Glossary: M10 Reporting Quality
| Term | Definition |
|---|
| Financial Reporting Quality | Degree to which financial reports reflect economic reality and are decision-useful |
| Earnings Quality | Degree to which reported earnings are sustainable, adequate, and backed by cash flows |
| Conservative Accounting | Accounting choices that tend to decrease current period income or understate assets |
| Aggressive Accounting | Accounting choices that tend to increase current period income or overstate assets |
| Earnings Smoothing | Using accounting discretion to reduce variability in reported earnings across periods |
| Big Bath | Taking large write-offs in one period to improve reported results in future periods |
| Cookie Jar Reserves | Overstating reserves in good periods and releasing them in poor periods to smooth earnings |
| Channel Stuffing | Shipping excess product to distributors near period-end to inflate current revenue |
| Bill-and-Hold | Recording revenue before goods are delivered to the customer |
| Beneish M-Score | Statistical model using financial ratios to detect likelihood of earnings manipulation |
| Accruals Ratio | Measure of accrual-based earnings relative to assets; high values may indicate manipulation |
| Related-Party Transaction | Transaction between entities with a pre-existing relationship; potential for non-arm’s-length terms |
| Qualified Audit Opinion | Auditor opinion noting specific exception to fair presentation |
| Going Concern Doubt | Auditor’s assessment that entity may not survive as a going concern |
| Earnings Management | Use of accounting judgment to alter financial reports for specific objectives |