Analysis of Financial Reporting 2022

Running head: ANALYSIS OF FINANCIAL REPORTING
Analysis of Financial Reporting
Name of the Student
Name of the University
Author Note

ANALYSIS OF FINANCIAL REPORTING
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Table of Contents
Introduction................................................................................................................................1
Answer 1................................................................................................................................2
Reasons for Improving the Communication of the Financial Statements..........................2
Answer 2................................................................................................................................4
Three Concerns about Information Disclosure in Financial Statements............................4
Answer 3................................................................................................................................6
Amendments in IAS 1 Financial Statements.....................................................................6
Amendments in IAS 7 Statement of Cash Flow................................................................7
Answer 4................................................................................................................................7
Effects of Materiality.............................................................................................................7
Answer 5................................................................................................................................9
Role of financial statements and the notes.........................................................................9
Answer 6..............................................................................................................................10
Brambles Ltd....................................................................................................................10
Conclusion................................................................................................................................12
References................................................................................................................................14

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Introduction
The effectiveness of informational communication in the financial statements
contributes towards the better decisions of the investments as well as lowers the costs of the
capital for the business organizations. The importance of the uses of the accounting data is for
communicating the meaningful information that not only helps the stakeholders but also helps
the management in making good decisions (Barbu et al. 2014). The better communication in
the financial reporting helps in highlighting the greater importance as well as common
themes of the number of the projects of IASB. The poorly presented financial statements
have resulted in making difficult for the investors to identify the useful information. Further,
the disclosures initiative of the IASB is more focused to identify the ways for ensuring that
the financial statements provides the information, which are relevant to the investors as well
as communicated effectively (Cheng et al. 2014).
Hence, under this assignment, discussion will be done on project taken by IASB for
the improvement of communication of information provided in financial statements.
Moreover, disclosures problems, amendments to IAS 1 and IAS 7 will be discussed. In
addition, materiality of the financial statements as well as concerns regarding content and
structure of the financial statement will be discussed. Lastly, structure and contents of the
Brambles Limited will be discussed.
Answer 1
Reasons for Improving the Communication of the Financial Statements
There is a certain need for increasing the amount of information that is presented in
the financial statements of the company. The phenomenon of producing less information
about the financial health in the annual report of the company is known as ineffective
communication. Ineffective communication in the financial report may leads to mislead the

ANALYSIS OF FINANCIAL REPORTING
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investors or the shareholders of the company. The stakeholders usually failed to identify the
relationships between information present in the financial statements of the company (Stubbs
and Higgins 2014). When the investors or the shareholders of the company failed to identify
the relationships between the information presents in the annual report of the company, the
investing decision of the investors or the stakeholders is hampered. Thus, the investors or
stakeholders tend to make poor decision regarding investment. Ineffective communication
will make annual report of the company less understandable. This normally increases the
uncertainty among the investors about the company’s prospects. This also affects the higher
cost of capital for the companies (Ifrs.org. 2019).
On the other hand, the effective communication is the phenomenon through which the
company can provide detailed information about the financial strength of the company. This
also helps the investors because they can perceive the information relevantly and relate the
information present in the financial statements of the company. Thus, the investors can make
better investment decisions. If the effective communication presents in the annual report of
the company then the cost of capital can be lower for companies (Simnett and Huggins 2015).
To avoid the problem of ineffective communication present in the financial statement
of the company the Board of IFRS contributes to bring back the effective communication in
the financial statements of the company. The Board wants to provide the information about
the financial statements of the company so that the investors can perceive the financial
strength of the company (Loughran and McDonald 2014). This will help the investors to
make better investment decisions. Addition to this, The International Accounting Standard
Board (IASB), has stated challenges for the companies to provide all information in the
annual report of the company (Frias‐Aceituno, Rodríguez‐Ariza and Garcia‐Sánchez 2014).