Help! This is an Accounting Assignment Financial Statement Analysis Assignment P

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Help! This is an Accounting Assignment

Financial Statement Analysis Assignment

Part I – General Information Contents How to Read Annual Reports: http://www.ibm.com/investor/help/reports/index.html?tab=tab_BB Read the information provided above and answer the following questions:

1. What are the optional and required (by SEC, Securities & Exchange Committee) elements required in an annual report?

2. Describe the contents of the Management Discussion and Auditor's Report

Download PepsiCo 2016 Annual Report from Sakai and answer following questions: A. Management’s Discussion and Analysis (MD&A) Identify two primary drivers/issues that explain current and future results of operations discussed in the MD&A. For example, the gross profit percentage increased because of improved buyer/supplier relationship resulting in greater overall operating performance.

B. Independent Auditor’s Report

a. Who was the company’s auditor and where is it located?

b. What is responsibility of the auditor?

c. Who is responsible for the preparation of and information within the company’s financial statement?

d. The audit was conducted in accordance with what?

e. What was the opinion of the auditor?

f. Based on the information collected and analyses, state your reasons why a potential should / should not invest in PepsiCo. Be specific.

Explanation / Answer

All publicly traded companies, most nonprofits and many privately held companies compile annual reports to help shareholders and other invested parties better understand the company's financial principles, practices and activities as they relate to company growth and development. An annual report provides an easy-to-digest snapshot of the prior fiscal year, including summary data, financial statements and relevant analysis.

Introductory Materials

An annual report's cover and introductory pages set the tone for the report that follows. Professional designers that specialize in annual reports are often used to help translate the message the company wants to project into an appropriate cover look. Many times, the company mission and objectives are restated in these introductory pages to remind readers of the company's larger goals. A letter addressed to readers--shareholders in the case of a public company and stakeholders in other cases--summarizes the report that follows. This may or may not be followed by an optional "highlights" page, to bullet point key items for readers.

Discussion And Analysis

Presenting audited financial data to shareholders and other readers is the primary goal of most annual reports. This section begins with a discussion and analysis of the figures to come. This summary page verbally explains the figures presented in the report, often with justifications explaining why or why not certain elements occurred.

Auditor's Letter

Annual reports include a letter form the party reviewing and externally verifying the financial data, typically in the form of an auditor's report or Certified Public Accountant letter. This letter provides proof of independent verification of the data presented. It will include statements like "this audit was conducted in accordance with auditing standards generally accepted in the United States of America" and "we perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement." It is typically presented on the official letterhead of the auditing firm or individual CPA.

Statements

The meat of the annual report is contained in the financial statements. Balance sheets, income statements and cash flow statements are standard elements. The balance sheet details assets, liabilities and working capital. The income statement shows revenues, expenses and resulting losses or gains. The statement of cash flows may outline cash flows from operating activities, investing activities and financing activities. If the organization includes equity partners, a statement of shareholder equity or partner equity specifying capital contributions may also be included.

Notes to Statements

An annual report's financial statements are followed by notes that clarify various points. This may include an introductory summary of the nature of the organization and its business. This may be followed by a summary of the accounting policies applied, information regarding capital contributions, investments and stock redemptions, and other items depending on the business and events of the prior year.

Additional Information

If the company has partners or subsidiary companies, partner profiles and company data sheets may be included in the report to provide a more complete picture of the year's activities. Contact information is always included and generally closes the report.

Contents of auditors report:-

Title page

Table of contents

This is optional depending on the length of the report—a 2 to 3 page report probably wouldn't have a table of contents but a 10 to 20 page report would.

Executive summary

An executive summary is a brief overview of a report that is designed to give the reader a quick preview of the report's contents. Its purpose is to present the key points of a report in one place. After reading the summary, your audience will understand the main points you are making and your evidence for those points without needing to read your full report. Remember that the purpose of an executive summary is to provide an overview or preview to an audience who may not have time to read the whole report carefully.

Introduction

The introduction should:

Discussion

This is the main body of the report and it has two key purposes:

Key points to remember when you are writing the discussion include the following:

Conclusion

The conclusion should:

Recommendations

Your recommendations point to the future and should be:

In reation to Pepsico 2016 annual report:-

Innovative new product launches, exciting new partnerships, breakthrough  new platforms and a powerful brand portfolio—each underpinned by strong execution by PepsiCo associates around the world—helped drive our performance while positioning PepsiCo well for the future.

a.Independent Auditors KPMG LLP 345 Park Avenue New York, NY 10154-0102

b.To review our critical accounting policies, financial reporting and internal control matters with them and encourage their direct communication with KPMG LLP, with our Internal Auditor, and with our General Counsel

c.The company's auditors

d.PepsiCo’s Corporate Audit Department evaluates the ongoing effectiveness of our key internal controls through periodic audit and review procedures;

e.Fair opinion

f.A potential investor should invest in Pepsico as it has fundamental growth and investors risk as its main objective.

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