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CPA Publishes Free Guides to Understanding Annual Reports

Prospective investors will find it a lot easier to understand annual reports with the publication of free plain English guides.

A Guide to Understanding Annual Reports: Listed Companies and A Guide to Understanding Auditing and Assurance: Listed Companies, published by CPA, will help investors make more informed investment decisions.

CPA Australia chief executive, Alex Malley, said the free guides would provide the keys to unlocking the immense amount of powerful information in a listed company’s annual and audit reports.

“To the uninitiated, or those not regularly dealing with financial data and reports, annual and audit and assurance reports can be extremely confronting. “However, with the right guidance and a little knowledge they are a quick and easy way to gain a lot of information that is not obvious at first glance.

“Understanding these reports means understanding the rules of the game of business, the players and their various roles

“These guides are an important financial literacy tool from CPA Australia and will provide existing or prospective investors with a whole new perspective on company performance over the reporting period.”

Mr Malley said the guides would equip shareholders with the knowledge necessary to ask the pertinent questions of companies at annual general meetings and throughout the year.

“Annual general meetings provide a great way for investors to really question boards and executive teams on a company’s performance and the rationale for their decisions.

“These guides will help investors build the financial literacy skills they need to become more active and engaged shareholders.”

The guides provide:

  • an overview of annual reports and financial statements
  • illustrative financial statements to introduce the reader to analytical tools that can be used to interpret the information in the statements
  • an overview of what auditing and assurance mean
  • an explanation of the difference between an audit and a review
  • advice on how to tell if an auditor’s report is “clean” or contains a qualification
  • an explanation of an auditor’s role in respect to fraud and going concern
  • an understanding what audit quality means
  • illustrative sample audits and review reports with plain language explanation
  • a simple glossary of terminology used in annual reporting, financial statements and auditing and assurance

These handy guides, updated for financial year 2013-14 are available free of charge from the CPA Australia website.