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Rsm220-Week 01 Slides
Chapter 1
The Canadian Financial Reporting Environment

Prepared by: Dragan Stojanovic, CA Rotman School of Management, University of Toronto

The Canadian Financial Reporting Environment
Role of Financial Reporting • Financial statements and financial reporting • Accounting and capital allocation •Stakeholders Objective of Financial Reporting •Management bias •Users’ needs Standard Setting • Need to develop standards • Parties involved in standard setting • Standard setting in a political environment GAAP • GAAP hierarchy •Professional judgement • Role of ethics Challenges Facing Financial Reporting • Globalization of companies and capital markets • Impact of technology • Changing nature of the economy • Increased requirement for accountability
2

The Canadian Financial Reporting Environment
Role of Financial Reporting • Financial statements and financial reporting • Accounting and capital allocation •Stakeholders Objective of Financial Reporting •Management bias •Users’ needs Standard Setting • Need to develop standards • Parties involved in standard setting • Standard setting in a political environment GAAP • GAAP hierarchy •Professional judgement • Role of ethics Challenges Facing Financial Reporting • Globalization of companies and capital markets • Impact of technology • Changing nature of the economy • Increased requirement for accountability
3

Characteristics of Accounting
1. Identification, measurement, and communication of financial information about; 2. Economic entities to; 3. Interested persons.

4

Financial Reporting
• Financial accounting provides historical information • Financial reporting is used by both internal and external users • External users include such decision makers as investors, creditors, unions, and government agencies • Managerial accounting provides both historical and forecast information • Managerial reporting information is used by management (internal users only)
5

Financial Statements and Other
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