International Financial Reporting Purpose
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Added on 2020-10-22
International Financial Reporting Purpose
Added on 2020-10-22
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INTERNATIONALFINANCIAL REPORTING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................31. Context and purpose of Financial reporting ...........................................................................32. The conceptual and regulatory framework of financial reporting and qualitativecharacteristics required for making financial information more reliable....................................43. The main stakeholders of an organisation and benefit of providing financial information tothem.............................................................................................................................................54. Value of financial reporting for meeting organisational objective and growth .....................75. The main financial statements as per IAS 1............................................................................76. Two years Financial statements of Marks and Spencer........................................................117. Difference between International Accounting standard (IAS) and International financialreporting standard (IFRS).........................................................................................................138. Benefits of IFRS....................................................................................................................139. The varying degree of compliance with IFRS by organisation across the world................14CONCLUSION .............................................................................................................................15REFERENCES..............................................................................................................................16APPENDIX....................................................................................................................................18
INTRODUCTIONFinancial reporting is a process of disclosing the financial information in a report formatto provide information about the performance and position of organisation to its variousStakeholders of company. As a junior auditor of the large accounting firm the following task willbe included for preparing a business report. This study will include context and purpose offinancial reporting also, it will provide understanding of the conceptual and regulatoryframework of financial reporting and the qualitative characteristics of financial reporting.Furthermore, it will assist in identifying the various stakeholders of an organisation and thebenefit of financial reporting to them. Moreover, this assignment will give information about thevarious financial statement such as profit and loss statement, balance sheet and statement ofequity. This study will include difference between international accounting standard andinternational financial reporting standard. This assignment will include benefits of IFRS. Also,this project will provide information about the varying degree of compliance with IFRS . Marksand Spencer is selected to determination of the ratios to identify its performance andprofitability.MAIN BODY1. Context and purpose of Financial reporting The purpose of financial reporting is to provide the financial information to themanagement and various stakeholders of the organisation to make effective decision making fororganisation. Financial statements are provided to the management in order to formulate variouspolicies and make effective decision for improving the performance and position of firm (Ali,Akbar and Ormrod, 2016). The main purpose of financial reporting is to provide informationwhich is useful for making decision so that management can take the decision based on thefinancial statements. Financial reporting includes profit and loss statements, balance sheet and cash flowstatements which helps the firm in identifying there performance and position. Profit and lossstatement prepared by the firm helps them in determining the profitability of the organisation onthe basis of which it can identify the performance in the industry (Biddle And et.al., 2016).Balance sheet assist in identifying the position of the organisation on the basis of its assets andliabilities. Cash flow statements helps the organisation in identifying the cash requirement of the
company to perform their various future operation on the basis of cash inflow and outflow of thefirm. Financial reporting helps the firm in providing information about the activities performedby the organisation in a year on the basis of which company formulate various strategies andprepare the budget to reduce the expenses to increase firm profitability level to improve itsperformance in the market to attract more customers towards the organisation. Financialreporting main purpose is to provide adequate information which helps the firm in improvingtheir future performance on the basis of the past results (Chen and Li, 2015). The purpose offinancial reporting is to provide information to lenders to give them information about theliquidity position of the firm to pay its obligation in order to attract lenders to lent them money.Financial reporting are provided to investors in order to provide information to investors aboutthe profitability of the firm and ability of the firm to generate more profits to pay them higherreturns.2. The conceptual and regulatory framework of financial reporting and qualitative characteristicsrequired for making financial information more reliableThe conceptual framework of financial reporting include various fundamental conceptsthat assist in preparing the financial statements and helps the board in development IFRSstandards. It assists in ensuring that the standards are conceptually consistent and that similartransactions are treated in the similar way in order to provide useful information to variousstakeholders of the organisation (Christiaens and et.al.,2015). Conceptual framework also helpsthe firm in developing policies when the IFRS standards does not apply to particular transaction. The conceptual framework provide qualitative characteristics in order to make thefinancial information more reliable. Also, it provides definition s for the assets , liabilities,equity, income and expenses in order to include them in financial reporting. This frameworkassist in determining the measurement bases and guidance to use them in financial reporting. Itprovides concepts and guidance for presentation and disclosure of financial information.Moreover, it provides understanding of concepts relating to capital and capital maintenance. The regulatory framework of financial reporting govern the applicability of various rulesand regulation for preparing the financial reporting. It helps in providing useful information andreduce chances of misappropriation of accounting information. Financial reporting are governedby the standards set out by international accounting standards and international financial
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