Definition of ACCOUNTING

: the system of recording and summarizing business and financial transactions and analyzing,
verifying, and reporting the results; also: the principles and procedures of accounting
Terminology
Bookkeeping
Bookkeeping can be described as: The recording of monetary transactions, appropriately
classified, in the financial records of an entity, either by manual means or otherwise.
Bookkeeping involves maintaining a detailed ‘history’ of transactions as they occur. Every sale,
purchase or other transaction will be classified according to its type and, depending on the
information needs of the organisation, will be recorded in a logical manner in the ‘books’. The
‘books’ will contain a record, or account, of each item showing the transactions that have
occurred, thus enabling management to track the individual movements on each record, that is,
the increases and decreases.
Financial accounting
Financial accounting can be described as: the classification and recording of monetary
transactions of an entity in accordance with established concepts, principles, accounting
standards and legal requirements, and their presentation, by means of various financial
statements, during and at the end of an accounting period.
Management accounting
Management accounting can be described as: The process of identification, measurement
accumulation, analysis, preparation, interpretation and communication of information used by
management to plan, evaluate and control within an entity and to assure appropriate use of and
accountability for its resources. Management accounting also comprises the preparation of
financial reports for non-management groups such as shareholders, lenders, regulatory agencies
and tax authorities.
The differences between external and internal information
External information is usually produced annually, though in organisations listed (or quoted) on
a stock exchange, information may be produced more frequently, for example quarterly. External
information is provided mainly by limited companies, in accordance with the relevant company
legislation. These may prescribe the layouts to be used and the information that is to be disclosed
either on the face of the financial statements or in the notes that accompany them.
External information is often available publicly and is therefore available to the competitors of
the organisation as well as its owners and employees.
Internal information is produced on a regular basis in order for management to compare the
organisation’s performance with its targets and to make decisions concerning the future.
Accounting information is usually produced on a monthly basis, although other non-financial
performance measures may be produced more regularly. Whereas external information is almost
exclusively measured in monetary terms, internal information will most likely involve reporting
financial and non-financial measures together.
Qualitative characteristics of useful financial information
The qualitative characteristics of useful financial reporting identify the types of information are
likely to be most useful to users in making decisions about the reporting entity on the basis of
information in its financial report. The qualitative characteristics apply equally to financial
information in general purpose financial reports as well as to financial information provided in
other ways.
Financial information is useful when it is relevant and represents faithfully what it purports to
represent. The usefulness of financial information is enhanced if it is comparable, verifiable,
timely and understandable.
Fundamental qualitative characteristics
Relevance and faithful representation are the fundamental qualitative characteristics of useful
financial information.
Relevance
Relevant financial information is capable of making a difference in the decisions made by users.
Financial information is capable of making a difference in decisions if it has predictive value,
confirmatory value, or both. The predictive value and confirmatory value of financial
information are interrelated.
Materiality is an entity-specific aspect of relevance based on the nature or magnitude (or both) of
the items to which the information relates in the context of an individual entity’s financial report.
Faithful representation
General purpose financial reports represent economic phenomena in words and numbers, To be
useful, financial information must not only be relevant, it must also represent faithfully the
phenomena it purports to represent. This fundamental characteristic seeks to maximise the
underlying characteristics of completeness, neutrality and freedom from error. Information must
be both relevant and faithfully represented if it is to be useful.

Enhancing qualitative characteristics

Comparability, verifiability, timeliness and understandability are qualitative characteristics that
enhance the usefulness of information that is relevant and faithfully represented.
Comparability
Information about a reporting entity is more useful if it can be compared with a similar
information about other entities and with similar information about the same entity for another
period or another date. Comparability enables users to identify and understand similarities in,
and differences among, items.
Verifiability
Verifiability helps to assure users that information represents faithfully the economic phenomena
it purports to represent. Verifiability means that different knowledgeable and independent
observers could reach consensus, although not necessarily complete agreement, that a particular
depiction is a faithful representation.
Timeliness
Timeliness means that information is available to decision-makers in time to be capable of
influencing their decisions.
Understandability
Classifying, characterising and presenting information clearly and concisely makes it
understandable. While some phenomena are inherently complex and cannot be made easy to
understand, to exclude such information would make financial reports incomplete and potentially
misleading. Financial reports are prepared for users who have a reasonable knowledge of
business and economic activities and who review and analyse the information with diligence.

Users of financial Information

1. Internal users
Human resources
Management
Finance
Marketing

2. External users
Tax authorities
Customers
Labour unions
Creditors
Investors
Regulatory agencies

Accounting Concepts and Principles

Accounting Concepts and Principles are a set of broad conventions that have been devised to
provide a basic framework for financial reporting. As financial reporting involves significant
professional judgments by accountants, these concepts and principles ensure that the users of
financial information are not mislead by the adoption of accounting policies and practices that go
against the spirit of the accountancy profession. Accountants must therefore actively consider
whether the accounting treatments adopted are consistent with the accounting concepts and
principles.
In order to ensure application of the accounting concepts and principles, major accounting
standard-setting bodies have incorporated them into their reporting frameworks such as the IASB
Framework.
Following is a list of the major accounting concepts and principles:
  Relevance
 Reliability
 Neutrality
 Faithful Representation
 Substance over Form
 Prudence
 Completeness
 Comparability/Consistency
 Understandability
 Materiality
 Going Concern
 Accruals
 Business Entity
In case where application of one accounting concept or principle leads to a conflict with another
accounting concept or principle, accountants must consider what is best for the users of the
financial information. An example of such a case would be the trade off between relevance and
reliability. Information is more relevant if it is disclosed timely. However, it may take more time
to gather reliable information. Whether reliability of information may be compromised to ensure
relevance of information is a matter of judgment that ought to be considered in the interest of the
users of the financial information.

Relevance:
Information should be relevant to the decision making needs of the user. Information is relevant
if it helps users of the financial statements in predicting future trends of the business (Predictive
Value) or confirming or correcting any past predictions they have made (Confirmatory Value).
Same piece of information which assists users in confirming their past predictions may also be
helpful in forming future forecasts.
Example:
A company discloses an increase in Earnings Per Share (EPS) from $5 to $6 since the last
reporting period. The information is relevant to investors as it may assist them in confirming
their past predictions regarding the profitability of the company and will also help them in
forecasting future trend in the earnings of the company.
Relevance is affected by the materiality of information contained in the financial statements
because only material information influences the economic decisions of its users.
Reliability
Information is reliable if a user can depend upon it to be materially accurate and if it faithfully
represents the information that it purports to present. Significant misstatements or omissions in
financial statements reduce the reliability of information contained in them.
Example:
A company is being sued for damages by a rival firm, settlement of which could threaten the
financial stability of the company. Non-disclosure of this information would render the financial
statements unreliable for its users.
Reliability of financial information is enhanced by the use of following accounting concepts and
principles:
Neutrality
Information contained in the financial statements must be free from bias. It should reflect a
balanced view of the affairs of the company without attempting to present them in a favoured
light. Information may be deliberately biased or systematically biased.
Faithful Representation
Information presented in the financial statements should faithfully represent the transactions and
events that occur during a period.
Faithfull representation requires that transactions and events should be accounted for in a manner
that represent their true economic substance rather than the mere legal form. This concept is
known as Substance Over Form.
Substance over form requires that if substance of transaction differs from its legal form then
such a transaction should be accounted for in accordance with its substance and economic
reality.
The rationale behind this is that financial information contained in the financial statements
should represent the business essence of transactions and events not merely their legal aspects in
order to present a true and fair view.

Example:
A machine is leased to Company A for the entire duration of its useful life. Although Company
A is not the legal owner of the machine, it may be recognized as an asset in its Statement of
Financial Position since the Company has control over the economic benefits that would be
derived from the use of the asset. This is an application of the accountancy concept of substance
over legal form, where economic substance of a transaction takes precedence over its legal
aspects.
Prudence
Preparation of financial statements requires the use of professional judgment in the adoption of
accountancy policies and estimates. Prudence requires that accountants should exercise a degree
of caution in the adoption of policies and significant estimates such that the assets and income of
the entity are not overstated whereas liability and expenses are not under stated.
The rationale behind prudence is that a company should not recognize an asset at a value that is
higher than the amount which is expected to be recovered from its sale or use. Conversely,
liabilities of an entity should not be presented below the amount that is likely to be paid in its
respect in the future.
There is an inherent risk that assets and income of an entity are more likely to be overstated than
understated by the management whereas liabilities and expenses are more likely to be
understated. The risk arises from the fact that companies often benefit from better reported
profitability and lower gearing in the form of cheaper source of finance and higher share price.
There is a risk that leverage offered in the choice of accounting policies and estimates may result
in bias in the preparation of the financial statements aimed at improving profitability and
financial position through the use of creative accounting techniques. Prudence concept helps to
ensure that such bias is countered by requiring the exercise of caution in arriving at estimates and
the adoption of accounting policies.
Example:
Inventory is recorded at the lower of cost or net realizable value (NRV) rather than the expected
selling price. This ensures profit on the sale of inventory is only realized when the actual sale
takes place.
However, prudence does not require management to deliberately overstate its liabilities and
expenses or understate its assets and income. The application of prudence should eliminate bias
from financial statements but its application should not reduce the reliability of the information
Completeness
Reliability of information contained in the financial statements is achieved only if complete
financial information is provided relevant to the business and financial decision making needs of
the users. Therefore, information must be complete in all material respects.
Incomplete information reduces not only the relevance of the financial statements, it also
decreases its reliability since users will be basing their decisions on information which only
presents a partial view of the affairs of the entity.
Comparability/Consistency

Financial statements of one accounting period must be comparable to another in order for the
users to derive meaningful conclusions about the trends in an entity's financial performance and
position over time. Comparability of financial statements over different accounting periods can
be ensured by the application of similar accountancy policies over a period of time.
A change in the accounting policies of an entity may be required in order to improve the
reliability and relevance of financial statements. A change in the accounting policy may also be
imposed by changes in accountancy standards. In these circumstances, the nature and
circumstances leading to the change must be disclosed in the financial statements.
Financial statements of one entity must also be consistent with other entities within the same line
of business. This should aid users in analyzing the performance and position of one company
relative to the industry standards. It is therefore necessary for entities to adopt accounting
policies that best reflect the existing industry practice.
Understandability
Transactions and events must be accounted for and presented in the financial statements in a
manner that is easily understandable by a user who possesses a reasonable level of knowledge of
the business, economic activities and accounting in general provided that such a user is willing to
study the information with reasonable diligence.
Understandability of the information contained in financial statements is essential for its
relevance to the users. If the accounting treatments involved and the associated disclosures and
presentational aspects are too complex for a user to understand despite having adequate
knowledge of the entity and accountancy in general, then this would undermine the reliability of
the whole financial statements because users will be forced to base their economic decisions on
undependable information.
Materiality
Information is material if its omission or misstatement could influence the economic decisions of
users taken on the basis of the financial statements (IASB Framework).
Materiality therefore relates to the significance of transactions, balances and errors contained in
the financial statements. Materiality defines the threshold or cutoff point after which financial
information becomes relevant to the decision making needs of the users. Information contained
in the financial statements must therefore be complete in all material respects in order for them to
present a true and fair view of the affairs of the entity.
Materiality is relative to the size and particular circumstances of individual companies.

Underlying assumptions
The IASB framework lists two assumptions that must be applied if financial statements are
to meet their objectives: the accrual basis/concept and the going concern concept.
What is a Going Concern?
Going concern is one the fundamental assumptions in accounting on the basis of which financial
statements are prepared. Financial statements are prepared assuming that a business entity will
continue to operate in the foreseeable future without the need or intention on the part of
management to liquidate the entity or to significantly curtail its operational activities. Therefore,
it is assumed that the entity will realize its assets and settle its obligations in the normal course of
the business.
It is the responsibility of the management of a company to determine whether the going concern
assumption is appropriate in the preparation of financial statements. If the going concern
assumption is considered by the management to be invalid, the financial statements of the entity
would need to be prepared on break up basis. This means that assets will be recognized at
amount which is expected to be realized from its sale (net of selling costs) rather than from its
continuing use in the ordinary course of the business. Assets are valued for their individual worth
rather than their value as a combined unit. Liabilities shall be recognized at amounts that are
likely to be settled.
What are possible indications of going concern problems?
 Deteriorating liquidity position of a company not backed by sufficient financing
arrangements.
 High financial risk arising from increased gearing level rendering the company
vulnerable to delays in payment of interest and loan principle.
 Significant trading losses being incurred for several years. Profitability of a company is
essential for its survival in the long term.
 Aggressive growth strategy not backed by sufficient finance which ultimately leads to
over trading.
 Increasing level of short-term borrowing and overdraft not supported by increase in
business.
 Inability of the company to maintain liquidity ratios as defined in the loan covenants.
 Serious litigations faced by a company which does not have the financial strength to pay
the possible settlement.
 Inability of a company to develop a new range of commercially successful products.
Innovation is often said to be the key to the long-term stability of any company.
 Bankruptcy of a major customer of the company.

Accruals Concept

 Financial statements are prepared under the Accruals Concept of accounting which
requires that income and expenses must be recognized in the accounting periods to which
they relate rather than on cash basis. An exception to this general rule is the cash flow
statement whose main purpose is to present the cash flow effects of transaction during an
accounting period.
  Under Accruals basis of accounting, income must be recorded in the accounting period in
which it is earned. Therefore, accrued income must be recognized in the accounting
period in which it arises rather than in the subsequent period in which it will be received.
Conversely, prepaid income must not be shown as income in the accounting period in
which it is received but instead it must be presented as such in the subsequent accounting
periods in which the services or obligations in respect of the prepaid income have been
performed.

 Expenses, on the other hand, must be recorded in the accounting period in which they are
incurred. Therefore, accrued expense must be recognized in the accounting period in
which it occurs rather than in the following period in which it will be paid. Conversely,
prepaid expense must not be shown as expense in the accounting period in which it is
paid but instead it must be presented as such in the subsequent accounting periods in
which the services in respect of the prepaid expense have been performed.

 Accruals basis of accounting ensures that expenses are "matched" with the revenue
earned in an accounting period.
Revenue-Expenses=Net profit

Underlying accounting concepts

These include the historical cost concept, the money measurement concept, business entity
concept, dual aspect concept, and time interval concept.

Business Entity Concept

 Financial accounting is based on the premise that the transactions and balances of a
business entity are to be accounted for separately from its owners. The business entity is
therefore considered to be distinct from its owners for the purpose of accounting.
 Therefore, any personal expenses incurred by owners of a business will not appear in the
income statement of the entity. Similarly, if any personal expenses of owners are paid out
of assets of the entity, it would be considered to be drawings for the purpose of
accounting much in the same way as cash drawings.
 The business entity concept also explains why owners' equity appears on the liability side
of a balance sheet (i.e. credit side). Share capital contributed by a sole trader to his
business, for instance, represents a form of liability (known as equity) of the 'business'
that is owed to its owner which is why it is presented on the credit side of the balance
sheet (SOFP).
The historical cost concept
This means that assets are normally shown at cost price and that this is the basis for valuation of
the assets.
The money measurement concept
Accounting information has traditionally been concerned only with those facts that:
(a) Can be measured in monetary units;
(b) Most people will agree to the monetary value of the transaction.
The dual aspect concept
This states that there are two aspects of accounting, one represented by the assets of the business
and the other by the claims against them. The concept states that these two aspects are always
equal to each other. The double entry is the name given to the method of recording transactions
under the dual aspect concept.
Assets=Capital + Liabilities
The time interval concept
The underlying principle is that financial statements are prepared at regular intervals of one year.
Companies which publish further financial statements between their annual ones describe the
others as ‘interim statements’.
The scope of financial statements
Applies to all general purpose financial statements based on International Financial Reporting
Standards.
General purpose financial statements are those intended to serve users who are not in a position
to require financial reports tailored to their particular information needs.

Purpose of financial statements for external reporting

The objective of general purpose financial statements is to provide information about the
financial position, financial performance, and cash flows of an entity that is useful to a wide
range of users in making economic decisions. To meet that objective, financial statements
provide information about an entity's: [IAS 1.9]
 assets
 liabilities
 equity
 income and expenses, including gains and losses
 contributions by and distributions to owners
 cash flows
That information, along with other information in the notes, assists users of financial statements
in predicting the entity's future cash flows and, in particular, their timing and certainty.
The Elements of Financial Statements
Financial statements portray the financial effects of transactions and other events by grouping
them into broad classes according to their economic characteristics. These broad classes are
termed the elements of financial statements.
The elements directly related to financial position (balance sheet) are:
 Assets
 Liabilities
 Equity
The elements directly related to performance (income statement) are:
 Income
 Expenses
The cash flow statement reflects both income statement elements and some changes in balance
sheet elements.
Definitions of the elements relating to financial position
 Asset. An asset is a resource controlled by the entity as a result of past events and from
which future economic benefits are expected to flow to the entity. [F 4.4(a)]
 Liability. A liability is a present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of resources
embodying economic benefits.
 Equity. Equity is the residual interest in the assets of the entity after deducting all its
liabilities.
Definitions of the elements relating to performance
 Income. Income is increases in economic benefits during the accounting period in the
form of inflows or enhancements of assets or decreases of liabilities that result in
increases in equity, other than those relating to contributions from equity participants.
 Expense. Expenses are decreases in economic benefits during the accounting period in
the form of outflows or depletions of assets or incurrences of liabilities that result in
decreases in equity, other than those relating to distributions to equity participants.
The definition of income encompasses both revenue and gains. Revenue arises in the course of
the ordinary activities of an entity and is referred to by a variety of different names including
sales, fees, interest, dividends, royalties and rent. Gains represent other items that meet the
definition of income and may, or may not, arise in the course of the ordinary activities of an
entity. Gains represent increases in economic benefits and as such are no different in nature from
revenue. Hence, they are not regarded as constituting a separate element in the IFRS Framework.
The definition of expenses encompasses losses as well as those expenses that arise in the course
of the ordinary activities of the entity. Expenses that arise in the course of the ordinary activities
of the entity include, for example, cost of sales, wages and depreciation. They usually take the
form of an outflow or depletion of assets such as cash and cash equivalents, inventory, property,
plant and equipment. Losses represent other items that meet the definition of expenses and may,
or may not, arise in the course of the ordinary activities of the entity. Losses represent decreases
in economic benefits and as such they are no different in nature from other expenses. Hence, they
are not regarded as a separate element in the Framework.
Definition of International Accounting Standards (IAS)
Standards for the preparation and presentation of financial statements created by the International
Accounting Standards Committee (IASC). They were first written in 1973, and stopped when the
International Accounting Standards Board (IASB) took over their creation in 2001.

Role & significance of IAS

The importance of International Accounting Standard is underpinned by the global nature and
impact of virtually all business transactions. Investors from different business environments need
a standardized form of reporting business transactions to ensure a fair and equitable analysis of
businesses, and proper peer-to-peer comparison of businesses operating in different legal
jurisdictions. International Accounting Standards enable such analysis and comparison by
ensuring that businesses adopt similar fundamental rules in reporting their activities. However,
such adoption is dependent on who the business believes are its stakeholders.
Definition of IFRS
International Financial Reporting Standards (IFRS) is a set of accounting standards developed by
an independent, not-for-profit organization called the International Accounting Standards Board
(IASB).
 International Financial Reporting Standards are standards and interpretations adopted
by the International Accounting Standards Board (IASB). They comprise:
o International Financial Reporting Standards (IFRSs);
o International Accounting Standards (IASs); and
o Interpretations developed by the International Financial Reporting Interpretations
Committee (IFRIC) or the former Standing Interpretations Committee (SIC) and
approved by the IASB.
The goal of IFRS is to provide a global framework for how public companies prepare and
disclose their financial statements. IFRS provides general guidance for the preparation of
financial statements, rather than setting rules for industry-specific reporting.
Having an international standard is especially important for large companies that have
subsidiaries in different countries. Adopting a single set of world-wide standards will simplify
accounting procedures by allowing a company to use one reporting language throughout. A
single standard will also provide investors and auditors with a cohesive view of finances.

The Nature of GAAP

Generally Accepted Accounting Principles, or GAAP, comprise a set of rules and
regulations set forth by the Financial Accounting Standards Advisory Board (FASAB) and
the Governmental Accounting Standards Board (GASB).
 GAAP is a structured set of accounting principles set up by the Financial Accounting
Standards Board (FASB) for publicly traded and private companies as well as nonprofit
organizations. The principles outline ethical accounting practices for business firms in
regards to their shareholders and to the government for tax reasons. The Financial
Accounting Standards Advisory Board (FASAB) establishes GAAP for federal reporting
entities. For local and state governments, GAAP is determined by the Governmental
Accounting Standards Board (GASB),
Generally Accepted Accounting Principles are published and periodically updated by two major
bodies: the Financial Accounting Standards Advisory Board (FASAB), whose guidelines are
primarily intended for use by private corporations, and the Governmental Accounting Standards
Board (GASB), which provides rules and regulations for local and federal governmental entities.
As the needs of both businesses and public bodies change, both types of organizations
periodically update their guidelines. These guidelines tend to be highly technical and detailed in
nature, and experts spend a great deal of time and effort to keep on top of the changes.
Importance
GAAP serves as a common language among accounting and finance professionals, thereby
allowing stakeholders to compare financial statements across corporations and vast time spans.
An investor who wishes to invest in the automobile industry, for example, can meaningfully
compare the profit figures of two automakers only if they were prepared using the same
principles. Similarly, managers can only draw realistic conclusions about their divisions'
performance if their accountants stick to a set of consistent principles over time. GAAP also
minimizes the risk of unintentional errors through implementation of checks and safeguards, and
provides confidence to the users of financial statements.
Company law
Most countries have legislation applying to companies and this is generally known as
‘company law’. The amount of detail in company law will vary between countries but in
general they cover broad issues rather than detailed aspects of accounting. Company law
often states which companies are required to have their financial statements audited by a
registered auditor.
CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS
Fundamental Principles
A professional accountant is required to comply with the following fundamental principles:
(a) Integrity
A professional accountant should be straightforward and honest in all professional and business
relationships.
ETHICS
(b) Objectivity and independence
A professional accountant should not allow bias, conflict of interest or undue influence of others
to override professional or business judgments.
Objectivity and independence are important ethical values in the accounting profession.
Accountants must remain free from conflicts of interest and other questionable business
relationships when conducting accounting services. Failure to remain objective and independent
may hamper an accountant’s ability to provide an honest opinion about a company’s financial
information. Objectivity and independence are also important ethical values for auditors. The
accounting industry usually limits the number of services public accounting firms or individual
certified public accountants (CPA) can offer clients. Accounting services include general
accounting, auditing, tax and management advisory services. Accountants who perform more
than one of these services for a client may compromise their objectivity and independence. For
example, individuals who handle general accounting functions and then audit this information
are essentially reviewing their own work.

(c) Professional Competence and Due Care

A professional accountant has a continuing duty to maintain professional knowledge and skill at
the level required to ensure that a client or employer receives competent professional service
based on current developments in practice, legislation and techniques. A professional accountant
should act diligently and in accordance with applicable technical and professional standards
when providing professional services.
(d) Confidentiality
A professional accountant should respect the confidentiality of information acquired as a result
of professional and business relationships and should not disclose any such information to third
parties without proper and specific authority unless there is a legal or professional right or duty
to disclose. Confidential information acquired as a result of professional and business
relationships should not be used for the personal advantage of the professional accountant or
third parties.
(e) Professional Behavior
A professional accountant should comply with relevant laws and regulations and should avoid
any action that discredits the profession.
Duties and responsibilities of those charged with governance
Management — The person(s) with executive responsibility for the conduct of the entity’s
operations. For some entities in some jurisdictions, management includes some or all of those
charged with governance, for example, executive members of a governance board, or an
owner-manager.

Those charged with governance — The person(s) or organization(s) (for example, a corporate
trustee) with responsibility for overseeing the strategic direction of the entity and obligations
related to the accountability of the entity. This includes overseeing the financial reporting
process. For some entities in some jurisdictions, those charged with governance may include
management personnel, for example, executive members of a governance board of a private
or public sector entity, or an owner-manager.
Management — Comprises officers and others who also perform senior managerial functions.
Management includes those charged with governance only in those instances when they
perform such functions

Governance — Describes the role of persons entrusted with the supervision, control and
direction of an entity. Those charged with governance ordinarily are accountable for ensuring
that the entity achieves its objectives, financial reporting, and reporting to interested parties.
Those charged with governance include management only when it performs such functions.
Management means such personnel who are responsible to perform day to day functions of
the business and are also responsible for making financial statements.

Those charged with governance means such personnel who will supervise the performance of
management and are responsible for approving financial statements.
Elements of an annual report

The annual report always includes:

 Financial statements.
 Management discussion and analysis.
 Notes to the financial statements.
 Independent auditor's report.