Summary: Fsa

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• 1 FSA

• 1.1 READING 27 Introduction to Financial Statement Analysis

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• Which of the following best describes the role of financial statement analysis?

  To form expectations about a company’s future performance and financial position

• A core objective of the International Organization of Securities Commissions is to:

  ensure that markets are fair, efficient, and transparent

• Accounting policies, methods, and estimates used in preparing financial statements are most likely to be found in the

  Notes to the financial statements

• Information about a company’s objectives, strategies, and significant risks are most likely to be found in the:

  management commentary.

• What type of audit opinion is preferred when analyzing financial statements, from high to low

  1. Unqualified, 2. qualified (one exception), 3. adverse (not presented fairly, or again accounting standards), 4. disclaimer of opinion

• An independent audit report is most likely to provide:

  A. absolute assurance about the accuracy of the financial statements.
  
  B. reasonable assurance that the financial statements are fairly presented.
  
  C. a qualified opinion with respect to the transparency of the financial statements.

• Which of the following statements is most accurate about the responsibilities of an auditor for a publicly traded firm in the United States? The auditor must:

  A. state that the financial statements are prepared according to generally accepted accounting principles.
  
  B. ensure that the financial statements are free from error, fraud, or illegal acts.
  
  C. express an opinion about the effectiveness of the company’s internal control systems.

• Providing information about the performance of a company, its financial position, and changes in financial position that is useful to a wide range of users is most accurately described as the role of:

  Financial reporting

• Where might an analyst look for details covering the full extent of a company’s capital resources?

  Management discussion and analysis (MD&A)

• The framework for inancial analysis has six steps:

  
  
  
  1. State the objective of the analysis.
  2. Gather data.
  3. Process the data.
  4. Analyze and interpret the data.
  5. Report the conclusions or recommendations. 
  6. Update the analysis.