Financial Reporting Assignment - Rita Plc
Added on 2020-07-22
12 Pages3097 Words63 Views
FINANCIAL REPORTING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1CHANGES TO ACCOUNTING REQUIREMENTS.....................................................................1Data Collection............................................................................................................................1REFERENCES................................................................................................................................2Research Methodology................................................................................................................2Customer Segmentation..............................................................................................................2
INTRODUCTIONFinancial reporting for any organisation is important in order to disclose its financialinformation. It includes financial statements like income statement, statement of changes inequity, statement of financial position and cash flow statement. Financial reporting of anyorganisation is subjected to the principles and regulatory framework of various standards. Thepresent report provides the conceptual and regulatory framework of IFRS. It also determines thekey stakeholders of an organisation and importance of financial information to them. In thepresent report, financial statements of Rita plc have been prepared along with the analysis offinancial performance of Inter-Continental Group hotel using ratio analysis. The study also shedsome light on difference between IFRS and IAS.Purpose and key principles of regulatory frameworkTo define the nature and purpose of accounting, conceptual and regulatory frameworkhas been provided. These principles consider the theoretical issues and conceptual issues that aresurrounded to the financial reporting. These principles and framework are referred as GenerallyAccepted Accounting Principle (GAAP), in accordance to the financial reporting. Theconceptual framework of financial reporting provides theoretical basis to determine andcommunicate the financial information to its users (Conceptual Framework for FinancialReporting, 2017). The main motive of financial reporting is to provide the necessary informationto its users that can affect the economic decision making. IFRS framework addresses to:Financial reporting objectives:To provide information that is used to take future economic decisions regarding, holding,selling or buying debt or equity instruments to the primary users of financial reporting.Potential users include lenders, investors, creditors, etc.Financial information is also used by its users to identify the responsibility ofmanagement in effectual utilisation of the organisation's existing resources and not onlyto assess the cash flows of the company.Reporting entity1
An entity that that need to report its financial information to its users is termed asreporting entity. It is also known as accounting entity.All the entities that are part of some another company or are the subsidiary or the parentcompany of any other entity are also the reporting entity (Ahmed, Neel and Wang, 2013).Parent company should report its financial statements in consolidated form.Qualitative features of financial information:Along with the quantitative features, financial information must also persist somequalitative feature that make the report more understandable and reliable. Report havingqualitative features could provide the most important and useful information to its users thathelps them in taking future economic decisions. Therefore, financial information of any entityshould contain the following qualitative features:Materiality: This refers to a specific information of an entity. Materiality refers to theimportance. Entity should only provide that information that could be material for anyuser in its decision. Accountants and auditor of the company should consider the aspectof materiality in the financial information.Understandability: an information to be understandable should be presented in such aform that can be comprehend by the reader easily.Relevance: Information presented in the financial reporting should only be related to thereporting entity. This refers the characteristic of relevance. Relevant financial informationcan make a significant difference in the decision making of the users because it containsboth predictive value and confirmatory value (Bonetti, Magnan and Parbonetti, 2016).Comparability: Another qualitative characteristic a report must contain is comparability.That means users must be able to compare the financial performance of the company withanother companies or across the period.Faithful Representation: Financial reports of the company should depict true and fairview. That means the data present in financial report should be free from misstatement.Others:2
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