Basic Accounting and Financial Reporting for In-House Attorneys (Part One): Foundations and the Balance Sheet

Understanding and interpreting financial information is a key skill for in-house counsel. Successfully working in areas including preparation of annual plans and budgets, evaluation of contract or acquisition terms, and review of external reporting information, involves using and interpreting financial statements. This first of two briefings will build a foundation to understand and use the information financial statements communicate, including assessing operating efficiency, liquidity and leverage risk. Beginning with foundational concepts for financial accounting and reporting, discussion will build an understanding of the statement of financial condition or balance sheet along with the information it communicates about liquidity and leverage risk. Part Two will then proceed to the income statement and statement of cash flows. Please join Cheryl L. Linthicum and George M. Wilson of PLI’s SEC Institute as they build a foundational understanding to demystify financial reporting.

In this Briefing faculty will:

• Explain the kinds of information that financial statements communicate – 10 minutes
  • Discuss the concepts of financial stability
    • Liquidity – Does a company have enough cash and liquid assets to pay its bills?
    • Leverage risk – Does a company have too much borrowed money and related interest expense?
  • Review the concepts of financial performance – Are we earning a profit or losing money?
    • Increasing or losing resources
• Articulate the communication foundations of financial reporting – 10 minutes
  • Definitions and examples – assets, liabilities, equity, etc.
• Discuss how balance sheets communicate financial information– 15 minutes
  • Structure and form
  • Terminology
  • Fundamental assumptions – current versus noncurrent, historical cost, periods, etc.
• Analyze the financial information communicated in the balance sheet– 15 minutes
  • Liquidity information
  • Leverage risk information
• Discuss how financial information is used in budgeting, deal evaluation and external reporting – 10 minutes
  • Budgeting for cost centers such as a legal department
  • Example deal provisions

After this briefing you will want to listen to Basic Accounting and Financial Reporting for In-House Attorneys (Part Two): The Income Statement and Statement of Cash Flows and Basic Accounting and Financial Reporting for In-House Attorneys (Part Three): Interpretation, Ratio Analysis, and Selected Technical Areas.

Who Should Attend: Attorneys who need a basic understanding of accounting and financial reporting in their practice.

Program Level: Update

Prerequisites: None

Advanced Preparation: None