Accounting -- Related Accounting Research

Business Ratios
Financial Market Data
Economic Data
Corporate Governance
International Business
Corporate Strategic and Operational Intelligence

BUSINESS RATIOS

Analysis drawn from company financial statements (income statement, balance sheet, cash flow statement) is used to assess an organization's business condition and overall risk. Ratios provide useful aggregate comparative data on industry performance and are specifically used by accountants to benchmark the performance of their clients against their industry peers. The benchmark data is now typically a part of the business performance review that accountants must complete as part of a financial statement audit.

Example: analysis of a company's "day sales in receivables" is an important indicator of how quickly a company collects cash from its sales; those with quicker collections present less of a cash/liquidity risk than a peer which takes a longer than average amount of time to make collections.

Click HERE to learn about the best sources to use for locating business ratios.

FINANCIAL MARKET DATA

Accountants regularly request financial market data such as stock prices, treasury rates, and bond values. This type of information is used to "independently" test the reasonableness of client assertions about the value of assets and liabilities on their books.

If a client has a large number of investments, an accountant may use statistical sampling to select items to test in order to ensure that the value of the investments as reported by the client and supporting documentation are accurate.

Financial data may be requested in order to:
-- provide support for historical cost or fair value recorded for an investment.
-- provide evidence that an investment has not declined in value below its original cost.
-- provide evidence of the value of a transaction.

Click HERE to learn about the best sources to use for locating financial market data.

ECONOMIC DATA

Accountants also regularly request economic data such as foreign exchange rates, the Consumer Price Index (CPI), rate of inflation, and the Gross Domestic Product (GDP).

Economic data may be requested for some of the following reasons:
-- foreign currency exchange translations. -- lease escalation provisions.
-- calculation of interest expense (for example, a company's debt may bear interest at a rate based on the prime or LIBOR rate plus a certain percent).

This data may be historical (to test transactions recorded in the past; current (to test a value at a balance sheet data) or forecasted (to estimate the impact that change in an interest rate or other factor may have on future expenses for disclosure in a company's financial statements).

Click HERE to learn about the best sources to use for locating economic data.
Click HERE to learn about the best sources for locating foreign exchange rates

CORPORATE GOVERNANCE

Accountants regularly request information to identify and learn more about an organization's top management and the members of its board. This research supports financial professionals in their roles as accountants and financial advisors to company management, the Board of Directors, and the audit or compensation committees.

Applications for gathering this type of information include:
-- corporate management and board member biographical profiles.
-- officer compensation and benefits.
-- audit committee members and biographical profiles. Use SEC filings (10K and Proxy Statement) for locating this type of information for publicly-held companies. For privately-held companies, use Factiva to locate articles from local, regional, and national newspapers; unfortunately, there is no guarantee that this information will be disclosed for private companies.

Click HERE to learn more about sources for keeping up with corporate governance regulations and hot issues.

INTERNATIONAL BUSINESS OPERATIONS

In their expanding roles as business advisors, they gather information on country accounting, tax, and corporate structures, local rules and regulations, and other risks related to conducting business abroad. This type of information is commonly referred to as "doing business" information.

EIU Viewswire and EIU Country Reports
One of the best sources for country "regulatory" information, including investment, competition, licensing, trade and tax.

CORPORATE STRATEGIC AND OPERATIONAL INTELLIGENCE

Accountants need to be aware of events that may impact a company's financial performance and health. These can include external factors such as the competitive marketplace, the regulatory environment, economy, internal and external risk factors, and future strategic directions.

For public companies, the Management Discussion & Analysis sections of the 10K is fast becoming extremely valuable for tapping into the CEO's perspective on a company's performance.