Financial Reporting of Qualitative Characteristics - PDF
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Added on 2021-02-19
Financial Reporting of Qualitative Characteristics - PDF
Added on 2021-02-19
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FINANCIAL-REPORTING
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31. 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..............7TASK 2............................................................................................................................................85. Preparation of main financial statements on the basis of given information..........................86. Interpretation and communication of financial performance..................................................9TASK 3. ........................................................................................................................................147. The difference between international Accounting Standards (lAS) and if internationalFinancial Reporting Standards (IFRS)......................................................................................148. Advantage of International financial reporting system.........................................................15TASK 4. ........................................................................................................................................169. Degree of compliance with international financial-reporting standards...............................16CONCLUSION .............................................................................................................................17REFERENCES..............................................................................................................................18
INTRODUCTIONThe financial reporting can be defined as reports which contains detailed informationabout financial activities that occurs in an organisation during a particular time period(Lail,MacGregor, Marcum and Stuebs, 2017). These reports are very crucial in the aspect ofmaking competitive strategies and plans effectively. In the absence of these reports, it can bedifficult to manage financial performance of companies. The aim of this project report is to builda better understanding about financial-reporting and its importance for companies. For betterunderstanding of all above mentioned concepts, a large accountancy firm is selected which isGrant Thornton. This company is located in London, UK and have about 26 offices all aroundthe UK. The aim of company is to provide audit, taxation and advisory services to their clients.In the project report, purpose of financial reporting and interpretation of prepared financialstatements is done. As well as evaluation of financial reporting standards, models and conceptsare discussed. In the end of report, international difference under financial-reporting is done. TASK 11. Context and purpose of financial reporting.The term financial-reporting is very crucial in aspect of financial management ofcompanies (Dichev, 2017). It is so because with the help of these reports, manager oforganisations can assess the actual financial position and on the basis of it they take importantdecisions. Along with under financial reports various kind of statements are included such asincome statement, balance sheet etc. Apart from it, the financial reporting is linked withregulatory frameworks. As well as governance of this reporting contains duties andresponsibilities of responsible person of companies. Herein, the context of above Grant Thorntoncompany they prepare financial reports in order to evaluate the financial position. As well as forevaluating the areas in which they need to improvement. There are various kind of purpose of financial reporting and some of them are mentioned below:Its main purpose is to helping companies in comply with different kind of regulations.As well as financial reports are important in raising the capital of companies.The financial reports provide detailed information regarding to financial position ofcompanies.
In the aspect of stakeholders, financial reports play a significant role. It is so because withhelp of it, they can assess the financial position and can make investment accordingly.For managers, the financial reports become an essential framework to take importantdecisions. In addition, the financial reports inform to owner of companies about how various kind ofresources are being allocated and used. Forecasting financial conditions and cash flows.Satisfying stakeholders need and legislations.As well as it helps in ensuring that all companies are using similar rules. So these are the main purpose of financial reporting. Along with in above accountancy firm,the financial reports play all above mentioned roles. 2. Conceptual, regulatory framework, key principle and qualitative characteristics.Conceptual and regulatory framework- The concept of financial reporting is linked withpreparation of various kind of financial statement that become an essential framework indecision-making and planning. The external stakeholders such as suppliers, customers are alsokeep an extra site of eye on the financial performance of companies so that they can investmentaccordingly. The regulatory framework of financial reports is linked with use of all accountingstandards and principals that helps in bringing accuracy and consistency in financial statements.Such as in the above Grant Thornton company, their accountants follow various kind ofaccounting rules and principles as per international financial reporting standards which are asfollows:Conservatism- This is one of the important principle of financial reporting that concernabout reliability of financial statements of organisations (Chand, Patel and White, 2015).In the absence of this accounting principle, accountant cannot be able to manipulateaccounting records in which transactions are not related. Such as in the above GrantThornton company, their accountant follows this principal of accounting in process ofrecording the transactions. Consistency- It is a common accounting principle which is related to the follow acommon accounting methodology in the process of recording financial transaction in allthe financial year without making any change. This is important to follow because with
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