You have recently been appointed auditor of three different organizations. The first organization is a mining company that was formed a year ago to develop a gold mining site in northern Ontario. The largest single part of the initial investment was provided by a major, publicly held mining company in exchange for 36% of the common shares. The remaining shares were issued publicly in the over- the- counter market, where they are very thinly traded. The company is still in the development stage and does not expect to commence production for at least another year.
The second organization is a not-for-profit secondary school that provides courses for stu-dents who intend to pursue a career in one of the performing arts. The school is fully recognized by the provincial Ministry of Education, which provides about 50% of the school’s operating budget. Another 20% of the operating funds are provided by the Ministry of Culture and Recreation, while the remainder is derived from student fees and by fundraising in the private sector. The school occupies an old public high school building that was no longer being used by the city; the school acquired the building on a 20- year lease from the city’s board of education.
The third organization is a labour union for the graduate students at a major university. The union receives its funding from dues that are mandatorily deducted by the university from the earnings of all members of the bargaining unit, whether they are members of the union or not. A portion of the funds is sent to the union’s parent national organization, and another part is set aside for the strike fund, which is held and invested by a trustee until such time as it is needed to pay striking union members.
Explain how the objectives of financial reporting would likely differ for these three organizations.