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Context and Purpose of Financial Reporting

   

Added on  2020-10-23

12 Pages3378 Words200 Views
FINANCIALREPORTING

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................11. Context and purpose of financial reporting.............................................................................12. Analysis of regulatory and conceptual framework and key principles and qualitativecharacteristics makes the financial information more reliable....................................................23.Main stakeholders of Marks & Spencer and benefits from financial information...................34. Value of financial reporting for meeting organisational growth and objectives.....................45. Interpretation of Financial statements as per IAS...................................................................46. Interpretation of last two years financial statement of the company for financialperformance.................................................................................................................................57. Differences Between IFRS and IAS.......................................................................................68. Benefits of IFRS......................................................................................................................79. Degree of compliance with IFRS by organisation across the world and the factors in anation...........................................................................................................................................8CONCLUSION................................................................................................................................8REFERENCES..............................................................................................................................10

INTRODUCTIONFinancial reporting is the procedure of producing statements that bring out anorganization's financial information to the several stakeholders about the financial performanceand financial position of the company over a specified period of time. Companies stakeholdersare creditors, investors, debt providers and government (Hope, Thomas and Vyas, 2013). In thisreport taken company marks & Spencer, it is a retail sector industry that selling of clothing,home products and luxury food products. In this report consist of context and purpose offinancial reporting for meeting organisational objectives, development and growth. Interpretfinancial statements and evaluate financial reporting standards and concepts. Identify differencebetween IAS and IFRS.MAIN BODY1. Context and purpose of financial reportingFinancial ReportingIt is a framework that involves to discover all financial information to management andthe public about the company related to particular accounting period for showing how companyperform business activities. Financial reports are prepare on the basis of quarterly and annualbasis for for identify activities according to situations. In financial report consist of profit andloss account, balance sheet and cash flow statements. On the basis of these reports managementare taking effective decisions and public ready to invest in the company. It is commonly considered as end product of accounting because it is mainly prepared byprofessional accountants in the end of year as well as quarter. The objective of provide accurateand reliable information that shows financial performance, position and changes of theorganisation that is helpful to a broad range of users in making economic decisions (Fu, R., Kraftand Zhang, 2012). For preparing these reports using International accounting standards that areidentify to reasons for taking different items according to financial position. Purpose of Financial reporting The main purpose of financial reporting is to presenting financial information to thestakeholders and lenders of the business. According to FTES financial reporting have manypurposes are as following - 1

a) Financial reporting are provide information to management for taking effective decision toachieve organisations objectives ad goals. And it is helping to know strength and weakness of thecompany. b) It is helping to company for preparing strategies according to overall performance. c) Financial reporting giving crucial information that are related to financial health and activitiesof the company to its stakeholders as well as shareholders, government regulators andconsumers.d) It is providing information that how to company operating & using various resources.e) To provide essential data to the management of the organization to show how an association isutilizing and obtaining diverse assets. 2. Analysis of regulatory and conceptual framework and key principles and qualitativecharacteristics makes the financial information more reliableRegulatory and conceptual frameworkThe conceptual and regulatory framework of financial reporting elaborate of objectivesand concepts. It will using as technical tool to help it develop standards and make abstracteddiscrimination and organize opinions. In different words this structure incorporates therequirements of financial related attributes and valuable financial data for substantial limits. Withthe help of regulatory framework defined set of regulations while preparing of financial reportingand provide financial information. Marks & Spencer adopted regulatory and conceptualframework to follow rules and regulations and also principles to properly execute businessactivities without government interference (Skaife, Veenman and Wangerin, D., 2013).Purpose1.The primary purpose of regulatory and conceptual framework is to guide company toprepare their financial statements in suitable manner because it is present transparentimage of the company can be presented in front of shareholders.2.Other purpose of these framework is to help companies to attract foreign investors so thatbusiness can be operated in more effective manner. All the above rules and standards are required to be followed by Marks and Spencer as they mayhelp to attain organisational objectives. Principles 2

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