General Financial Reporting Case Writing Considerations

Every financial reporting scenario or case study needs to be analyzed and assessed based on its own individual facts
and circumstances. There is no “one way” or “template” for analyzing accounting scenarios or cases. However, in
most cases there are some general writing considerations that students should consider. Not each consideration
will be relevant in every situation and therefore blinding following a “template” is not recommended.

Structure case in A “user” is someone who relies on the financial

To: statements to make a decision.
From: professional format.
Re:
“Objectives” refer to financial reporting
Overview objectives – the financial reporting bias/goal
that a user strives to achieve.
Users & Objectives
• User 1 – State why a user and what is their financial statement objective(s)
• User 2 – State why a user and what is their financial statement objective(s)
• ECT…

Constraints
• State what the constraint is and why it is a constraint.
• If more than one option, discuss alternative and conclude, with support, on selected constraint.

A “constraint” is a formal limitation to the accounting choices prepares can make. These include for example - APSE,
IFRS or terms of contracts.

Conflict / Ethical Considerations

• If conflicting financial reporting objectives among users, state conflict.
• Consider any ethical dilemmas

Primary User and Primary Objective

• Select and state the primary user of the financial statements and what financial reporting objective will
guide decision making, when and only when, choices/alternatives exist.
• Select and state the secondary user of the financial statements and what financial reporting objective will
guide decision making, when and only when, the primary user’s objective cannot be met and
choices/alternatives exist.

A “primary user” is the person that will most heavily rely on the financial statements to make a decision or is the
user with the most power.

In many cases, answering the questions “who do you want to please the most….?” will dedicate who the primary
user is.

© Alex Fisher 2019 | All Rights Reserved – Not to Be Distributed Without Explicit Permission of Alex Fisher

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 General Financial Reporting Case Writing Considerations

Analysis
Think more. Write less!
Issue: State the issue explicitly - could be a statement or a question

Rank issues in order of importance (e.g. materiality, impact on objective, degree of complexity, timeliness, ECT.).

Analysis:
• Think about the type of accounting issue before jumping into an analysis.
• There are different types of issues:

o Discussion of alternatives Use case facts.

▪ More than one possible answer
▪ Identify possible alternatives, given the facts of the case State your
▪ Only discuss viable alternatives – given the facts & constraints assumptions.
▪ Limit yourself generally to viable 1-2 alternatives
Quantify where
o Application of criteria possible.
▪ Apply a set of criteria (i.e. usually GAAP rules) to case facts
Be concise.
o Application of technical knowledge
▪ Apply specific technical guidance (i.e. usually GAAP rules) to a specific scenario or to
explain technically how to account for something

o Mix of the above

Conclusion:
• Must be included for each analyzed issue
• Must include:
o Explicit action statement (e.g. what to do)
o Impact on the financial statements (e.g. expenses will increase, assets will decrease)
o Impact on the primary/secondary user objective (e.g. decreases bonus, contrary to
management objective)

Conclusions must be based on facts and consider the constraint.

If and only if, the facts and constraint allow for more than one accounting conclusion, then the final choice depends
on the financial reporting objective of the primary user.

Big Picture Take-Away

• Only relevant for certain cases
• Consider if any overall takeaway exist
o Provide commentary as part of a larger decision
o Recalculate financial statement element (e.g. net income)

© Alex Fisher 2019 | All Rights Reserved – Not to Be Distributed Without Explicit Permission of Alex Fisher