190 (ASR 190) mandates footnote disclosure of replacement cost (RC) accounting information by certain firms. It purports to provide investors with relevant information on the impact of inflation on company assets. A study was performed to see whether disclosure of RC data actually had much impact on transaction volumes of common stock for companies having to comply with the RC disclosure rule. A sample of 73 final treatment firms and 73 control firms was selected and examined over 9 separate 'event' weeks, using the standard paired t-test. It was hypothesized that if ASR 190 affected investors' portfolio holding decisions, a higher than normal volume would be expected when RC data was announced. The trading volume of ASR 190 stocks would be different from the trading volume of common stocks in firms not affected by the rule. The study found no evidence of an effect by ASR 190 on trading volume. Thus, RC data under ASR 190 does not contain information important enough to investors to get them to revise portfolios. Equations. Chart. Tables. Appendices. References. Desc.: Replacement cost accounting; Replacement costs; Disclosure; Financial statement notes; Form 10-K; SEC filing requirements; Investors; Information; Effects; Volume; Transactions; Common stock; Efficient markets (FIN); Studies CLASS. CODES: 4100 (CN=Accounting); 4300 (CN=Law); 3400 (CN=Investment analysis) Y020015 134 81003094 SEC's Integrated Disclosure Rules Parker, David P. Financial Executive v49n1 PP: 17-22 Jan 1981 CODEN: FIEXAW ISSN: 0015-1998 JRNL CODE: FEX DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM When the Securities and Exchange Commission's (SEC) new integrated disclosure rules were adopted in August of 1980, the apprehension felt by many company officials was understandable. The extensive rules that were set forth significantly affect the form and content of the shareholders report and the Form 10-K and other filings of SEC registrants. In the long run, the new rules should cause symmetry and consistency of financial statements and other disclosures. There are 5 highlights of the new SEC rules: 1. There are important and far-reaching changes that expand materially management's discussion and analysis. 2. Shareholder reports must contain 3-year financial statements prepared in compliance with Regulation S-X. 3. The 5-year summary of operations is replaced by a 5-year summary of selected financial data. 4. Form 10-K must be signed by the chief executive officer, the chief financial officer, the controller or principal accounting officer, and by a majority of the board of directors. 5. A company involved in a merger or reorganization can use a shorter filing form if the transaction does not involve a ten percent change in the company's assets, net income, operating revenue, gross sales, or shareholder's equity. Desc.: SEC; Disclosure; Rules; Form 10-K; SEC filing requirements; GAAP; SECSX; Financial statements; Annual reports CLASS. CODES: 4300 (CN=Law); 4100 (CN=Accounting); 2400 (CN=Public relations) Y020015 135 81002755 SEC Alters Face of Shareholders' Report Zabusky, Allen J. National Underwriter (Life/Health) v85n2 PP: 12, 15-17 Jan 10, 1981 ISSN: 0028-033X JRNL CODE: NUD DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The Securities and Exchange Commission (SEC) adopted final rules on September 2, 1980, designed to integrate the disclosure requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934. As a result of the new rules, the annual report to the shareholders has several significant changes, including: 1. a requirement for 2 years audited balance sheets and 3 years audited statements of income and changes in financial position, 2. a 5-year summary of selected data, 3. a more general discussion and analysis by management, and 4. a discussion of the effects of inflation and changing prices. Items, such as primary financial statements, must appear in both the shareholders' annual report and the revised Form 10-K. The principal executive officer, the principal financial officer, the principal accounting officer, and a majority of the board of directors must sign the Form 10-K. There will be fewer differences now between the Form 10-K and the annual shareholders' report. Desc.: Stockholders; Annual reports; Financial; Information; Disclosure; Requirements; Financial statements; Form 10-K; SEC; SEC 33; SEC 34 CLASS. CODES: 2400 (CN=Public relations); 4100 (CN=Accounting); 4300 (CN=Law) Y020015 136 81002601 SEC Alters Face of Shareholders' Report Zabusky, Allen J. National Underwriter (Property/Casualty) v85n1 PP: 23, 26-27 Jan 2, 1981 ISSN: 0163-8912 JRNL CODE: NUN DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The Securities and Exchange Commission (SEC) adopted final rules for the annual report form required to be filed by most publicly-owned companies. This was done to improve disclosure, reduce disclosure burdens, and to facilitate the integration of the disclosure systems under the Securities Act of 1933 and the Securities Exchange Act of 1934. Through the various amendments, the SEC has succeeded in developing uniform instructions for financial statements included in most registration and reporting forms filed with the SEC and in annual reports to shareholders by creating a basic information package. It has also reduced many of the disparities in financial statement presentation and disclosures between the Form 10-K and the shareholders' report. The SEC is currently seeking guidance on revision of the articles governing presentation and disclosure requirements for specialized industries such as insurance companies. Desc.: SEC regulations; Annual reports; Form 10-K; Form 10-Q; SEC filing requirements; Changes; Amendments CLASS. CODES: 4300 (CN=Law); 2400 (CN=Public relations) Y020015 137 81001458 FASB Statement No. 33: Implications for Commercial Banks Yahr, Robert B. Jrnl of Commercial Bank Lending v63n4 PP: 47-57 Dec 1980 ISSN: 0021-986X JRNL CODE: CBL DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The Financial Accounting Standards Board (FASB) has issued its Statement No. 33 to deal with the impact of inflation on the financial statements of commercial enterprises. FASB 33 requires all information regarding inflation's impact on a business to be presented as unaudited supplemental information in the firm's financial statement footnotes. This information must be denominated in 2 different bases: constant dollars and current costs. The items required on the constant dollar basis are income from continuing operations and purchasing power gain or loss; with regard to the current cost basis, depreciation expense and cost of goods sold are adjusted. A final item is the summary of key financial data for the current and preceding 4 years, with all items restated into constant dollars. Drawbacks to these requirements for commercial banks are: 1. There are too many alternatives for meeting the required disclosure of revenues. 2. Constant dollar information and current cost information are often too similar to be meaningful. 3. Year-end net assets may be reported only in historical cost. Charts. References. Desc.: FASB statements; Financial statement notes; Financial statements; Disclosure; Effects; Inflation; Financial accounting standards Supplemental; Information; Implications; Commercial banks CLASS. CODES: 8110 (CN=Commercial banking); 4100 (CN=Accounting; 1100 (CN=Economics) Y020015 138 81000389 Compilation and Review Reports on Financial Statements Presented on the Cash Basis or the Income Tax Basis of Accounting Gutberlet, Louis G. Jrnl of Accounting, Auditing & Finance v4n2 PP: 169-178 Winter 1981 JRNL CODE: JAA DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM Standards of reporting applicable to the compilation and review of financial statements presented in accordance with some ''other comprehensive basis of accounting (OCBOA)'' were established by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants (AICPA) with the issuance of its first Statement on Standards for Accounting and Review Services (SSARS No. 1), entitled ''Compilation and Review of Financial Statements.'' There is no requirement in SSARS No. 1. for disclosure of how OCBOA differs from generally accepted accounting principles or that the financial statements are not intended to present financial position or the results of operations in accordance with such principles. It is difficult to distinguish between the cash basis and income tax basis of accounting, but for purposes of reporting under SSARS No. 1, the general standard of the profession on due professional care requires the accountant to consider whether it will be necessary to perform ''other accounting services, '' and to apply his total knowledge of the entity's business and operations. Exhibits. Desc.: Financial statements; Cash basis accounting; Tax basis; Accounting; Reporting; Standards; Reviews; Disclosure; AICPA CLASS. CODES: 4100 (CN=Accounting); 4200 (CN=Taxation) Y020015 139 81000177 Impact of Replacement Cost Data on Financial Statement Analysis Grant, Edward B.; Weirich, Thomas R. Survey of Business v16n2 PP: 22-25 Fall 1980 CODEN: SUBUDY JRNL CODE: SOU DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM A significant and vigorously debated reporting issue in the financial world pertains to the recent replacement cost disclosures required by the Security and Exchange Commission (SEC). The issuance of Accounting Series Release (ASR) No. 190 by the SEC in March, 1976, requires certain major corporations to disclose to third parties selective replacement cost information regarding an entity's productive facilities, depreciation, inventory, and cost of sales for fiscal years ending on or after December 25, 1976. The primary objective of a recent study was to provide additional evidence as to the impact that the current SEC replacement cost disclosure requirements have on selected financial profitability and activity ratios of 155 corporations. Cross-sectional analysis resulted in 3 tentative conclusions: 1. There does exist a distortion in ratio components as a result of changes in prices, which thus violate the concept of dimensional soundness. 2. The statement user should have some ''ball park'' ideas as to the statistical characteristics of selected ratios when adjusted for ASR No. 190. 3. The financial ratio analyst should proceed with caution in employing replacement cost data as presently disclosed. However, generalizations to firms not included in the study cannot be made, due to the method of selection of sample firms. In addition, SEC requirements on disclosure of replacement cost data are limited to certain areas, therefore, effects of replacement cost adjustments on other balance sheets or income statement items have been ignored. Equations. References. Desc.: SEC; Accounting procedures; Financial statement analysis; Replacement cost accounting; Impacts; Financial ratios; Analysis CLASS. CODES: 4100 (CN=Accounting); 3100 (CN=Capital & debt management) Y020015 140 80023470 Employee Publications-Changing with the Times Taylor, Dennis; Webb, Laurie Work & People (Australia) v6n1 PP: 3-7 1980 JRNL CODE: WAP DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The traditional staff magazine relying on amateur contributions and a shoe-string budget is no longer adequate, due to: 1. better presentation techniques, 2. greater management reliance on printed media, and 3. greater recognition of employee rights to corporate information. Employee periodicals published by larger Australian organizations now show an increase in the scope of information. There is also evident upgrading of the editorial management and in the style of the publications. House periodicals could provide specific information such as operating performance to allow employees to evaluate the organization. Providing information to employees could improve: 1. industrial relations. 2. strategic planning, and 3. public relations. However, there are risks involved in greater disclosure, such as: 1. employee misunderstanding, and 2. a desire by employees to participate in managing the organization. References. Tables. Desc.: Employee; Publications; Company publications; Jrnls; Exxon-New York; Australia; Case studies; Newspapers; Annual reports; Disclosure; Risk; Rewards CLASS. CODES: 9110 (CN=Company specific); 8690 (CN=Publishing industry); 2400 (CN=Public relations) Y020015 141 80022506 The Multinational Corporation and SFAS No. 8 Price, Claudia I. Woman CPA v42n4 PP: 26-30 Oct 1980 CODEN: WCPAAR ISSN: 0043-7271 JRNL CODE: WCP DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM Companies recognize the risks involved in international operation as a result of complying with SFAS Statement No. 8. SFAS No. 8 not only provides standardization but exposes corporate risks resulting from foreign currencies and floating exchange rates. A result of SFAS-8 is better identification of a company's risk potential since earnings of multinationals are subject to fluctuations in the exchange rate. The effectiveness of financial statement analysis is reduced due to insufficient disclosure about realized and unrealized translation gains and losses. There are several suggestions for correcting the effects of SFAS-8, including: 1. using current rate, 2. recording inventory at current rate, and 3. deferring translation gains and losses. Each proposed solution has drawbacks such as ignoring other reporting aspects of the enterprise. Much of management's concern can be alleviated through use of separate presentations of unrealized translation gains and losses in income and earnings per share. References. Desc.: Multinational corporations; FASB statements; Financial accounting standards; Foreign exchange translations; Accounting standards; Foreign exchange; Gains; Losses; Disclosure; Foreign exchange rate risk CLASS. CODES: 1300 (CN=International trade & foreign investment) 4100 (CN=Accounting); 3500 (CN=Foreign exchange administration) Y020015 142 80022206 Auditing America's Cities Giroux, Gary A.; Flory, Steven M. CPA Jrnl v50n10 PP: 21-28 Oct 1980 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM Even though state and local government expenditures have consumed 15% or more of gross national product annually, until 1976, Congress did not mandate that all municipalities of any consequence be audited before 1980. When compared to the more standardized format for corporate entities, the independent audit reports for local governmental units are largely characterized by the diversity of their format. The auditor is precluded from issuing an unqualified opinion if the financial statements are not in conformity with generally accepted accounting principles (GAAP). A recent study of annual reports of 100 US cities found that 90% had been audited, generally by an independent certified public accountant (CPA), but that approximately three-fourths of the reports included qualified opinions on one or more funds. Another study found that the largest single reason for audit exceptions related to general fixed assets, with depreciation not recorded in enterprise funds ranking second. Tables. References. Desc.: Municipal accounting; Audits; Municipal finance; GAAP; Cities; CPAs; AICPA; Financial reporting CLASS. CODES: 4100 (CN=Accounting); 9550 (CN=Public sector) Y020015 143 80021640 Lease Capitalization and Systematic Risk Finnerty, Joseph E.; Fitzsimmons, Rick N.; Oliver, Thomas W. Accounting Review v55n4 PP: 631-639 Oct 1980 CODEN: ACRVAS ISSN: 0001-4826 JRNL CODE: ACR DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM Efforts to tighten the disclosure requirements on leasing came from the Securities and Exchange Commission (SEC) with its Accounting Release Series 147 (ASR 147) and the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 13. Three samples of companies were used in this study, to investigate whether the market-determined systematic risk of the companies that used leasing extensively was affected by ASR 147, the FASB's exposure draft on lessee accounting, and SFAS 13: 1. companies which engaged in a lot of leasing, 2. companies which did very little leasing, and 3. a random sample of companies. There was no significant change in the systematic risk of the sample companies pre- and post-June, 1973, or pre- and post-August, 1975. The conclusion is that the SEC's ASR 147 and the FASB's pronouncement had little effect on the market's assessment of systematic risk. Business leaders had feared a deterioration in credit ratings, and the possibility that lenders would demand higher interest rates as a result of firms showing more ''debt'' on their post SFAS 13 balance sheets. Tables. Equations. Figure. References. Desc.: Leases; Capitalization; Systematic; Risk; Disclosure; Requirements; FASB statements; Financial statements; Studies; SEC accounting policies; Manycompanies; Capitalized CLASS. CODES: 3100 (CN=Capital & debt management); 4100 (CN=Accounting) Y020015 144 80019385 SEC's New Proposals Taft, Robert W.; Long, John C. Public Relations Jrnl v36n8 PP: 17-18 Aug 1980 CODEN: PREJAR ISSN: 0033-3670 JRNL CODE: PRJ DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The Securities and Exchange Commission (SEC) will soon act on a series of controversial proposals introduced last January. If enacted, the proposals could change the current format of most companies' annual reports. Business leaders fear that the additional required items could erode annual report readership. The proposals include: 1. revisions of Form 10-K and Form S-15, 2. revision of Articles 3 and 5 of Regulation S-X, and 3. establishment of uniform instructions for financial statements. According to the SEC, the proposed rules are to facilitate integration of the disclosure requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934 and to reduce the disclosure burdens on companies. Desc.: SEC; Proposed; Changes; Annual reports; Form 10-K; SEC filing requirements; Financial statements; Disclosure CLASS. CODES: 2400 (CN=Public relations); 4300 (CN=Law); 4100 (CN=Accounting) Y020015 145 80016604 Computer-Assisted Research Administration Burt, R. Alan Jrnl of the Society of Research Administrators v12n1 PP: 25-29 Summer 1980 ISSN: 0038-0024 JRNL CODE: SRA DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM Computers can help research administrators provide expanded research services and increase research productivity. Office automation techniques can enhance research administration productivity as well as more traditional office functions. Research administrators can use computer programs to perform many services, including: 1. preparing proposal cost estimates, 2. preparing project financial reports, and 3. monitoring project and contract deadlines. Computers can be used to prepare budgets and to assist in space allocation and inventory control. Computers can be used to transmit and receive written text which can lead to a practically paperless office. Searches of stored data are quick and efficient using computers. Computer-controlled intelligent copiers can accept electronic data and produce a printed document of text and graphics. The format of forms can be stored and the form itself printed as the required information is entered into the computer. The research administrator must carefully plan future use of computers to provide for a synergistic system of research services. Desc.: Research; R&D; Administration; Computers; Automation; Cost estimates; Financial reporting; Budgeting CLASS. CODES: 5400 (CN=Research & development); 5200 (CN=Communications & information management); 4100 (CN=Accounting); 3100 (CN=Capital & debt management) Y020015 146 80015925 Questions and Answers to Help You Understand the New Accounting and Reporting Requirements for Defined Benefit Pension Plans Rubin, Steven Jrnl of Pension Planning & Compliance v6n4 PP: 271-278 Jul 1980 ISSN: 0148-2181 JRNL CODE: PPT DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: Panel Publishers, 14 Plaza Rd., Greenvale, NY 11548 Financial accounting and reporting standards for annual financial statements of defined benefit pension plans for years beginning after Dec. 15, 1980 have been set forth in Statement of Financial Accounting Standards No. 35. This FASB statement applies to defined benefit pension plans that are: ongoing, funded and unfunded, sponsored by government units as well as business, and plans that are and are not subject to ERISA reporting requirements. It requires that financial statements contain a statement with information on the plan's net assets available for benefits at the end of the plan year and information on changes during the year in the plan's net assets available for benefits.Disclosure in the statement or in notes must be made regarding the actuarial present value of accumulated plan benefits at the beginning and end of the plan year. Disclosure of significant effects of factors causing changes during the year in the actuarial present value of accumulated plan benefits must also be made. Desc.: Defined benefit plans; Accounting procedures; Accounting standards; Reporting; Requirements; Financial statements; Disclosure; FASB statements CLASS. CODES: 6400 (CN=Employee benefits & compensation); 4100 (CN=Accounting) Y020015 147 80015906 What Current Cost Accounting Means to Utilities Ritter, Thomas J. Public Utilities Fortnightly v106n3 PP: 19-23 Jul 31, 1980 CODEN: PUFNAV ISSN: 0033-3808 JRNL CODE: PUF DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: Public Utilities Reports, Inc., Suite 500, 1828 L St. NW, Washington, DC 20036 Financial Accounting Standards Board (FASB) Statement 33 requires the presentation of supplementary financial information that will profoundly affect the financial reports of many utilities. The aim of the statement is to provide users of financial statements information about the effects of inflation on a firm by requiring adjustments to the valuation of assets, both on a constant dollar and current cost basis. For rate regulated industries, special treatment is directed. Most rate regulated industries are allowed a return derived from a rate base that is valued at historical cost, limiting the recoverable value of assets.As a result, utilities will show large write-downs on nonmonetary assets. Another difference of Statement 33 between regulated and non-regulated industries is that the former will report restated depreciation based on current cost, even though asset values are not restated. The effect of these requirements on debt and equity interests in utilities is not clear. Regulators may be aided by the new requirements in that they will be provided with additional information on which to base their actions. Utilities themselves may benefit from FASB 33 if the inflation adjusted information encourages rate commissions to reconsider the equity of presently allowed returns when evaluating financial performance. Illustration. Desc.: FASB statements; Current cost accounting; Inflation accounting; Financial reporting; Public utilities; Utilities; Regulation; Electric rates CLASS. CODES: 4100 (CN=Accounting); 8340 (CN=Electric, water & gas utilities); 4300 (CN=Law) Y020015 148 80015081 Financial Forecasts-State of the Art Mentzel, Alvin J.; Proscia, Leonard J. CPA Jrnl v50n7 PP: 12-18 Jul 1980 CODEN: CPAABS ISSN: 0094-2049 JRNL CODE: CPA DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM A financial forecast estimates a company's most likely financial position, operational results, and changes in financial position for certain periods. In late 1974, the American Institute of Certified Public Accountants (AICPA) published the first guidelines for preparing these forecasts. The Securities & Exchange Commission (SEC) has also issued flexible guides for protecting the issuer and reviewer against lawsuits for erroneous forecasts so long as they have a reasonable basis and are made in good faith.Covered under the safe harbor rule are projections of revenues and certain other financial data and statements of management plans, objectives, and future performance projections. The AICPA-recommended format is that of historical financial statements. The SEC advocates disclosure of key assumptions upon which forecasts are based. Management must have a reasonable basis for its projections and evidence to support its assumptions. An AICPA exposure draft is now being developed to cover the accountant's review of financial forecasts. A compilation forecast engagement translates economic data into forecasts using assumptions provided by management and not verified or analyzed. A comprehensive scope engagement analyzes and expresses an opinion on data reasonableness. Table. Desc.: Financial; Forecasting; Financial statement forecasting; SEC regulations; AICPA statements of position CLASS. CODES: 3100 (CN=Capital & debt management); 4300 (CN=Law; 4100 (CN=Accounting) Y020015 149 80014132 A Review of Municipal Disclosure Requirements Ingram, Robert W.; Edwards, William R. National Public Accountant v25n6 PP: 17-20 Jun 1980 CODEN: NPACAI ISSN: 0027-9978 JRNL CODE: NPA DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM There is concern about the adequacy of financial reporting for governmental units with emphasis on reform of accounting procedures and disclosure practices. Success in improving governmental reporting practices may depend on the way those responsible for the financial data implement reporting standards. More courses in the accounting curriculum dealing with governmental entities are needed to educate accounting students and practitioners.The auditor must report any material deviations from generally accepted accounting principles (GAAP) in financial statements in either the public or private sectors. Many standards for disclosure cause problems when applied in the governmental area. A study of municipal financial statements indicated disclosure problems, including: 1. the use of separate financial statements, 2. the required bases of accounting, and 3. disclosures dealing with allowance or contra accounts. References. Desc.: Municipal accounting; Disclosure; Requirements; Financial statements; Auditors; Responsibilities; GAAP CLASS. CODES: 4100 (CN=Accounting); 9550 (CN=Public sector) Y020015 150 80013777 How to Communicate Financial Data More Effectively Leivian, Gregory M. Management Accounting v62n1 PP: 31-34 Jul 1980 CODEN: MGACBD ISSN: 0025-1690 JRNL CODE: NAA DOC TYPE: Jrnl Paper LANG.: ENG. AVAIL.: ABI/INFORM The format for communicating financial information has generally been a numerical tabulation. Many managers, particularly in small businesses, have difficulty interpreting such information because they do not have the training or experience of the accountants or financial executives that prepared the information. However, a person's visual or pictorial memory is better than the memory for numbers and thus, graphs can be an effective way of communicating financial data.Graphs can give a person an overall view of a company or division and can highlight trends and relationships better than numerical tabulations do. Graphs are very flexible and can be designed to meet the specific information needs of a company or division in a particular situation. Besides the reporting of historical financial information, graphs can provide an excellent planning tool. For example, a profit sensitivity graph can show the relative sensitivity of profits to changes in various factors such as labor costs, selling price, materials costs, etc. This enables management to plan for various possible strategies and environmental contingencies. Table. Graphs. Desc.: Financial planning; Financial; Data communications; Graphs; Information; Presentation CLASS. CODES: 3100 (CN=Capital & debt management); 5200 (CN=Communications & information management)