Financial Reporting - Marks & Spencer
Added on 2020-10-22
15 Pages4225 Words381 Views
Financial Reporting
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1Q1 Financial reporting and its purpose.......................................................................................1Q2 Examination of conceptual and regulatory framework and their purpose and principles.....2Q3 Main stakeholders of an organisation and they way in which they benefit from financialinformation..................................................................................................................................3Q4 Value of financial reporting for meeting organisational growth and objectives...................4Q5 Formulation of financial statements of the organisation.......................................................5A: Statement of profit and loss:..................................................................................................5B: Statement of equity:................................................................................................................6C: Statement of financial position:..............................................................................................6Q6 Interpretation of organisation's last two year's financial statements.....................................8Q7 Difference between IAS and IFRS........................................................................................8Q8 Evaluation of benefits of IFRS..............................................................................................9Q9 Identification of the varying degree of compliance with IFRS.............................................9CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11APPENDIX....................................................................................................................................12
INTRODUCTION Financial reporting refers to the process of recording finance related information in thefinal accounts of an organisation. These accounts are income and expenditures statement,balance sheet and cash flow statement. It is very important for the organisations to generatefinancial statements as these are required to analyse performance and financial strength of acompany. All the external stakeholders such as customers, government, suppliers, investors andcreditors monitor the statements and than analyse actual position of the organisation (Al-Matari,2013). If the accountants of the company are not able to make effective decisions than it mayresult in improper financial statements and may not be able to show the actual position of thebusiness enterprise. Organisation chosen for this report is Marks and Spencer and it is based inUK. Various topics are discussed under the assignment that are financial accounting and itspurpose, requirement of regulatory framework, stakeholders of the organisation, value offinancial reporting in meeting organisational objectives and growth, formulation of differentfinancial statements to determine organisation's current position. Difference between IAS andIFRS and benefits of IFRS have also been covered under this report.MAIN BODYQ1 Financial reporting and its purposeFinancial reporting: It refers to the process of formulating different type of statementsthat are income statement, balance sheet and cash flow statement. External stakeholders mayanalyse organisational performance with the help of these statements. It is very important for thecompanies to conduct financial reporting for a certain period of time so that market image,position and competitive advantage can be determined. According to law all the businessenterprises like Marks and Spencer have to prepare their all the statements every year so thatcompanies may analyse their yearly performance (Chae and Oh, 2016). All type of businessinformation is recorded in the final accounts of a organisation which is required to analysefinancial strength. Proper and transparent data can help the shareholders to make effectivedecisions for investment and they also analyse that their money is used by the businessappropriately or not which is possible with the help of financial statements. Importance andpurpose of financial reporting for Marks and Spencer are as follows:Importance of financial reporting:1
Financial reporting is very important for Marks and Spencer to provide information oforganisational position to its stakeholders.It helps to make appropriate decisions and effective financial planning for the futureperiod so that all the long term goals can be achieved (Duncan, 2014).Purpose of financial reporting:Main purpose of financial reporting is to analyse that Marks and Spencer is performingwell or not.Provide accurate and transparent information of business to the stakeholders so thathigher funds can be raised.Marks and Spencer create final accounts to analyse financial health of the business.To provide business information to the managers so that they may take effectivedecisions for Marks and Spencer according to its current position.Q2 Examination of conceptual and regulatory framework and their purpose and principlesRegulatory and conceptual framework:Both are required to prepare all the financialstatements effectively and to assure that all the transparent information is recorded in the reports.Conceptual framework guides the companies to follow all the relevant accounting standards thatare followed while recoding financial informations in the books and accounting. IASB is theregulatory authority who have introduced different type of standards for the companies toformulate appropriate financial statements. Some selected principles are as follows:IFRS (International Financial Reporting Standards): These are the standards that areintroduced by IASB (International Accounting Standards Board) for all the organisations whoare conducting financial reporting every year. It is required by the businesses to follow all thestandards while creating final accounts (IFRS, 2018).IFRS 9: It was introduced by IASB and includes requirements for acknowledgement andmeasurement, modification, de-recognition and broad protection accounting related rulesand regulations for the organisations.IFRS 10: According to this standard business entities are required to formulate theirfinancial statements in consolidated form.Purpose:Purpose of regulatory frameworks is to guide organisation while formulating financialstatements.2
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