Assessing the Company’s Financial Reporting
Discussion Question
Select a publicly traded corporation. Review your corporation’s annual report and name three (3) specific changes that your corporation reported that you believe would be important to investigate for an industry analysis. Then provide a rationale for each of your choices; in particular, you should look at changes in top management, the board of directors, strategy, financial reporting methods, distribution of earnings and/or allocation of monies, etc.
Financial reporting is the documentation and communication of financial activities and performance over a particular period, which is always yearly or quarterly. Firms often use financial reports to organize accounting information and report on the present financial status. The paper will assess the financial reporting of Sturm, Ruger & Company, particularly assessing the three main changes that it should conduct aligned with the 2019 financial report. The three changes Sturm, Ruger & Company listed in its 2019 report mainly dealt with the firm’s ability to implement strategies in its control and operational processes effectively. Further, from the annual report, it is explicit that the company should improve different aspects aligned to the assessment of disclosure control and processes, changes within the internal control regarding its financial reporting, and management’s report on the internal control over the financial reporting (Sturm, Ruger & Company, 2019).
The first change that the company should implement is evaluating disclosure control and procedures. According to the Securities and Exchange Commission (2002), the recent exchange act rules 13a-15(a), and 15d-15(a) accompany the prevailing need for the strategies of reporting firms to create and sustain systems of the internal controls concerning their fiscal data. Also, they are meant to guarantee that a challenge maintains appropriate processes for collecting, assessing, and disclosing all the data needed to be revealed within the firm’s exchange act reports. Sturm, Ruger & Company assessed the involvement of the firm’s CEO and chief financial officer regarding the design’s efficiency and operation of the firm’s disclosure control and processes. According to the report assessment, the CEO and chief financial officer determined that the organization’s disclosure controls and processes aligned to its financial reporting were effective.
The other change reported in the Sturm, Ruger & Company’s annual report is its management’s responsibility to create and maintain suitable internal control regarding its fiscal reporting aligned with the 13a-15(f) and 15d-15(f) provided under the security rules enforced in 1934. Besides, due to its restrictions, the internal control regarding the company’s fiscal reporting does not essentially avert or even detect any misstatements in the report. Moreover, the projection of efficiency assessment to the future projected periods is always subject to the risk that control might be perceived as inadequate due to the transformations in conditions, or the level of firms complying with the procedures and policies could deteriorate. Hence, Sturm, Ruger & Company should implement ways of developing an early warning system that can forecast the beginning of the financial challenges. As mentioned earlier, this was directly linked to the issue since the firm operated blindly in certain financial well-being components.
The final change was aligned with the changes in the internal control pertaining to the financial reporting. There were no transformations within the company’s internal control concerning its fiscal reporting, which happened during its most recently concluded financial quarter that has substantially impacted or is considered rationally possible to affect Sturm, Ruger & Company’s internal control on its financial reporting. Also, this was the origin of the first two issues highlighted in the report. However, the company has made the necessary adjustment in line with the issues identified in the 2019 report with the recommendations of different analysts. Overall, the annual report assessed the firm and NYSE and the future strategies for fixing issues that could arise in such reports. Therefore, the report highlighted that Sturm, Ruger & Company created challenges for itself because of the inadequacy in its reporting processes. If the firm had implemented effective reporting procedures, the findings would have offered the company another set of issues that could be unveiled in 2021; rather, the reporting period would be focused on the effectiveness of the reporting procedures.
References
Securities and Exchange Commission. (2002). Certification of disclosure in companies’ quarterly and annual reports. Final Rule, 33-8124.
Sturm, Ruger & Company. (2019). 2019 Annual Report. Retrieved from: https://www.annualreports.com/HostedData/AnnualReportArchive/s/NYSE_RGR_2019.pdf
