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FINANCIAL REPORTING INTRODUCTION 3

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Added on  2021-02-20

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The financial-reporting can be defined as process of gathering and communicating financial information of companies with various kind of stakeholders so that financial position of companies can be assessed. The financial-reporting can be defined as process of gathering and communicating financial information of companies with various kind of stakeholders so that financial position of companies can be assessed. Below the purpose of financial reporting are mentioned that are as follows: Assess financial condition- It is one of the important purpose of financial reporting that is linked with assessment of

FINANCIAL REPORTING INTRODUCTION 3

   Added on 2021-02-20

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Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................31. Explanation of context and purpose of financial-reporting.....................................................32. Conceptual, regulatory framework, key principle and qualitative characteristics..................43. Main stakeholders of companies and what benefit they get from financial reports. ..............54. The value of financial reporting for meeting organisational objectives and growth..............65. Preparation of main financial statements on the basis of given information..........................76. Interpretation and communication of financial performance..................................................97. Comparison between IAS and IFRS.....................................................................................148. Advantage of International financial reporting system.........................................................159. Degree of compliance with international financial-reporting standards...............................15CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17
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INTRODUCTIONThe term financial reporting may be defined as a way of making communication offinancial information with the internal and external stakeholders (Schooley and English, 2015).Under this, financial statements such as balance sheet, income statement, statement of change inowner's equity section etc. being used to gather information about financial transactions ofcompanies. Basically, the financial reporting is useful for internal stakeholders for makingeffective decisions as well as for external stakeholders in taking investment decisions. Herein,the project report purpose and conceptual framework of financial reporting is mentioned. Inaddition, evaluation of financial reporting standards and difference in financial reporting at theinternational level is also done. To better understand about the financial reporting a large accountancy firm is selectedthat is “Financial angles”. This company is located in London and provide financial services totheir various clients. MAIN BODY1. Explanation of context and purpose of financial-reporting.The financial-reporting can be defined as process of gathering and communicatingfinancial information of companies with various kind of stakeholders so that financial position ofcompanies can be assessed. In the absence of this, it can be difficult to manage companiesinternal and external operations. Most of companies prepare financial reports at the end offinancial year. Such as in the aspect of above Financial angles company, their accountantsproduce these reports so that they can evaluate company's financial condition. Below the purposeof financial reporting are mentioned that are as follows:Assess financial condition- It is one of the important purpose of financial reporting that islinked with assessment of financial position of companies (Sikka and Stittle, 2017). Thisbecomes possible because of financial information that is collected from various kind offinancial statements. As well as on the basis of it, managers of companies take futuristicdecisions effectively. Compare actual result with budget- Another purpose of financial reporting is related withcomparison of actual result with budgeted performance. In other words, companies set
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their financial goals before starting of a financial year and these financial reports evaluateactual result to compare with estimated results. Hence, these financial reports are crucialin analysing actual performance of companies. Such as in above, Financial anglescompany, their managers compare the actual result with estimated results. Accountability to donors and stakeholders- The financial reports makes a companyaccountable towards their external stakeholders such as investors, customers, suppliersetc. This is so because financial reports reflects the result of all business activities in frontof stakeholders and on the basis of it they take future decisions regarding to investment.Like the above company, they are accountable for their donors and stakeholders byproviding actual financial results. 2. Conceptual, regulatory framework, key principle and qualitative characteristics. Conceptual framework of financial reporting- The conceptual framework of financialreporting is linked with producing financial reporting on a regular time interval (Cho and Yun,2015). Basically, companies prepare financial reports at the end of financial year. The externalstakeholders of companies are suppliers, customers etc. who want to see financial performanceof companies with help of financial reports.Regulatory framework of financial reporting- The regulatory framework of financialreporting is associated with implementation of accounting rules, regulation and standards so thatprepared financial statements can become reliable and transparent for users. In the aspect ofabove accountancy firm, financial angel their accountants use below mentioned accountingprincipals that are as follows:Full disclosure-As per this principal of financial reporting, it is essential for accountant touse all kind of financial information about company in preparation of financial reports.They should not hide any important information and must include in financial statements.This principal is important to apply because if companies' accountants will disclose entireinformation about company's financial position, then their financial statements willbecome more reliable and accountable. In above company, their accountant use thisprincipal in order to prepare their financial statements more useful and accountable totheir stakeholders.
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