Montclair State University

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Montclair State University

• Accounting 201
• Review of
• Annual
• Reports

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Montclair State University

• Accounting 520
• Review of
• Annual
• Reports

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Annual Reports
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Annual Reports
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Review of Annual Reports
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Topics To Be Discussed

• General Format of Annual Reports
• Management Responsibility for Financial
  Statements
• Auditors Report
• Financial Statements
• Disclosure of Significant Accounting Policies
• Fiscal Year End
• Rounding of Amounts

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Topics To Be Discussed

• General Format of Annual Reports
• Management Responsibility for Financial
  Statements
• Auditors Report
• Financial Statements
• Disclosure of Significant Accounting Policies
• Fiscal Year End
• Rounding of Amounts

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General Format of Annual Reports

• Financial Highlights
• Letter to the Shareholders
• Description of Companys Operations
• Managements Discussion and Analysis of Financial
  Statements
• Financial Statements
• Footnotes to Financial Statements
• Managments Statement of Responsibility for Annual
  Report
• Auditors Report
• Multi-Year Statistical Data

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General Format of Annual Reports

• Financial Highlights
• Letter to the Shareholders
• Description of Companys Operations
• Managements Discussion and Analysis of Financial
  Statements
• Financial Statements
• Footnotes to Financial Statements
• Managments Statement of Responsibility for Annual
  Report
• Auditors Report
• Multi-Year Statistical Data

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Financial Highlights
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Financial Highlights
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Financial Highlights
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Letter to the Shareholders

• General Mills had a good year in fiscal 1998,
  achieving record results
• Sales grew 8 percent
• Earnings grew 10 percent

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Letter to the Shareholders
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Letter to the Shareholders

• This is a remarkable time ...
• Some tough work is behind us with much more ahead
• 1997 was indeed the end of the beginning.

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Managements Discussion

• Compare
• Fiscal
• Years
• 1998
• 1997
• 1996

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Managements Discussion

• Compare
• Fiscal
• Years
• 1997
• 1996
• 1995

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Managements Discussion

• Compare
• 1998
• vs.
• 1997
• Compare
• 1997
• vs.
• 1996

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Managements Discussion

• Compare
• 1998
• vs.
• 1997
• Compare
• 1997
• vs.
• 1996

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Multi-Year Statistical Data

• Minimum of 5-year statistical data
• Some balance sheet, some income statement
  information
• Some non-financial statement information
• Tysons 11-year data is overkill

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. Informed estimates and judgments
  were used that affect the reported amounts in the
  financial statements and disclosures regarding
  contingencies. While the estimates were based on
  managements best judgment at the time, future
  facts and circumstances could change, causing the
  ultimate results to differ from managements
  estimates.

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. Informed estimates and judgments
  were used that affect the reported amounts in the
  financial statements and disclosures regarding
  contingencies. While the estimates were based on
  managements best judgment at the time, future
  facts and circumstances could change, causing the
  ultimate results to differ from managements
  estimates.

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. Informed estimates and judgments
  were used that affect the reported amounts in the
  financial statements and disclosures regarding
  contingencies. While the estimates were based on
  managements best judgment at the time, future
  facts and circumstances could change, causing the
  ultimate results to differ from managements
  estimates.

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. The consolidated financial
  statements were prepared in conformity with
  generally accepted accounting principles.
  Informed estimates and judgments were used for
  transactions not yet completed or for which
  ultimate effects cannot be precisely determined.

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. The consolidated financial
  statements were prepared in conformity with
  generally accepted accounting principles.
  Informed estimates and judgments were used for
  transactions not yet completed or for which
  ultimate effects cannot be precisely determined.

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. The consolidated financial
  statements were prepared in conformity with
  generally accepted accounting principles.
  Informed estimates and judgments were used for
  transactions not yet completed or for which
  ultimate effects cannot be precisely determined.

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. The consolidated financial
  statements were prepared in conformity with
  generally accepted accounting principles.
  Informed estimates and judgments were used for
  transactions not yet completed or for which
  ultimate effects cannot be precisely determined.

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to
• provide reasonable assurance that assets are
  safeguarded

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to
• provide reasonable assurance that assets are
  safeguarded
• that transactions are properly recorded and
  executed, and

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to
• provide reasonable assurance that assets are
  safeguarded
• that transactions are properly recorded and
  executed, and
• that established policies and procedures are
  followed

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to provide reasonable assurance that

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to provide reasonable assurance that
• assets are safeguarded

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to provide reasonable assurance that
• assets are safeguarded
• transactions are properly recorded

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to provide reasonable assurance that
• assets are safeguarded
• transactions are properly recorded
• and executed, and that established policies
  and procedures are followed.

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Managements Statement ofResponsibility for
Annual Report

• Tupperware Corp.
• . . . There are inherent limitations in all
  internal controls systems based on the fact that
  the cost of such systems should not exceed the
  benefits derived. Management believes that the
  Company's systems provide the appropriate balance
  of costs and benefits.

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Managements Statement ofResponsibility for
Annual Report

• Lucent Technologies Inc.
• . . . Even an effective internal control system,
  no matter how well designed, has inherent
  limitations -- including the possibility of
  circumvention or overriding of controls -- and
  therefore can provide only reasonable assurance
  with respect to financial statement presentation.

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Managements Statement ofResponsibility for
Annual Report

• MCI Communications Corporation
• The company maintains a system of internal
  controls designed to . . . provide reasonable
  assurance that assets are safeguarded and
  transactions are recorded and executed with
  managements authorization.

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Managements Statement ofResponsibility for
Annual Report

• MCI Communications Corporation
• The company maintains a system of internal
  controls designed to . . . provide reasonable
  assurance that assets are safeguarded and
  transactions are recorded and executed with
  managements authorization. Internal control
  systems are subject to inherent limitations due
  to the necessity to balance costs incurred with
  benefits provided.

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Managements Statement ofResponsibility for
Annual Report

• MCI Communications Corporation
• The company maintains a system of internal
  controls designed to . . . provide reasonable
  assurance that assets are safeguarded and
  transactions are recorded and executed with
  managements authorization. Internal control
  systems are subject to inherent limitations due
  to the necessity to balance costs incurred with
  benefits provided.

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Auditors Report

• We have audited the accompanying consolidated
  balance sheets of McCormick Company,
  Incorporated and subsidiaries as of November 30,
  1998 and 1997 and the related consolidated
  statements of income, cash flows and
  shareholders' equity for each of the three years
  in the period ended November 30, 1998. These
  financial statements are the responsibility of
  the Company's management. Our responsibility is
  to express an opinion on these financial
  statements based on our audits.

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Auditors Report

• We have audited the accompanying consolidated
  balance sheets of McCormick Company,
  Incorporated and subsidiaries as of November 30,
  1998 and 1997 and the related consolidated
  statements of income, cash flows and
  shareholders' equity for each of the three years
  in the period ended November 30, 1998. These
  financial statements are the responsibility of
  the Company's management. Our responsibility is
  to express an opinion on these financial
  statements based on our audits.

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Auditors Report

• We have audited the accompanying consolidated
  balance sheets of McCormick Company,
  Incorporated and subsidiaries as of November 30,
  1998 and 1997 and the related consolidated
  statements of income, cash flows and
  shareholders' equity for each of the three years
  in the period ended November 30, 1998. These
  financial statements are the responsibility of
  the Company's management. Our responsibility is
  to express an opinion on these financial
  statements based on our audits.

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Auditors Report

• We have conducted our audits in accordance with
  generally accepted auditing standards. Those
  standards require that we plan and perform the
  audit to obtain reasonable assurance about
  whether the financial statements are free of
  material misstatement. An audit includes
  examining, on a test basis, evidence supporting
  the amounts and disclosures in the financial
  statements. An audit also includes assessing the
  accounting principles used and

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Auditors Report

• An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures
  in the financial statements. An audit also
  includes assessing the accounting principles used
  and significant estimates made by management, as
  well as evaluating the overall financial
  statement presentation. We believe that our
  audits provide a reasonable basis for our
  opinion.

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Auditors Report

• In our opinion, the financial statements
  referred to above present fairly, in all material
  respects, the consolidated financial position of
  McCormick Company, Incorporated and
  subsidiaries at November 30, 1998 and 1997 and
  the consolidated results of their operations and
  their cash flows for each of the three years in
  the period ended November 30, 1998 in conformity
  with generally accepted accounting principles.

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Auditors Report

• Standard Unqualified Opinion
• Explanatory Language Added to Report
• Opinion of another auditor
• Uncertainties
• Consistency
• Emphasis of matter
• Qualified Opinion
• Scope limitation
• Adverse Opinion
• Disclaimer

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Disclosure ofSignificant Accounting Policies

• Usefulness of financial statements depends on
  users understanding of accounting policies of
  reporting entity

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Disclosure ofSignificant Accounting Policies

• Generally
• Recognition of revenue and expense
• Specifically
• Selection from existing alternatives
• Principles peculiar to particular industry
• Unusual or innovative applications

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Disclosure ofSignificant Accounting Policies

• May be shown
• separate Summary of Significant Accounting
  Policies section preceding notes
• initial note

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Notes to ConsolidatedFinancial Statements

• Consolidation
• Fiscal Year
• Inventories
• Intangibles
• Plant Assets
• Depreciation
• Pension and Retiree Benefit Plans

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Notes to ConsolidatedFinancial Statements

• The consolidated financial statements include The
  Quaker Oats Company and all of its subsidiaries
  (the Company). All significant intercompany
  transactions have been eleminated. . . .

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Notes to ConsolidatedFinancial Statements

• The consolidated financial statements include The
  Quaker Oats Company and all of its subsidiaries
  (the Company). All significant intercompany
  transactions have been eleminated. . . .

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Month of Fiscal Year End
1997 1996 1995
1994 January ................................... 2
4 21 23 23 February ..............................
... 10 11 11 12 March ............................
......... 14 15 15 15 April ......................
................ 10 10 8 8 May ..................
..................... 14 14 16 16 June ...........
............................ 53 57 58 59 July ....
.................................... 11 11 14 14 A
ugust .................................. 14 15 15
15 September .............................. 36 37
35 37 October ..................................
22 23 23 22 November ............................
.. 15 14 17 17 Subtotal .........................
.. 223 228 235 238 December .....................
......... 377 372 365 362 Total
Companies ............ 600 600 600 600
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Rounding of Amounts
1997 1996 1994 1993 To nearest
dollar 30 33 40 43 To nearest thousand
dollars Omitting 000 349 352 354 352 Presenting
000 13 17 20 22 To nearest million
dollars 208 198 186 183 Total Companies 600 600 60
0 600
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Review of Annual Reports