International Financial Reporting - Report
Added on 2020-06-03
15 Pages3277 Words115 Views
International FinancialReporting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Purpose of financial reporting............................................................................................12. Outline conceptual framework and qualitative characteristics of financial information . .23. Important stakeholders of company...................................................................................24. Highlighting value of financial reporting ..........................................................................35. Producing financial statements ..........................................................................................46. Presenting financial ratios..................................................................................................77. Difference between IAS and IFRS.....................................................................................88. Benefits of IFRS.................................................................................................................99. Varying degrees of compliance with IFRS......................................................................10CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONFinancial reporting plays vital role in providing effective information to stakeholders' totake enhanced decisions with much ease. The enclosed report deals with importance of financialreporting to organisations. The financial statements prepared by accountants are governed byprofessional bodies which has accuracy in such statements. The report also discusses about theprofessional bodies such as IAS and IFRS which have immense benefits to organisation as wellas stakeholders'. On the other hand, financial ratios are also computed for the company. Thequalitative characteristics of financial information are also discussed which provides clarity tousers of accounting information to assess financial health of organisation. 1. Purpose of financial reportingFinancial reporting is important for various stakeholders as it provides much neededinformation to them in the best possible way. The preparation of financial reports is not an easytask as talented accounting professionals are required (Stent, Bradbury and Hooks, 2017). Thisreport helps company to ascertain whether profit is made or loss has been incurred in a particularperiod. As such, it is relevant for stakeholders as well as management of the company to takebetter and effective decisions.Another purpose is that investors and creditors require such information to assess whetherto provide funds to organisation or not. If financial position of organisation is strong, this meansthat higher returns will be provided to investors. On the other hand, creditors analyse financialreports by determining debt paying capacity of company and as such, these stakeholders' seeksfinancial reports to analyse financial health of company.Financial reporting is used to prevent scandals which are prevailing internationally. Assuch, fair reports are prepared by company which is then provided to stakeholders' and as aresult, they seek reports for assessing financial position of organisation quite effectively (Grahamand et.al, 2017). It has sectioned of liabilities and assets which is much relevant to stakeholders.Moreover, financial reports are also used for the purpose of imparting information tostakeholders about the capital which is sufficient for future growth or not. As such, clarity isobserved as lenders and investors seeks financial reports.The elements of financial reporting are balance sheet, cash flow statement, incomestatement, changes in stockholder’s' equity. These financial statements are important to beprepared carefully as it is reflected in financial reports. Moreover, it is also used for bidding and1
labour contracts as well. Thus, financial reports are useful tool for exhibiting true financialinformation of the company quite effectively. 2. Outline conceptual framework and qualitative characteristics of financial information Conceptual framework are used to distinct and organise the various ideas having all theinformation which is important and real so that they could be easily remembered. This is alsoregarded to as the generally accepted theoretical principles forming the important part ofparticular field of enquiry (A conceptual andregulatory framework, 2018). There are mainly 4characteristics of this framework which are relevance, reliability, comparability andunderstandability this will be helping the financial information to b more accurate and reliable.Purpose-The main purpose of the financial information systems is to provide useful data whichwill be the base of economic decision making for the company. This framework is also providingrule and standard for accounting so that this could set a limit and lead to creation of set of rule.One of the primary function of conceptual framework is to assist IASB so that they coulddevelop for future IFRS and could review the existing one.The characteristics which are stated will be making financial information more reliable asthe framework would be relevant, reliable, comparable and understandable to the user of theinformation. Thus, this will be helping in furthermore accuracy of data which is given.Regulatory framework-This is the policy and guidelines which are governing the control and implementation ofadopted action plan and principles. The International Accounting Standards Board (IASC) willbe providing the framework (A conceptual andregulatory framework, 2018). This is also a rulebased standards of accounting which is regulated by specified piece of legislation like thatprotection of environment.3. Important stakeholders of companyStakeholders are the people who are whether directly or indirectly connected to thebusiness with some or the other motive they are having some interest in the financial informationor performance of the organisation. Some stakeholders of business are as follows:2
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