Financial Reporting System - Sample Assignment
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Added on 2021-01-01
Financial Reporting System - Sample Assignment
Added on 2021-01-01
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Financial Reporting
TABLE OF CONTENTINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................11. Context and purpose of financial accounting..........................................................................12. Requirement, purpose and key principles of regulatory and conceptual framework..............23. Main Stakeholders of an organisation and their benefits from financial information............44. Value of financial reporting for meeting organisational growth and objectives.....................55. Financial statements of the organisation.................................................................................6A: Statement of profit and loss:..................................................................................................6B: Statement of financial position:..............................................................................................76. Use of financial statements of a company to interpret and communicate financialperformance.................................................................................................................................87 Difference between IAS and IFRS...........................................................................................98 Evaluation of benefits of IFRS...............................................................................................109 Ascertaining the varying degree of compliance with IFRS...................................................11CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12APPENDIX....................................................................................................................................13
INTRODUCTIONFinancial reporting is a technique which is required for every company to formulate itsfinancial statements like income statement, balance sheet and cash flow statements. All of themmay help internal as well as external stakeholders to analyse actual position, financial health andevaluate performance of the organisation. The process of financial reporting guides the managersand investors to make strategic and investment decisions (Al-Matari, 2013). They determine theorganisational performance and then managers make decisions to make improvements andinvestors pass judgement to invest their money in the business or not. Shareholders evaluatefinancial information that are recorded in the statements to analyse than their money is usedeffectively or not. Company chosen for this report is Marks and Spencer which is based in UK.The assignments aims at context and purpose of financial reporting, requirement, purpose andkey principles of conceptual and regulatory framework, main stakeholders of the company, valueof financial statements to attain organisational objectives and growth, preparation of financialstatements and comparison of two years statements, benefits of IFRS and difference betweenIFRS and IAS.MAIN BODY1. Context and purpose of financial accountingFinancial reporting: It is the process of recording finance related business informationin financial statements so that stakeholders may analyse organisational performance andfinancial strength. According to IASB organisations are required to formulate financialstatements to present actual status of the company in front of its shareholders. Appropriate andtransparent information may help the business entities to operate business effectively. It is veryimportant to follow all the accounting related principles, rules and regulations while recordingdata in different statements so that it may help to depict actual position of the organisation. ForMarks and Spencer it is also very important to keep appropriate financial statements so that itsstakeholders may analyse it performance. Transparent records helps to achieve predeterminedorganisational goals that are required to execute business. Marks and Spencer is preparing itsfinancial statements regularly that helps to operate business globally and to run all the activitieseffectively. Purpose and importance of financial reporting is as follows:Purpose of financial reporting:1
Financial reporting is done by Marks and Spencer to facilitate mangers while formingstrategic decisions so that objectives can be achieved.It helps to evaluate market value, financial status and health of the company so thateffective strategies can be formulated.General purpose of financial reporting is to analyse the outcomes of those actions whichhas been taken by the organisation in a particular period of time.To provide results of the operations to the external stakeholders to increase sales, profitsand market share (Chae and Oh, 2016).Help managers of the company to make effective planning for future period.Importance of financial reporting:Financial reporting is very important for the organisations to analyse the financialperformance.For stakeholders financial reporting is very important as it may help them to analyse thattheir money is effectively used or not.While organisations are willing to raise foreign capital and investment than appropriatefinancial reporting may help to attract international investors.Properly managed financial statements are very important fro bidding, governmentsupplies and labour contracts because it provides overview of the company to externalparties.It is very important to analyse actual performance and market position of the company.2. Requirement, purpose and key principles of regulatory and conceptual frameworkRegulatory and conceptual framework: Conceptual framework is a type of analyticalelement with few variable quantity and textual matter. It is applied by organisations when anoverall performance and status of business is required. It is mainly used by companies to makeabstract differentiation and arrange business ideas. Regulatory framework is the set of legal rulesand regulations that are set by legal authorities of UK for all the companies who are executingbusiness activities there. According to the rules every company is required to conduct financialreporting for their business because it is required to determine actual position and financial statusof the organisations. Marks and Spencer is following all the regulations that are set by IASBbecause it may help the stakeholders to analyse organisational performance effectively. Theseregulations are imposed in the form of IFRS which is explained below:2
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