Seeing is believing!

Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.

Subject 2. Evaluating the Quality of Financial Reports PDF Download
Typical steps involved in evaluating financial reporting quality include:

1. An understanding of the company's business and industry in which the company is operating.

2. Review of management compensation and insider transactions.

3. Identify significant accounting areas.

4. Make comparisons.

  • Current period vs. previous year
  • Company vs. competitors: accounting policies, ratio analysis

5. Check for accounting warning signs.

6. Segment analysis.

7. Quantitative tools.

  • Beneish Model: It uses financial ratios and eight variables to identify whether a company has manipulated its earnings.

Learning Outcome Statements

describe how to evaluate the quality of a company's financial reports;

evaluate the quality of a company's financial reports;

CFA® 2023 Level II Curriculum, Volume 2, Module 15

User Contributed Comments 0

You need to log in first to add your comment.
I used your notes and passed ... highly recommended!


My Own Flashcard

No flashcard found. Add a private flashcard for the subject.