- CFA Exams
- 2022 Level I
- Study Session 8. Financial Reporting and Analysis (4)
- Reading 25. Financial Reporting Quality
- Subject 1. Reporting Quality and Results Quality
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Subject 1. Reporting Quality and Results Quality PDF Download
Financial reporting quality: a subjective evaluation of the extent to which financial reporting is free of manipulation and accurately reflects the financial condition and operating success of a company. It pertains to the information disclosed.
Earnings are considered to be high quality if they exhibit persistence and are unbiased. Sustainable earnings enable better forecasts of future cash flows or earnings. This is referred to as results quality or earnings quality.
Financial reporting quality is different from earnings quality. The two concepts are, however, interrelated because a correct assessment of earnings quality is possible only if we have some basic level of financial reporting quality. Low financial reporting quality makes it hard to assess earnings quality.
Learning Outcome Statementsa. compare and contrast financial reporting quality with the quality of reported results (including quality of earnings, cash flow, and balance sheet items);
CFA® 2022 Level I Curriculum, , Volume 3, Reading 25
User Contributed Comments 4
|sahilb7||High Earnings Quality = Better forecasting|
|khalifa92||High reporting quality - High earnings quality
High reporting quality - Low earnings quality
Low reporting quality - Low earnings quality
|Freddie33||Khalifa are you just trying to confuse people?|
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
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