The owners of CSC Inc., a privately held company, are considering a public offering of the company’s common stock as a means of acquiring additional funds. Prior to making a decision about a public offering, the owners had a lengthy conversation with John Duncan, CSC’s chief financial officer. Duncan informed the owners of the reporting requirements of the Securities and Exchange Commission, including the necessity for audited financial statements. At the request of the owners, Duncan also discussed the objectives of financial reporting, the sophistication of users of financial information, and the stewardship responsibilities of management, all of which are addressed in Statement of Financial Accounting Concepts No. 1, “Objectives of Financial Reporting by Business Enterprises.”

Required
1. Discuss the primary objectives of financial reporting.
2. Describe the level of sophistication that can be expected of the users of financial information.
3. Explain the stewardship responsibilities of management.