The elements of the reporting entity represented in ﬁnancial statement

ABSTRACT

Financial statements report on the ﬁnancial elements of the reporting entity: its assets, liabilities, revenues, and expenses.

The elements are in the ﬁnancial reporting territory, not in the ﬁnancial reporting map (see Chapter 4); assets, for example, exist outside the ﬁnancial statements, not in the ﬁnancial statements. Financial statements present merely representations of the elements. No balance sheet contains any cash, for example-it’s merely represented in that statement; cash exists in, for example, strongboxes and bank accounts. The outside auditor’s standard report erroneously states that the ﬁnancial statements present the ﬁnancial position and results of operations of the reporting entity. They don’t. The ﬁnancial position and the results of operations, whatever they are, pertain to the reporting entity and exist and occur in the ﬁnancial reporting territory. They aren’t presented in the ﬁnancial statements, the ﬁnancial reporting map. Instead, they are represented in the ﬁnancial statements.

The elements of the reporting entity represented in ﬁnancial statements

ABSTRACT