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StudentName/IDNumberTruong Yen PhiUnitNumberandTitleUnit 13: Financial ReportingAcademicYearSemester 2, Academic year 2019 - 2020UnitAssessorMs. Kim Oanh Vu and Ms. Bich Ngan NguyenAssignmentNumberandTitleFR1: International Financial Reporting (1 of 3)IssueDate05thFebruary, 2020SubmissionDateTo be announced by officeIVNameMs.Doti Chee(Lead IV) andMs. Bich Ngan Nguyen (IV)IV Date2ndJanuary 20201. Outline the context and purpose of financial reporting.
In the world of business, financial reporting serves as a crucial tool in providing informationabout the financial and business condition of an enterprise since its examinations andinterpretations are the key to assess the quality of a company from which to make businesschoices. For that, financial reports are represented as the scorecards of enterprises in reportingtheir financial status, namely: balance sheet, income statement, cash flow statements, etc. Thus,the outputs of financial reporting can be carried out in forms of reports, snapshots and books.(Cengage Learning, 2019)There are three main purposes of financial reports which mainly resolve around financialperformance, financial position and financial management of a firm in a given period of time:Financial performance: Based on financial statements, a firm can measure if the businessmeets the outcome requirements of owners, shareholders and State agencies.Financial position: After reviewing their financial performance, they can also identifytheir current business status in comparison of other competitors in the industry.Financial management: Lastly, a firm may also see the results of the management'sstewardship of business resources. (Zeff, 2012)Above all, accounting standards must be implemented in the process of conducting financialstatements so that financial information will be distributed with honesty, transparently andaccuracy, especially in defining contractual entitlements. However, mandatory standards can beflexibly applied in each enterprise to avoid unwanted business outcomes. (Elliott, B. & Elliott, J.,2011)2. Examine the regulatory frameworks and governance of financial reporting.The table below describes some basic accounting standards of financial reporting:DefinitionFormationContentInternationalAccountingStandard(IAS)The first internationalaccounting standardsestablished by theInternationalAccounting StandardsFormed in 1973, thenlater developed byIASB (Internationalaccounting standardsboard) to become aIAS consists of 41different ordinances whichcover a variety of basicaccounting regulations on:Business combinations
Board (IASB)(Kenton, 2020)uniformedinternational standard,named IFRS. (Kenton,2020)Present valueReporting financialperformanceInsuranceExtractive industriesFinancial instruments.(Kenton, 2020)InternationalFinancialReportingStandard(IFRS)Standards created bythe IFRS Foundationand the InternationalAccounting StandardsBoard (IASB).(Palmer, 2020)In 2001, IFRS wasformed being thereplacement of IAS(InternationalAccounting Standard).(Palmer, 2020)IFRS provides a commonglobal language forbusiness affairs with 17different ordinances whichcover:Accrual basis ofaccountingMateriality &aggregationOffsettingFrequency of reportingComparativeinformationConsistency ofpresentation. (Palmer,2020)GenerallyAcceptedAccountingPrinciples(GAAP)A common set ofaccounting principles,standards, andprocedures made bythe FinancialAccounting StandardsBoard (FASB)(Tuovila, 2020)In response of theStock Market Crash of1929 in the UnitedStates and thesubsequent GreatDepression, GAAPwas primarily formed.(Ross, 2020)GAAP governs theaccounting world with 10general rules andguidelines which cover:Revenue recognition;Balance sheetclassification;Materiality. (Tuovila,2020)