Financial Reporting: Context, Purpose, Stakeholders, IAS vs IFRS, and Value for Organizational Growth

Financial Reporting

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................3
Outline the context and purpose of financial reporting..........................................................................3
Key principles of conceptual and regulatory frameworks, their purpose................................................4
Main stakeholders of an organisation and analyse how they benefit from financial information..........6
Value of financial reporting for meeting organizational objectives and growth......................................7
Difference between International Accounting Standards (IAS) and International Financial Reporting
Standards.................................................................................................................................................8
Degrees of compliance with IFRS by organisations across the world and the factors.............................9
Interpretation of Financial statements..................................................................................................11
CONCLUSION.............................................................................................................................................17
REFERENCES..............................................................................................................................................18

INTRODUCTION
Financial reporting is a discipline of bookkeeping that deals with the actions of documenting
financial events, bookkeeping and preparing and presenting income reports. The income
statement shows a company's current financial situation, as well as the results of various
activities, functional and work engagement, future revenues, comparisons, and other data.
Financial statements include a cash position, a statement of comprehensive income, a net
income, a statement of retained earnings, a statement of cash flow, and other pertinent
comments. Financial reporting's major goal is to provide necessary details about an individual's
statement of financial position, as well as important effect on financial circumstances, to a
variety of users to aid in great decision (Baker and Persson, 2021). Such a study analyzes the
description and intention of financial reporting, the abstract and regulatory framework for
financial reporting, the leadership of financial statements, important accounting fundamentals
and their intention and requirements, relevant parties and their necessity accounting information,
the statement of assets reportage for organizational growth and success and development and the
discrepancies between IAS and IFRS.
MAIN BODY
Outline the context and purpose of financial reporting.
Financial reporting is the structured reporting or appearance of financial results,
consequences, and associated documents to upper executives and internally or externally
interested parties (equity holders, distributors, shareholders, clients, regulatory authorities, and
others) about how a company organisation works over time. Adopting proper reporting methods
that aid in the achievement of corporate goals and targets is critical for a commercial entity. The
financial reporting of British American Tobacco informs investors, owners, as well as other
industry professionals well about firm's earnings, authenticity, feasibility of various ongoing
initiatives, and overall value. The firm may establish a basis for effective judgment and examine
its own performance indicators, liquidity situation, leveraging, and possible or current lifestyle
factors based on the outcomes of the financial reporting system (Mohamadi, 2020).

Organizations like British American Tobacco are mandated by the International
Accounting Standard Board to follow all IAS and IFRS for compliance with accounting reasons
in order to achieve consistency and improve financial statement reliability. Financial reporting
guarantees that all required disclosures are made in order for final accounting to be transparent. It
also aids in the avoidance of financial statement window dressing and offers a genuine and
honest picture of the firm.
Purpose of financial reporting: The following are the major goals of financial reporting in the
United Kingdom:
• The primary objective of financial reporting is to review financial info about a disclosure
corporation that is important to prospective and current shareholders, depositors or lending
institutions, as well as other parties with a considerable interest in the reporting company in order
to make important financing and commodity judgments.
• It aids in identifying if numerous rules, rules, and guidelines are being followed.
• It holds shareholders, contributors, shareholders, and other users accountable.
• It aids in the development of an approach for evaluating an institution's real results and
compare it to its budget (Dameri, Garelli and Resta, 2020).
• Assisting British American Tobacco management in developing an adequate new strategy so
that the firm may accomplish desired revenues and profits and successfully compete in the
market edge.
Financial reporting aids in the budgeting process, which are necessary in order to determine
differences in achievement and allowing British American Tobacco to make decisions and
propose recommendations that will help decrease deviations in effectiveness in effort to match
the firm's goals and success objectives. The primary goal of financial reporting is to offer
accurate info about a company's operations and strategy so that users may make informed
decisions about the company for various purposes. On the influence of economic accounting,
investors make a variety of judgments, including lending, investment, taxation, and so on. The
financial report of Bruitish American Tobacco includes information on the company's activities,
financial status, and profitability.

Key principles of conceptual and regulatory frameworks, their purpose
The term "accounting regulatory framework" refers to a collection of regulations,
regulations, and procedures that must be followed while preparing financial statements. The use
of these principles and guidelines by commercial organizations facilitates the comparison of
accounting records. Accounting policies and generally accepted accounting principles are
essentially included in the Regulatory Framework of Accounting for Financial Reporting.
Various frameworks have been established to give a basis for creating accurate financial reports.
The Summaries of Standardized Accounting Practice (SSAP) and Financial Reporting
Requirements are the two fundamental regulations in the United Kingdom (IFRSs). These two
guidelines stress uniformity in the preparation of various statements for limited public businesses
(McVay and Szerwo, 2021). Worldwide Accounting Standards (IASs) and International
Financial Reporting Standards (IFRSs) have been established to ensure that big global
corporations' financial statements are consistent.
A conceptual framework is a collection of concepts that provide uniform or widely
recognized advice for launching innovative reporting methods in response to new and emerging
difficulties, as well as evaluating current practices. In 1989, the Worldwide Accounting
Standards Board presented its conceptual framework with the goal of regulating or governing
nationally and internationally requirements, as well as assisting accountants in understanding
requirements and providing solutions to difficulties that the benchmarks do not address. The
purpose of the conceptual framework is to assure global accounting equity and to make corporate
data more critical and accessible (Yeboah and Pais, 2021).
Key principles: The below are the essential principles of the conceptual and regulatory regime,
as well as financial reporting leadership:
• Relevance: IFRS and IAS compliance guarantees that investors and other judgement have
access to the right information. Significance in knowledge also aids in the development of
stakeholder trust.
• Materiality: The IASB adheres to the quantification principle since the absence or
misunderstanding of any important information might impact an investor's choice.