Financial Reporting Case analysis Study Example | Topics and Well Written Essays - 1000 words

Financial Reporting analysis - Case Study ExampleThe Generally Accepted Accounting Principles (generally accepted accounting principles) also cheer a major role in the solving of the issues at hand (Epstein and Nach 77). The case involving Philadelphia Communications Inc. first of all presents the issue of disclosures before, during and after an sign state-supported Offer. Since Philly had just recently completed an IPO, the SEC, FASB and IFRS requirements require certain disclosures concerning this process. Another issue arising out of Phillys case is the testing and verification of receivables to the company. These too require certain considerations under the SEC, FASB and IFRS provisions. Revenue recognition needs to receive keen focus at this stage. The fact that the receivable support provided by the client does not trap interest or payment terms for the notes receivable from several of the companys chief executive officers cousins is some other issue of bulky concern. Th e bodies verbalize above, namely the SEC, FASB and the IFRS have provisions and requirements for these kinds of transactions and thus need to be followed (Shamrock 11). The family members, being considered related parties, need to have more disclosures besides those stated above. The family, though only actively represented by Mr. Sigar in his position as the companys chief executive and chairman, still owns a declamatory part of the company hence the need to put into consideration its role in the firms operations. The fact that there is dependence on records from another party from the previous year presents another issue to be put into consideration. The Generally Accepted Accounting Principles play a serious role in this area enabling the auditor draw clear conclusions from the information available. Options and Solutions to the Issues a. Initial Public Offer Philadelphia Communications Inc. became a public company through the Initial Public Offer. The Securities and Exchange C ommission, upon receiving an application from any company willing to go public, compels the company to apply all accounting standards to which the company subscribes (Epstein and Nach 55). These include the IFRS requirements, among others. The information disseminated in this period includes the share of the company owned by the individual participants. This serves to ensure there is transparency and accountability. The information from Phillys IPO doesnt state the self-command in terms of the number of shares owned. This type of non-disclosure is against the SEC and GAAP requirements and should be adhered to. b. Receivables The other issue involves receivables and in this particular case from shareholders. This basically is the money current from shareholders in their purchase of a companys shares. It is an investment into the company hence keenness is required in handling this issue. The SEC provisions and GAAP in place concerning receivables from shareholders are that the share holder should be in the know concerning the type of shares purchased and their amount. The notes receivable from Mr. Sigars cousins should have clearly stated interest grade and payment terms. This applies to all other shareholders notes (Shamrock 23). For transparencys sake, interest rates and payment terms on all notes receivable should be stated beforehand. jibe to the Financial Accounting Standards Board, the risk level to which shareholders receivables are exposed to should also be known by the