Financial Reporting Assignment (Proved)

Financial Reporting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Regulatory frameworks and governance of financial accounting:....................................3
P2 Purpose of financial reporting for meeting organisational objectives, development and
growth:....................................................................................................................................6
P3 Interpretation of profit & loss, balance sheet and cash flows...........................................8
P4 Financial ratios for organisational performance and investment.....................................9
P5 Benefits of International Accounting Standards (IAS) and International Financial
Reporting Standards (IFRS)...................................................................................................9
P6 Models of financial reporting and auditing:....................................................................11
P7 Evaluate the differences and importance of financial reporting across different countries:12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
APPENDIX....................................................................................................................................15

INTRODUCTION
Financial reporting refers to systematic presentation of financial or accounting result and
other related information to managerial personnel and external stakeholders like customers,
inventors, government etc. about performance of business enterprises during a specific period.
Under financial reporting, reports are prepared by managers on quarterly or annually basis
(Flower, 2016). Financial reporting includes preparation of financial statements, income
statement, change in equity statement and cash flow statements. This report exhibits analysis of
financial reporting along with regulatory frameworks and governance of financial reporting,
evaluation of financial reporting standards, theoretical concepts and models and evaluation of
international differences in financial reporting in the the context of HSBC Holdings plc, UK's
banking and financial services holding company. This report also provide explanation about
purpose of financial reporting for meeting organisational objectives, development and growth.
TASK 1
P1 Regulatory frameworks and governance of financial accounting:
Financial reporting is a systematic of preparing financial statements like balance sheet,
profit and loss account, cash flow statements etc. that describes business organisation's actual
financial position to internal and external stakeholders like investors, government, management
etc. It assist in providing financial information or data to top management within business
organisation which is used by managerial personnels in different managerial activities like
analysis, planning, decision-making and benchmarking (Zeff, 2013). Main motive of financial
reporting is providing information for investors, shareholders and large public group about
various aspects of business organisation. It also help to analyse in which manner business
organisation is utilising and procuring various resources. It also ensure compliance of statutory
rules and regulations to avoid any complexity in future. Financial reporting assist business
organisation to enhance accountability. Various financial report act as a backbone for business
organisation to take strategic decisions. Following are major purpose of financial reporting, are
as follows:
1. Reporting to managerial personnel which help in strategic planning and decision-
making activities in HSBC.

2. To provide relevant information and reports to promoters, lenders, investors and
creditors which assist them in taking prudent and rational financial and
investment decisions.
3. To communicate the true and fair picture of business enterprises to shareholder
and interested public at large scale.
4. To assess how effectively company is utilising their financial and other business
resources.
5. To give detailed information of organisation's performance and growth to various
stakeholders.
6. To determine and report the effectiveness of decisions taken by business
organisation to various interested parties.
7. To ensure the proper compliance of various statutory rules and regulation in
HSBC.
Regulatory framework of financial reporting:
In order to regulate the processes and reporting under financial reporting, a systematic
framework is used by different – different business organisations to cover all the aspects of
financial reporting in detailed manner. Regulatory framework ensure most reliable and relevant
financial reporting within an organisation. It emphasises on compliance of generally accepted
accounting principals to make uniformity in reporting. Regulatory framework includes IFRS
(International Financial Reporting Standards) and GAAP (generally accepted accounting
principles), Which contains set of standards, assumptions, principles and concepts to be applied
by accountants while reporting different matters. Regulatory framework is set of steps taken by
regulators to increase the responsiveness of various regulations. It is essential for HSBC to
comply with regulatory framework as it ensures that relevant financial information is
communicated to investors and users (Shackelford, Slemrod and Sallee, 2011). Main motive of
regulatory framework is to make similarity in accounting processes adopted by different
organisations across the world. IFRS is main aspect of regulatory aspect as its includes standards
that assist smoothness of accounting processes. Regulatory framework is prepared by governing
bodies so compliance of rules and regulation is also an objective. Financial statements prepared
by using regulatory framework leads to increase in enhancement of confidence of investors and
other users of financial statement. Compliance of regulatory framework enhance the creditability