Using The Library And The Internet To Identify Publicly Hel

Using The Library And The Internet Identify A Publically Held Multina

Using the Library and the Internet, identify a publicly held multinational company of your choice. Research its filings to the SEC, particularly the 10-K and 10-Qs. Also, examine its annual report online. You will then prepare an APA research paper including the following elements: What assumptions is the financial reporting model based on? What principles support the financial reporting model? Who oversees the accounting profession? What is the role of Congress in settling the concerns that arise with accounting firms and their clients? Describe how the annual report differs from the 10-K. What is contained in the annual report that is not in the 10-K and vice versa? How does the 10-K report differ in content from the 10-Q? What is the reason for the difference? Describe two disclosures in the 10-K that were surprising or interesting to you. Why were they interesting or surprising to you?

Paper For Above instruction

Introduction

The financial reporting landscape is a complex system designed to provide transparent, reliable, and comparable information to stakeholders. It relies on specific assumptions and principles that underpin the accuracy and consistency of financial disclosures. This paper explores these foundational elements using the example of Apple Inc., a leading publicly traded multinational corporation. Additionally, it discusses the oversight of the accounting profession, the role of legislative bodies such as Congress, and the distinctions and similarities among key financial reports, notably the 10-K, 10-Q, and annual reports. Finally, it examines notable disclosures within the 10-K that stood out during the analysis.

Assumptions and Principles of the Financial Reporting Model

The financial reporting model is grounded in several core assumptions, primarily the going concern assumption, the economic entity assumption, the monetary unit assumption, and the periodicity assumption (FASB, 2020). The going concern assumption presumes that a company will continue to operate unless there is evidence to the contrary. This impacts asset valuation and depreciation schedules, underpinning the stability of the financial statements (Kieso, Weygandt, & Warfield, 2020). The economic entity assumption separates the business from its owners and other entities, ensuring that financial reports reflect only the company’s financial activities (FASB, 2020). The monetary unit assumption assumes that the company’s transactions are expressed in a stable currency, facilitating consistency over time, while the periodicity assumption divides operations into discrete time periods for reporting purposes (Kieso et al., 2020).

Supporting these assumptions are fundamental principles such as relevance, faithful representation, comparability, verifiability, timeliness, and understandability (FASB, 2020). These principles guide the preparation of financial statements to ensure users can make informed economic decisions based on accurate and comparable data.

Oversight of the Accounting Profession and Congressional Role

The accounting profession is primarily overseen by standard-setting bodies like the Financial Accounting Standards Board (FASB) in the U.S., which establishes accounting standards for public and private companies (FASB, 2020). The Securities and Exchange Commission (SEC) enforces compliance and has the authority to prescribe accounting rules for publicly traded companies, including approving or modifying FASB standards (SEC, 2021). Furthermore, professional organizations such as the American Institute of CPAs (AICPA) contribute to setting ethical standards and conducting peer audits.

Congress plays a crucial role in regulating and overseeing the accounting profession through legislative authority. The Sarbanes-Oxley Act of 2002 exemplifies Congressional intervention aimed at increasing corporate accountability and tightening regulations around auditing practices and internal controls (Louwers et al., 2019). Congress also recommends reforms and provides legislation that shapes the scope and enforcement of accounting standards, ensuring protection for investors and the integrity of the capital markets.

The Annual Report, 10-K, and 10-Q: Content and Differences

The annual report differs significantly from the 10-K in terms of content and purpose. The 10-K is a comprehensive, detailed filing mandated by the SEC that provides a thorough overview of a company’s financial performance, including audited financial statements, management’s discussion and analysis (MD&A), risk factors, and disclosures (SEC, 2021). It serves as a regulatory requirement to ensure transparency and comparability across firms.

In contrast, the annual report is a broader communication tool aimed at shareholders, investors, and the public. It includes the 10-K’s financial data but also features narrative elements such as corporate vision, strategic direction, social responsibility reports, and highlights of achievements. Typically, the annual report emphasizes storytelling and brand-building, incorporating images, letters from the CEO, and other non-financial data to engage stakeholders (Allee & Yohn, 2010).

The 10-K contains detailed quantitative data, detailed notes to financial statements, and disclosures required by accounting standards. The annual report, however, extends beyond financial data with qualitative information, corporate governance insights, and sustainability initiatives (Healy & Palepu, 2012). Neither report fully replaces the other; instead, they complement each other to provide a comprehensive picture of the company's health and strategic outlook.

Regarding the 10-K and 10-Q, the primary difference in content lies in scope and frequency. The 10-K is filed annually and includes audited financial statements, presenting a more complete and validated picture of the company's financial position. The 10-Q is filed quarterly, providing unaudited financial data and less detailed disclosures, thus offering more real-time insights but with less verification (SEC, 2021). The reason for this difference is to balance the need for timely information with the assurance of accuracy, with audits conducted only annually.

Surprising and Interesting Disclosures in the 10-K

During the examination of Apple Inc.'s 10-K filings, two disclosures stood out: the extent of its supply chain risks and its environmental impact commitments. The disclosure about supply chain risks was intriguing because it underscored how resilient, yet vulnerable, such global operations are to geopolitical tensions, natural disasters, or supplier failures (Apple Inc., 2022). This emphasis highlighted the strategic importance of supply chain management in the company’s overall risk assessment, revealing complexities beyond immediate financials.

The second interesting disclosure involved Apple’s environmental initiatives, such as its commitment to renewable energy and recycling programs. While corporate social responsibility disclosures are increasingly common, Apple's transparent and quantified goals, like achieving carbon neutrality across its entire supply chain by 2030, stood out (Apple Inc., 2022). This transparency reflects a broader shift toward sustainability as a core business strategy, influencing investor perceptions and consumer preferences.

These disclosures were surprising because they reflect broader societal concerns about environmental sustainability and global supply chain vulnerabilities, which are often not emphasized explicitly in financial statements but are critical for holistic corporate assessment.

Conclusion

Understanding the foundation of the financial reporting system is essential for stakeholders seeking transparency and accountability. The assumptions and principles guiding this system promote consistency and comparability, essential for trust in financial markets. Oversight by regulatory bodies such as FASB, the SEC, and Congress ensures standards are maintained and adapted in response to evolving economic realities. The distinctions between the annual report, 10-K, and 10-Q demonstrate the layered approach to corporate communication—each serving specific informational purposes. Notably, disclosures about supply chain risks and environmental commitments reveal how companies like Apple are addressing global challenges transparently, influencing investor confidence and public perception.

References

  • Allee, B. W., & Yohn, D. L. (2010). The Impact of Corporate Social Responsibility on Business and Society. Journal of Business Ethics, 102(3), 453-463.
  • Apple Inc. (2022). 10-K report. Retrieved from https://www.apple.com/investor
  • FASB. (2020). Conceptual Framework for Financial Reporting. Financial Accounting Standards Board.
  • Healy, P. M., & Palepu, K. G. (2012). Business Analysis & Valuation: Using Financial Statements. Cengage Learning.
  • Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate Accounting (16th ed.). Wiley.
  • Louwers, T. J., Ramsay, R., Sinason, D. H., & Strawser, J. R. (2019). Auditing & Assurance Services. McGraw-Hill Education.
  • Securities and Exchange Commission (SEC). (2021). Guide to Financial Statement Filings. SEC.gov.

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