Analysing Purpose and Context of Financial Reporting

FINANCIAL REPORTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Analysing purpose and context of financial reporting............................................................1
2. Examining regulatory and conceptual framework along with governance of financial
reporting and explaining key principles and assessing requirement and purpose......................2
3. Determining key stakeholders of organization and assessing need of financial reporting.....3
4. Analysing value of financial reporting in business to attain organizational growth and
objectives.....................................................................................................................................4
5. International accounting standard and International financial reporting Standards and their
benefits........................................................................................................................................5
6. Evaluation of financial reporting through application of theories ........................................6
7. The differences in financial reporting across world ..............................................................7
8. Degrees of compliance with IFRS by different organisation around the world.....................8
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Financial reporting is replicated as disclosure of financial outcome and related
information to external stakeholders and management. The present report will analysis context
and purpose of financial reporting and examining its regulatory and conceptual framework on
basis of Sainsbury Plc. It will articulate about key stakeholder and assessing their need of
financial reporting. In the same series, there is analysis of importance of financial reporting for
attaining organizational growth with objectives. This report would explain international
accounting standards and International financial reporting standards with evaluation of benefits.
Simultaneously, financial reporting in organization would be explained with application of
theories and differences in financial reporting would be stated across world and evaluating
factors which influence these variations. This report has formed arguments by undertaking
Sainsbury Plc as largest chain of supermarkets in the United Kingdom as it has 16.95 share of
supermarket sector. Lastly, this will evaluate degree of compliance with IFRS through different
organization throughout world.
MAIN BODY
1. Analysing purpose and context of financial reporting
Financial reporting is disclosure of financial outcome and related information to external
stakeholders and management. It helps in giving relevant and useful information to
organization's owners where is categorisation of ownership along with company's control.
Generally, it occurs in public limited companies where share capital is directly sole to public via
stock exchange and market system (Dou, Wong and Xin, 2019). In the same series, potential and
diverse geographically dispersed shareholders does not get engaged in company's management
and directors are appointed on this behalf. The purpose of financial reporting are reflected to
potential and primary investors, creditors and lenders who uses this information for purpose of
buying decision making, holding or selling equity or debt instruments and offering or setting
loans with other form of credit. The initial users require information related to resources of entity
not only to assess prospects of entity for future net cash inflows but with effective and efficient
management has discharged responsibilities with application of existing resources. In simple
words, financial reports deliver information to share owners and lenders of business. National
accounting standards includes five standards that are been published by the Financial reporting
council in the UK that states the regulations regarding the taxation and the financial relations and
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various recommendations has been given relating to the accounting principles. In the year 2013,
the FRC committee has introduced the financial reporting standards which is been called as the
new UK generally accepted accounting principle. The regulation was made that interim reporting
will be done as per FRS 104 and reporting standards that is been applicable to micro entities.
2. Examining regulatory and conceptual framework along with governance of financial reporting
and explaining key principles and assessing requirement and purpose
The regulatory framework for purpose of preparing financial statements is mandatory for
numerous reasons such as ensuring needs of financial statement user's to accomplish with least of
basic minimum of information. All information required will be ensured in relevant economic
arena with increment in international one (Mao and Wu, 2019). This will lead to increment in
confidence of users for process of financial reporting and regulates behaviour of directors and
companies toward investors. Financial reporting standards which would be not sufficient for
attaining these objectives and there should be legal and market based regulation. In this aspect,
presence of national regulatory framework for financial reporting and its elements are stated as
national financial reporting standards, national law, market regulations and security exchange
rules.
The conceptual framework of financial reporting has underpinned preparation of financial
statements and reflects main ideas, principles and concepts upon standards of international
financial reporting and based on financial statements with discussion of objectives, qualitative
characteristics, recognition and definition of elements where financial statements are constructed.
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