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The Context and Purpose of Financial Reporting Pdf

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Added on  2020-12-18

The Context and Purpose of Financial Reporting Pdf

   Added on 2020-12-18

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FINANCIAL REPORTING
The Context and Purpose of Financial Reporting Pdf_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Analyzing the context and purpose of financial reporting in UK...........................................12. Examining conceptual and regulatory framework and governance of financial reportingwith key principles and assessing requirement and purpose.......................................................23. Determining stakeholders of organizations along with critical assess about need of financialreports..........................................................................................................................................34. Analyzing value of financial reporting for attaining organizational growth and objectives...65. Explaining International Accounting Standards (IAS) and International Financial ReportingStandards (IFRS) along with evaluation of benefits...................................................................76. Critical evaluation of financial reporting in organization with application of models andtheories for supporting conclusions and judgments....................................................................87. Identifying differences in financial reporting throughout world and evaluating factorswhich influence these differences.............................................................................................108. Degree of compliance of International Financial Reporting Standards................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
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INTRODUCTIONFinancial reporting is referred as disclosure of financial outcome and related informationto external stakeholders and management on basis of company which is performing over specificduration. The present report will discuss about context and purpose of financial reporting in UKand then conceptual and regulatory framework along with governance. In the same series, it willarticulate key stakeholders of organization with their need for financial reporting. Furthermore, itwill analyse value of financial reporting for attaining organizational growth and objectives. Thisreport will state International Accounting Standards and International financial reportingstandards with its benefits. It will critically evaluate about financial reporting in organizationwith application of various models and theories for supporting conclusions and judgements.Henceforth, it will state variations in financial reporting throughout world and evaluation offactors which influence these variations. Thus, it will reflect about degree of compliance withIFRS throughout the world.1. Analyzing the context and purpose of financial reporting in UKFinancial reporting has very crucial role throughout the world economies its mainpurpose is to give useful and relevant information to company owners where is presence ofdivision among control and ownership of that particular company. Usually, it occurs in publiclimited companies where share capital is sold to public via stock market or exchange system. Thepotentially and diverse geographically shareholders does not engage in company's managementas they appoint directors with this behalf (Financial Reporting, 2019). The owners retain annualstatement which briefs about position and performance of organization so that it could assessabout investment performance in this reporting period. With absence of reporting system,investors would be less inclined as contributing to capital without monitoring effectively thathow organization is operated through directors along with company's stewards who are supposedfor operating in shareholder's best interests.The United Kingdom is an EU member stated as UK companies are listed ion EEA andEU securities market follow IFRS and periodically issue document which briefs about use ofoptions of IAS regulation through EU member states. The key aim of corporate governance is forsafeguarding integrity of process of financial reporting to give reasonable assurance aboutfinancial statements provide true and fair aspect of operations and finances of companies. Thegood corporate governance protects interest of key stakeholders and corporate performance is1
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enhanced and its important pillar is board of directors where they have fiduciary and legalresponsibility for purpose of managing governance risks. In nutshell, purpose of financialreporting is to meet user legislation and expectations and ensuring about organizations to complywith similar standards and rules and to seek investment and funding (Mao and Wu, 2019). Ithelps in predicting future financial positions along with cash flow.2. Examining conceptual and regulatory framework and governance of financial reporting withkey principles and assessing requirement and purposeThe conceptual framework of financial reporting is referred as theory of accountingprepared through standard setting body against where practical problems could be testedobjectively. It deals with fundamental issues of financial reporting like users and objectives offinancial statements along with features which create accounting information very useful alongwith basic elements of financial statements like assets, equity, liabilities, expenses and incomealong with concepts for measuring and recognizing elements in financial statements. In simplewords, conceptual framework is coherent system related to interrelated objectives along withfundamental principles and framework prescribes about nature, limits and functions of financialstatements and accounting (Dou, Wong and Xin, 2019). Conceptual framework helps in enabling accounting standards and generally acceptedaccounting practice must be developed as per agreed principles. This will avoid fire fightingwhere is development of accounting standards in piecemeal aspect for responding about specificabuses and problems. Fire fighting could lead to inconsistency among different standards amongaccounting legislation and standards. There is lack of conceptual framework might mean certaincritical problems were not addressed. In this aspect, transactions are more complex andbusinesses are highly sophisticated and helps in auditors for dealing with transaction as they arenot subjected to accounting standard. With context to attain requirements of financial statement's users the organization has toimplement accounting systems which give need information. It is significant system which isregulated for ensuring about information given to users in proper format which is useful withcontext of informational requirement which is attained via framework of financial reporting onbasis of conceptual framework. The European Union has adopted regulation of IAS withrequirement of listed European companies in EU securities market which considers aboutinsurance and bank companies for preparing consolidated financial statements as per IFRS2
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