Original Question: R.E.C. Inc.s staff of accountants finished preparing the financial statements for 2010 and will meet next week with the companys CEO as well as the Director of Investor Relations and representatives from the marketing and art departments to design the current years annual report. Write a paper in which you present the main idea(s) you think the company should present to shareholders in the annual report. Why do you think those ideas should be included?
Response 1: Half Page – Derrick,
There are several key aspects that need to be included in the annual report, which include; highlights, CEO letter, auditors report, managements discussions and analysis (MD&A), managements discussion of financial responsibility, financial statements, notes to the financial statements and potentially other information. It is important that all this information be included for the both public and internal use. All these areas are important, but the financial statements section may be the most important. The financial statements section will need to include the balance sheet, income statement and statement of cash flows. It is important to show this information to show how the company is currently doing financially and all publicly traded companies must file their annual financial reports with the SEC (Epstein, 2014). The auditors report of these financial statements is also vital to the annual report to ensure that the information being shared is both truthful and relevant. As they prepare all this information they will be wanting to determine what information they want to use in the highlights section to portray the successes of the company to those who read the report. At this point the CEO letter may not be complete as they prepare all this information to meet with the CEO next week. The CEO may want to see and hear the presented information during this meeting before finalizing their letter that will be apart of the annual report.
Response 2: Half Page – Reginald,
So, shareholders can fully understand the financial health of the company, R.E.C. Incs annual report from 2010 should be provided since its comprised of essential information. Financial stability and the performance of the business can both be divulged from the annual report since it features the most effective sound financial data. Financial and operational information, new product or service plans, a letter from the CEO, industry specifics, if applicable, information on subsidiaries are all components that must be included in the annual report, this is mandated by the Securities and Exchange Commission (SEC) according to Epstein, (2014)
Stability, financial health, and opportunities for growth in the future are all necessary concepts that could offer shareholders needed information. On the other hand, political, economic, and social situations are all opportunities that could attribute to shortcomings featured in annual reports. The management’s discussion and analysis, management’s discussion of financial responsibility, financial statements with notes, and any other information are additives that should be emphasized throughout the report from the auditor. The presence of statements related to cash flow, statements pertaining to income, and the balance sheet are critically important as it relates to the financial section of the annual report. Any supporting documentation in conjunction with financial data should present an accurate display of financial stability as it relates to R.E.C. according to Epstein, (2014).
