Corporate Culture
Where does corporate culture resonate from?
Upper management; Top Brass
Do you need to have a CPA to be part of an Audit Committee?
No
Who issues standards for GAAP?
"The reliability of a company's earnings in assessing current and future performance". This is the definition of ________.
Earnings quality
The switch from one depreciation method to the other. What kind of window dressing is this?
Depreciation window dressing
Name one of the 5 ways a strong corporate culture can be created in a company
Strong mission statement
Focus on leadership
Investments in employees
Ability to advance within the company
Strong tone at the top
3
What regulation was issued by the SEC in 2003 to give further guidance on non GAAP measures
Regulation G
"Legally changing the way information is presented so it looks more appealing to management". This is the definition of _________.
Creative Accounting
Cash window dressing
_________ exemplifies a companies values and beliefs
organizational leadership
Accounting or finance
Name one of the growing concerns regarding non GAAP measures
Lack of consistency
Comparability
Possibility of misleading
Name one of the synonyms for creative accounting
Accounting by design
Aggressive accounting
Deceptive accounting
Capitalizing smaller expenditures that would normally be charged to expense. What kind of window dressing is this?
Capitalization window dressing
CEOs
VPs
Controllers
According to Deloitte, name two of the 7 contributions to audit quality
Strong communication
Competence
Quality of firm resources
Innovations in tech
Strong professional skepticism
Project management
Independence of the engagement team
According to Deloitte, give 2 of the most common non-GAAP measures.
Operating income that excludes one or more expense items
Adjusted revenues; Adjusted Earnings; Adjusted EPS
EBIT; EBITDA
Core earnings
Free cash flow
Funds from operations
Net debt
Name two of the rationales behind creative accounting
Pressure from investors through management
Hide incompetence
Create the most attractive image
Pressure from shareholders
Inadequacy of accounting rules
Freedom of choice
Withholding supplier invoices, and recording in a later period. What kind of window dressing is this?
Expense window dressing
16%
What are two of the four oversights of an Audit Committee?
Financial Reporting
Internal Controls
Internal Auditing
Independent Auditor
According to Regulation G, what must be presented alongside a non GAAP measure? (Hint: it's for comparison)
The most directly comparable GAAP measure
Name two of the most common techniques used in creative accounting.
Choice between different accounting methods
The manner in which forecasts or estimates are used
Artificial transactions
Including or excluding additional information
According to our presentation, how might fund managers utilize window dressing?