Purpose of Financial Statements PDF
Added on -2021-02-21
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FINANCIALREPORTING
Table of ContentsINTRODUCTION..........................................................................................................................3TASK 1..........................................................................................................................................3P 1. Regulatory framework and governance of financial reporting...........................................3P 2. The purpose of financial reporting .....................................................................................5P 3. Interpretation of the financial statements ...........................................................................6P4. financial ratio for the organizational performance and investment.....................................8LO 3 ............................................................................................................................................11P 5 Benefits of the International accounting standards and the international Financialreporting Standards..................................................................................................................11P 6 Evaluating the models of financial reporting and auditing................................................13LO 4.............................................................................................................................................15P 7 Difference and the importance of the financial reporting across all over the world amongdifferent countries....................................................................................................................15CONCLUSION............................................................................................................................17REFERENCES.............................................................................................................................18Books and Journals..................................................................................................................18Online.......................................................................................................................................19
INTRODUCTIONFinancial reporting refers to the presentation of financial information like the financialdata, financial statement to the users. The users of the organization are the people who directlyor indirectly affects the performance of the organization such as creditors, debtors, customer,employees, stakeholders etc. The purpose of making financial statements is to present thefinancial condition of the company in the market to pull the investors. Besides the financialstatement financial reporting also includes the auditors report, management letters, shareholderminutes and the financial statement notes. Tesco is a multinational company who deal in all over the world. It provide variousproduct and services like groceries, food items, clothing, beauty products etc. in the market. Ithas its own websites to provide the product online and solve the queries of the customer. Tescorepresent their financial report in annual meeting to disclose their financial conditions, growth,decision toward the stakeholders. The report highlights the meaning of financial reporting and the role of regulatoryframework and governance in financial reporting. It helps to analyze the purpose of financialreporting in the organization and how it works to meet the financial objective, growth anddevelopment of the organization. It represent the financial statement like balance sheet, cashflow and profit and loss account of Tesco and the different ratio to evaluate the performance. The report highlights the benefits of international accounting standard and internationalfinancial reporting standard in the organization and in making the financial report. It helps toevaluate and maintain the financial reporting and auditing. It also help to analyses theimportance of financial reporting in different countries.TASK 1P 1. Regulatory framework and governance of financial reportingFinancial reporting refers to the full disclosure of the financial position like the assetsand liabilities of the organization, the cash inflow and outflow etc. It present in the annualreports of the company to aware the stakeholders about the financial condition. Stakeholdersinclude the creditors, public, investors, government and debt providers. The financial data arepresent annually, half yearly, quarterly and monthly. The components of financial reporting arefinancial statements, the notes to financial statements, quarterly and annual report, prospectsand management discussion and analysis. Tesco report their financial statement under the UK
generally accepted accounting concept. This guideline provides the general rule and regulationwhich have to followed by the Tesco. It helps to raise the capital for the organization byshowing the profit of the company in the market. It also increases the reputation and sales ofTesco which ultimately increase their market share and profit. The regulatory framework helps in insure that the information are present in requiredform to meet the requirement of stakeholders. The regulatory framework provide guideline toTesco to ensure that the information are present in useful manner so the investor can get theproper knowledge about the financial statements and help them to invest in the organization. InUK, the accounting standard board issues the financial reporting standards to regulate andcontrol the companies to follow this standard in the organization. Tesco follow the regulation ofregulatory framework in their organization and present their financial statement in boardmeetings and annual reports. The guidelines of the regulatory framework provide the rules andregulation to insure the accuracy, comparability and consistency in financial results. Theregulatory framework regulate the behavior of various directors and the companies toward theirinvestors. The presentation of financial reporting helps to pull the investor and customer towardthe organization. The financial governance describe as a way to collect, monitor, control and manage thefinancial information in the organization. Ii helps Tesco to track the financial transaction,compliance, manage and control the data and disclose the related information to thestakeholders. The financial governance is useful for the organization because it helps to checkthe accuracy of the data. The function of financial governance to ensure that the collectedfinancial data are correct. Financial governance includes work flow, financial policies, internalcontrols, financial control, internal and external audit, data security etc. The proper financialgovernance help Tesco in preparing the accurate plan, models, budget and forecast demands.The internal and external audit of Tesco regulate the financial report and suggest theorganization for the valuable improvement in the company and make audit report to ensure thatTesco follows the norms and regulation of the government. It allows Tesco to analyses the riskand market condition easily and make the improvement in the organization. To improve thefinancial governance Tesco control and automate the financial data, conduct the risk assessmentto measure the risk, regulate the compliance regulation and make the necessary changes.
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