Assignment on the Purpose of Financial Accounting

Financial Reporting

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Purpose of financial accounting..............................................................................................1
2. Requirement and key principal of regulatory and conceptual framework..............................2
3. Main stakeholder of an organisation.......................................................................................3
4. Value of financial reporting to meet companies’ goals. ........................................................4
5. Financial statement as per the IAS 1:......................................................................................5
6.Use of financial statements of a company to interpret and communicate financial
performance.................................................................................................................................7
7 Difference between IAS and IFRS...........................................................................................8
8. Evaluation of benefits of IFRS. ..............................................................................................8
9 Ascertaining the varying degree of compliance with IFRS.....................................................9
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
In accounting, financial reporting is defined as the method of making financial statement
within company during an accounting period. Reporting mean to post transaction into accounting
book and it also help in preparation of income statements, balance sheet and cash flow
statements (Aversano and Christiaens, 2014). This method of posting support manager to take
internal decision and also help investors to form strategies and make investment decision.
Company taken in this report is Marks & Spenser which is situated in UK.
In this project report, purpose of financial reporting, its requirement, purpose and key
principles of conceptual and regulatory framework, important stakeholder of company is shown.
Report also focus on value of financial statement, statements of last two year, importance of
IFRS and actual difference among IFRS and IAS is Shown.
MAIN BODY
1. Purpose of financial accounting.
The process of recording all business transaction in the statements that help stakeholder
to company performance and financial position of company. Report gives appropriate and
transparent data that help companies to execute business operation effectively. In Mark &
Spencer, manager keep transparent and accurate statement that help stockholder to gather useful
information related to performance, profitability during an accounting year. This helps to achieve
predetermined organisational goals that are essential to perform different business operation in
company. Some of the basic purpose and importance of financial reporting are discussed below:
Main purpose:
 Financial Reporting help the company to facilitate the better formation of strategic
decision so that goals of Mark & Spencer may achieved.
 This support in making effective planning for future year.
It is useful to analyse the result of activities that has been performed during a particular period of
time (Dyreng, Mayew and Williams, 2012).
 Gives best information to the outside stakeholder so that investment decision are made,
which increase sales, profit and market share of company.
Importance.

 Financial reporting is essential for the companies to examine the financial performance
during an accounting year.
 When companies raise foreign capital and investment than transparent report can support
to attract international investors.
 Financial reporting is helpful for stakeholder to analyse about their money if it is used
effectively or not.
 Manage of Mark & Spenser use the report to analyse the actual performance, market
position so that future strategies can be formed.
2. Requirement and key principal of regulatory and conceptual framework.
The accounting board have developed conceptual framework that is a type of analytical
element which have some variable quantity and textual matter. This helps companies to analyse
the overall performance and actual position of company and also used to make abstract
differences and arrange business ideas. Regulatory frameworks are defined as the set of laws and
regulations that are set by government of UK for all companies those perform business operation
(Flower, 2016). It is observed that Mark & Spencer follows all standards that are set by IASB
while formation of their financial statements. These are imposed in the form of IFRS that are
described underneath:
IFRS: Standard that are established by IASB that are followed by companies are called
interactional financial reporting standard. Some of the IFRS are explained underneath that are
commonly called principles of regulatory and conceptual frameworks:
 IFRS 1: This is related to the standard that companies adopts the very first time. These
set of IFRS directs the Mark & Spenser to formulate various financial statements
accurately and effectively.
 IFRS 3: This principle is connected to business combination that should be done as per
the purchase method of accounting. According to this method the purchases identifiable
assets and liabilities must be measured and recorded at their actual values on the date of
acquisition date.
 IFRS 9: This financial reporting statement is related to standard that are followed for
financial statements. Basically it contains three key topic such as measurement
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