Disclosures and Analysis Overview
As you have learned, the accounting and financial reports are essential to a firm's stakeholders. In this chapter, you will see what actions a firm takes to ensure that the reports presented to the stakeholders are a true and accurate representation of their financial status. Pay particular attention to the discussion on disclosure issues.
1. Putting It All Together: Disclosures and Analysis Overview
Trading Has Been Suspended for SEHK: 0940
On December 4, 2015, a Hong Kong-listed animal drug company, China Animal Healthcare Ltd. (SEHK: 0940), announced a delay in the release of its financial statements. The firm alleged that a thief had stolen the truck in which the past five years of the
company’s financial records were being transported. The theft was alleged to have occurred during the middle of a forensic audit, when the truck’s driver, who was transporting the original financial documents from the Qingyuan area to Hebel province, stopped
and left the truck for a lunch break. The company continues to be embroiled in the forensic accounting investigation, stalled as a result of the missing financial statements now labeled the “Lost Documents.” As of March 2016, the Hong Kong Stock
Exchange suspended the company’s shares trading when the firm missed its deadline for filing the 2014 financial results. The suspension is expected to continue until further notice, while the company continues its search for the stolen documents. This
situation has created more than a little angst for 20% shareholder Eli Lilly’s Elanco company, which invested $100 million in the troubled China Animal Health care Ltd. in 2013. These recent events threaten to suspend Elanco’s efforts to expand its
presence in China, giving its competition a potential advantage. If the issue is not resolved soon, Elanco may be on the hunt for another China-based partner to give it a stake in one of China’s fastest growing markets for animal health.
Learning Objectives
After completing this chapter, you should be able to:
LO 1: Discuss the rationale and methods of full disclosure in corporate reporting.
LO 2: Identify the issues and disclosure requirements for related parties.
LO 3: Describe the appropriate accounting and disclosure requirements for events occurring after the reporting period.
LO 4: Describe the purpose of the audit opinion and the contents of the auditor’s report.
LO 5: Explain the various financial statement analysis tools and techniques.
LO 6: Explain the similarities and differences between ASPE and IFRS regarding dis-closures and analysis of financial statements.
Source: Glenn Arnold & Suzanne Kyle, https://lifa1.lyryx.com/textbooks/ARNOLD_2/marketing/ArnoldKyle-IntermFinAcct-Vol2-2020A.pdf
This work is licensed under a Creative Commons Attribution 4.0 License.