International Financial Reporting Solved Assignment

INTERNATIONAL
FINANCIAL
REPORTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Evaluating regulatory frameworks and governance in the context of financial reporting....1
P2. Analysis of Financial Reporting Purpose for meeting organisational goals, development
and growth...................................................................................................................................3
TASK 2............................................................................................................................................4
P3. Interpretation of Profit & Loss, Cash Flow and Balance Sheet Statements..........................4
P4. Calculation of financial ratios and their presentation............................................................7
TASK 3............................................................................................................................................8
P5. Benefits of International Accounting Standards (IAS) and International Financial
Reporting Standards (IFRS).........................................................................................................8
P6. Assessing the models of Financial Reporting and Auditing................................................10
TASK 4..........................................................................................................................................11
P7. Evaluating the differences and importance of financial reporting in various countries......11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13
APPENDICES...............................................................................................................................14

INTRODUCTION
Every business enterprise has a set of book-keeping records for each accounting period that
are inclusive of important financial transactions which the organisation undertakes over the
course of its life. It is mandatory for the companies to disclose such information to both internal
as well as external shareholders. In order to ensure consistency and promote comparability,
financial reporting is mandated to be followed using certain formats and principles all around the
world. These are popularly known as International Financial Reporting Standards (IFRS) and
International Accounting Standards (IAS).
This project report aims to outline the context and purpose of financial reporting,
provides benefits and methods of ensuring compliance and accountability as well as evaluate key
principles. Also, different countries have been evaluated to account for deviations in Financial
Reporting Practices. For this purpose, Grant Thornton Accountancy Firm's client Lloyds
Banking Group has been taken into account which is an FTSE 100 retail banking company
headquartered in UK (Representative Client List of Grant Thornton, 2019). It provides banking
as well as financial services to its client on a global scale.
TASK 1
P1. Evaluating regulatory frameworks and governance in the context of financial reporting
The term 'Financial Reporting' can be defined as the presentation as well as
communication of financial records to the relevant key stakeholders. Usually financial reports
are issued in the form of Income Statements, Balance Sheet and Cash Flow Statements among
others, based on the policies and nature of business. Thus, there issuance may differ from
organisation to organisation. Every organisation including Lloyd's Banking Group is required to
comply with the conceptual as well as regulatory frameworks of financial reporting. These have
been discussed as under:
 Conceptual framework:
These aim to define the objectives of financial reporting along with acting as a practical
tool that helps in formulation of various Standards (Abeysekera, 2013). Hence, this framework is
required to enables Lloyd's management to develop a strong theoretical foundation so that they
are able to easily measure, present and communicate the various financial transactions
undertaken by them to their key stakeholders. In the context of Financial Reporting, a conceptual
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framework can be mainly observed as a statement of Generally Accepted Accounting Principles
(GAAP). These principles act as a measuring yardstick as well as point of references in order to
compare and improvise current accounting practices of a company. Lack of such a framework
can lead to a substantial increase in proliferation as well as number of accounting scandals
through misappropriation of profits. Thus, conceptual framework assists in:
 Development of future standards;
 Promoting coherence between accounting regulations as well as standards;
 Preparation and Communication of Financial Statements to the identified key
stakeholders.
 Regulatory Framework:
As the name suggests, the regulatory framework determines the manner in which
reporting of financial information is carried out among organisation on a worldwide scale. For
this purpose, International Financial Reporting Standards (IFRS) is one such body which aims to
encourage collaboration, investor engagement and transparency in due process (Albu and Albu,
2012). This framework is necessary for ensuring that the communication of relevant information
to Lloyd's key stakeholders is made in such a way that their needs are fulfilled adequately. Some
of the most important IFRS are as follows:
 IFRS 1: First- time Adoption of International Financial Reporting Standards
 IFRS 10: Consolidated Financial Statements
 IFRS 12: Disclosure of Interest in Other Entities
 IFRS 13: Fair Value Measurement
The main purpose of conceptual framework is to facilitate understanding and revision of
both GAAP as well as IFRS. On the other hand, the qualitative characteristics of financial
information can be divided as:
Type Components Description
Fundamental Relevance,
Faithful
representation
These characteristics imply that the financial information
is material, conforms to legal guidelines, free of errors,
complete and neutral.
Enhancing Comparability,
Verifiability,
These characteristics imply that the financial information
is capable of promoting timely decision-making practices
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