Learning Outcome Statements

1. Reporting Quality and Results Quality

a. distinguish between financial reporting quality and quality of reported results (including quality of earnings, cash flow, and balance sheet items);

2. Quality Spectrum of Financial Reports

b. describe a spectrum for assessing financial reporting quality;

c. distinguish between conservative and aggressive accounting;

3. Context for Assessing Financial Reporting Quality

d. describe motivations that might cause management to issue financial reports that are not high quality;

e. describe conditions that are conducive to issuing low-quality, or even fraudulent, financial reports;

f. describe mechanisms that discipline financial reporting quality and the potential limitations of those mechanisms;

4. Detection of Financial Reporting Quality Issues

g. describe presentation choices, including non-GAAP measures, that could be used to influence an analyst's opinion;

h. describe accounting methods (choices and estimates) that could be used to manage earnings, cash flow, and balance sheet items;

i. describe accounting warning signs and methods for detecting manipulation of information in financial reports.