Financial Accounting IP 5 Assignment

Financial Accounting IP 5
Abstract
The paper seeks to investigate the financial reporting model of Walmart Stores Inc. as well as the comparison of the annual reports and 10-K. It also examines the role of the Congress in dealing with the issues affecting the accounting firms and their customers. The disclosures in the 10-K, which are critical in understanding the financial performance of the company. Therefore, the report will examine the annual report of Walmart Inc.
Assumptions of the Financial Reporting Model
Some of the key assumptions of the financial reporting model adopted by Walmart Inc. includes the accrual assumption and the going concern assumption. The accrual assumption is the accrual approach of accounting whereby recognition of revenues and expenses when they are earned or utilized respectively (Sorrentino & Smarra, 2015). Thus, the accrual approach is appropriate in ensuring that the financial statements reflect the true and fair value of the organization. Additionally, Walmart Inc. relies on the going concern assumption to project the future of the organization. The financial reporting approach assumes that the business will continue in the coming years and thus, it was able to recognize deferred expenses.
Principles Supporting the Financial Reporting Model
The principles that support the financial reporting model of Walmart Inc. includes the consistency and the comparability principles. The consistency principle helped to ensure that the company used the U.S GAAP to compile the financial statements. The U.S GAAP was applied uniformly to allow for consistency, which helps the external stakeholders including the investors to compare with past year performances (Chen & Li, 2015). The principle of comparability involved the reporting of the financial performance in different years as well as allowing for comparison with other companies in the retailing industry. For example, the comparison between the assets from one year to another helped to predict the future financial performance and outcomes.
Public Company Accounting Oversight Board (PCAOB)
The Public Company Accounting Oversight Board (PCAOB) is body tasked with the role of overseeing the accounting profession in the U.S. The PCAOB ensures that the investors, regulators and the public can rely on the audited financial statements. It is because the public corporations are forced to provide the accurate and true view of the financial health of the public companies (Cassell, Dreher & Myers, 2013). The PCAOB was created after the passing of the Sarbanes-Oxley Act of 2002 to protect the interests of the external stakeholders in the design and preparation of the independent audit reports. However, the actions and rules of PCAOB must be authorized by the U.S SEC.
Role of Congress
The U.S Congress has the different roles in ensuring the upholding of integrity and discipline among all the auditors and their clients. For years now, the Congress has been responsible for developing laws and regulations which create a commission and regulatory bodies such as the SEC (Barth, Landsman, Lang & Williams, 2012). Act of Congress created SEC and given the responsibility to set accounting and reporting standards. In any accounting war occurring between two stakeholders, the U.S Congress plays an important role through intervening and performing an investigation on the conflict and offer a guideline for a solution. The U.S Congress also plays the role of punishing the rule breakers through the imposition of fines.
Difference between Annual Report and the 10-K
The annual report and form 10-K can offer information needed by the shareholders to forecast on the future performance and investment of the company. Some of the key differences between the annual report and form 10-K are that the annual report has detailed information, which includes graphical view and other images to present the financial information and data. On the other hand, the form 10-K does not present information using graphical presentations. Form 10-K is summarized and represents the financial reports of the company. It includes a summary of the executive compensation, property holdings, and the potential legal proceedings of the organization.
Another key difference is the location of accessing the two reports. The annual report can be obtained from the company’s website. In contrast, form-10 K is usually filed with the SEC and thus, it can only be obtained from the EDGAR database of SEC. Based on the content differences, the annual report has the various graphical presentation and other images, which offers detailed information about the organization. Such information is not presented in the form 10-K (Li, Lundholm & Minnis, 2013). On the other hand, the form 10-K has detailed information about the executive compensation and legal proceedings which are not presented in the annual report. It is essential to note that form 10-K is compulsory to be filed with the SEC while, the annual report is not a compulsory for filing with SEC and only helps in creating awareness to the shareholders.
The Difference between the 10-K report and the 10-Q
In terms of content, the 10K report is similar to the 10-Q, but the difference in content comes in because it is less detailed than the 10 K. The 10-Q are required to be filed on a quarterly basis compared to the 10 K report which is filed annually. The quarterly 10-Q reports not detailed due to the short period of filing. Some of the reasons for the less detail in 10-Q compared to the 10-K report is the nature of measurement and other circumstances. Unlike the 10-K report which details the general financial performance, the 10-Q contains the information about the changes in the earning figures, changes in the accounts receivable and the working capital.
Disclosures in the 10-K
The two disclosures in the 10-K that were interesting include the directors and corporate governance and the controls and procedures disclosures. The directors and corporate governance helped to disclose the information relating to the officers and directors of Walmart Inc. It also helped to analyze the model of corporate governance which is critical in understanding the governance and the accountability of Walmart Inc (Bentley, Omer & Sharp, 2013). It was interesting as it does not offer any financial insights only the governance structure of the company. The disclosure of controls and procedures was interesting, as it assists in giving the information about the effectiveness of controls and procedures in terms of the evaluation of the CEO and CFO.

References
Barth, M. E., Landsman, W. R., Lang, M., & Williams, C. (2012). Are IFRS-based and US GAAP-based accounting amounts comparable?. Journal of Accounting and Economics, 54(1), 68-93.
Bentley, K. A., Omer, T. C., & Sharp, N. Y. (2013). Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, 30(2), 780-817.
Cassell, C. A., Dreher, L. M., & Myers, L. A. (2013). Reviewing the SEC’s review process: 10-K comment letters and the cost of remediation. The Accounting Review, 88(6), 1875-1908.
Chen, J. V., & Li, F. (2015). Discussion of “Textual analysis and international financial reporting: Large sample evidence”. Journal of Accounting and Economics, 60(2), 181-186.
Li, F., Lundholm, R., & Minnis, M. (2013). A measure of competition based on 10‐K filings. Journal of Accounting Research, 51(2), 399-436.
Sorrentino, M., & Smarra, M. (2015). The term “business model” in financial reporting: Does it need a proper definition?. Open Journal of Accounting, 4(02), 11.