Short Paper: Nonfinancial Statement Analysis

In this short paper, you will analyze financial statement footnotes, as well as management discussions, in order to identify elements that could suggest the possibility of fraud.

Overview: In this assignment, you will learn to search for and analyze the qualitative/nonfinancial data within a public company’s annual report. You will
examine the footnotes as well as management discussions to identify elements that could suggest the possibility of fraud. It is important to know how to analyze
qualitative/nonfinancial data, as indicators of fraud can be found within this data.
Prompt: Using the SEC’s EDGAR database, search for a large public company and download the most recent Form 10-K. This form contains all the information
that must be reported annually to the SEC. Within this form, ensure that it includes footnotes, the management discussion and analysis (MD&A) sections, review
each of the previously listed sections, and discuss any off-balance sheet financing, management concerns, management’s expectations for the future, and
anything interesting or out of the ordinary. Feel free to supplement your search with current articles that discuss your chosen company and the industry in which
it operates.
Specifically the following critical elements must be addressed:
I. Company Selection: Select and name the public company along with the fiscal year-end of the annual report that includes footnotes and the
management discussion and analysis (MD&A) sections.
II. Footnotes: Review the footnotes of the financial statements and describe off-balance sheet financing in general or with specific examples provided
within the Form 10-K of the selected company (e.g., operating lease or through special purpose entities).
III. Management Discussion and Analysis (MD&A): Review the MD&A of the annual report. Management often discusses issues of concern in this area of
their report. They also include projected financial statements, which may suggest ideas about the firm’s potential for future earnings.
a. Describe any management concerns listed and/or explain anything you find interesting or out of the ordinary.
b. Describe any projections and/or future expectations of the management.
Guidelines for Submission: Your paper should be submitted as a 2- to 3-page Microsoft Word document with double spacing, 12-point Times New Roman font,
one-inch margins, and at least two sources cited in APA format.
Critical Elements Exemplary (100%) Proficient (90%) Needs Improvement (70%) Not Evident (0%) Value
Company Selection Names company and the fiscal
year-end of the annual report
Does not name company or
fiscal year-end of the annual
report
15
Footnotes Describes off-balance sheet
financing with clear examples
and specific details
Describes off-balance sheet
financing with general
examples or ones provided
from the selected Form 10-K
Describes off-balance sheet
financing but description lacks
detail
Does not describe off-balance
sheet financing
25
MD&A:
Management
Concerns
Describes management
concerns and/or anything out
of the ordinary found within
the MD&A using clear
examples and specific details
Describes management
concerns and/or anything out
of the ordinary found within
the MD&A
Describes management
concerns and/or anything out
of the ordinary found within
the MD&A but description
lacks detail
Does not describe
management concerns or
anything out of the ordinary
25
MD&A: Projections Describes projections and/or
future expectations of the
management found within the
MD&A using clear examples
and specific details
Describes projections and/or
future expectations of the
management found within the
MD&A
Describes projections and/or
future expectations of the
management found within the
MD&A but description lacks
detail
Does not describe projections
or future expectations
25
Articulation of
Response
Submission is free of errors
related to citations, grammar,
spelling, syntax, and
organization and is presented
in a professional and easy-toread format
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact
readability and articulation of
main ideas
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
10
Total

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