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The Context and Purpose of Financial Reporting

   

Added on  2020-10-22

15 Pages5082 Words306 Views
FINANCIAL REPORTING

Table of ContentsINTRODUCTION...........................................................................................................................3LO 1.................................................................................................................................................3The context and purpose of financial reporting .....................................................................3LO 3 ................................................................................................................................................1Theoretical models of financial reporting and the concepts...................................................1LO 4 ..............................................................................................................................................5International differences in financial reporting .....................................................................5International differences before IFRS ...................................................................................6Countries responded to IFRS .................................................................................................7Factors that influence international difference in financial reporting ..................................7CONCLUSION ...............................................................................................................................8.........................................................................................................................................................8REFERENCES................................................................................................................................9

INTRODUCTIONFinancial reporting is the disclosure of the financial information of the company itconsists of identifying the financial performance of the company which assist in developing theeffective decision for the success of organisation. Financial reports consist of income statement,balance sheet and cash flow statement which are being prepared by the firm to present thefinancial information on the basis of which the organisation is able to show accurate andinformation to its stakeholders.In this assignment will provide information for the purpose offinancial reporting. Moreover, it will also provide information regarding the differentstakeholder of BDO LLP and meeting their expectation. Furthermore, it will consist theinformation about financial reporting standards and the theoretical models. Also, it will includethe difference between the International accounting standards and international financialreporting standards. In addition to this, the assignment will provide the information regardingdifference in financial reporting in different countries. This assignment will provide informationregarding the purpose of financial statement and following the standards to comply with theregulatory framework while preparing the financial statement to have the accurate and reliableinformation. LO 1The purpose of financial reporting Financial reporting is the method of reporting the financial information in order toprovide the information to the stakeholders for making the decision in context to BDO LLP suchas investors are shown with the financial data as it assist in making investment decision. Thefinancial information is reported in the statement which consist of income, balance sheet andcash flow statement (Acharya and Ryan, 2016.). The income statement prepared by theorganisation assist in identifying the profitability on the basis of recording the income andexpenses for the period. Balance sheet is prepared to identify the liquidity of the firm on the basisof recording the assets and liabilities. Cash flow statement prepared delivers information regarding the cash flows for theperiod on the basis of which the firm is able to determine the cash requirement of the firm forperforming the different activities relating to organisation. The regulatory framework which isrequired to be complied while preparing the statement in order to have the accurate and reliableinformation.

The regulatory framework of the financial reporting consists of IFRS (Internationalfinancial reporting standards) which are the standards provided the IASB. It is important theorganisation to treat the transactions as per the provision stated in the standards in order to havethe accurate and reliable information on the basis of which the stakeholders of BDO LLP areable to make the effective decision. The officers which are responsible for the financial reporting consist of management,directors, stakeholders and external auditors. The conceptual framework of financial reportingstates that objectives, concepts and general purpose of financial reporting (Flower, 2018). Theconceptual framework of the financial reporting provides information regarding the disclosure ofthe information in the statement and the measurement basis. It defines the assets, liability, equity,income and expenses which are considered for preparing the reports. It provides the informationregarding the qualitative characteristics of financial reporting which consist of comparability,reliability, understandability and timeliness. Duties and responsibility of officers: Management: It is the duty of management to prepare the financial statement as per thestandards in order to provide accurate and reliable information to the stakeholders. Directors: The responsibilities of the directors are to oversee the financial statementprepared by the management. They have ultimate responsibility for ensuring thatlegislative requirements are met in relation to financial reporting. The governance of financial reporting assist in achieving the objectives of the BDO LLPand provide accountability to stakeholders. The directors of the organisation have theresponsibility to manage the governance risk in BDO LLP. The board is responsible for ensuringthe reliability of financial reporting. For the good corporate governance, it is important that theorganisation have the strong internal controls. Incorporated organisation is the separate legal entity from the business owner. In theincorporate organisation, individuals have the limited liability and the risk is reduced whereasunincorporated organisation are those which does not have separate legal entity different fromowner and thus the liability of the individual in this type of BDO LLP is unlimited and themembers of the organisation are wholly liable for the debts of firm. The incorporated businessprepares the financial reports as per the standards of IFRS it is the legal entity and is required tocomply with the regulatory framework while preparing the financial statement whereas

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