Financial Accounting Report on Financial Statement Users and Qualities

This report delves into the realm of financial accounting, offering a detailed exploration of its core components. It begins by establishing a foundational understanding of financial statements, emphasizing the significance of the International Financial Reporting Standards (IFRS) and the role of the International Accounting Standards Board (IASB) in shaping the framework for accurate financial reporting. The report then identifies and analyzes various users of financial statements, including government entities, lenders, employees, the public, suppliers, investors, and customers, highlighting how each group utilizes financial data to make informed decisions. Furthermore, the report meticulously examines the qualitative characteristics of financial information, categorizing them into fundamental aspects such as relevance and faithful representation, and enhancing characteristics like comparability, verifiability, timeliness, and understandability. Through these analyses, the report underscores the crucial role of financial accounting in ensuring transparency, reliability, and effective decision-making across diverse stakeholder groups. Finally, the report also includes references to various books and journals to support the findings.

1 X FINANCIAL
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Definition................................................................................................................................1
Scope......................................................................................................................................1
Example..................................................................................................................................1
PART 2............................................................................................................................................2
Definition................................................................................................................................2
Scope......................................................................................................................................3
Example..................................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
To make the presentation of financial statements of the company's accounts, there are
requirements of preparing and presenting the adequate methods and techniques which are
facilitated by International financial reporting system (IFRS), International accounting standard
board (IASB) etc. In the present report, there will be discussion based on various users of
financial statements and their usefulness.
PART 1
Definition
The role of IASB in presentation of the financial statement is the motive to facilitate
authenticate framework and manner of preparing such data sets (Picker and et.al., 2016).
Therefore, in the current scenario, there has been use of such techniques which will be beneficial
as the users will rely over the outcomes facilitated by the firm as well as they could make their
profitable investments in the company.
Scope
The influence of these accounting standards and broads helpful in creating the reliability
of the financial disclosure. It ensures that there has been use of authenticated data and will be
measured in the preferable state (Flower, 2016). Therefore, it can be said that influence of
principles and format or such institutions will help in validating the outcomes.
Example
There have been 7 users of such financial information which are being analysed by IASB
such as:
Government:
The legal authority in every nation seeks the financial statement of various organisations
in terms of gaining the information relevant with the revenue and gains made by them as well as
taxes paid by them. Thus, it helps them in determining the amount of corporate taxes being paid
by the organisation.
Lenders:
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They seek the information and the ability of the firm in making the payment on time.
Therefore, it determines the solvency in terms of analysing the payments to be received by them
in the long terms loans and grants.
Employees:
The stakeholder insight of the organisation will be beneficial in terms of analysing the
profitability of firm in the period so they could have increment in the salaries, incentives etc.
The public:
They analyse the profitability and growth of business as well as analyse the job
opportunities and company's contribution in the corporate social responsibilities (Users of the
Financial Statements, 2012).
Suppliers:
They use the information about profits and earnings made by company during the period
and determine when they will be paid over the supply of any goods and services.
Investors:
These are the main users of such financial statements as they seek the profitability,
capital structure and the efficiency of business in terms of making the effective debt payments.
Therefore, with the help of such information, they make valuable investments decision in favour
of organisation.
Customers:
They analyse whether the organisation is being able to serve them the products and
services in the long run or not (Cayanan and Valderrama, 2016).
PART 2
Definition
To analyse the usefulness of financial information, there has been various qualitative
features of these techniques such as fundamental and enhancing qualitative characteristics. These
help in determining the usefulness of the financial statements and reporting for the growth of
business. In terms of making changes in operational activities of the firm, there is need of having
the financial analysis in the right manner. However, these characteristics are very useful for
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presenting and preparing the reports. These includes, relevance, faithful representation in
fundamental and comparability, verifiability, timeliness and understandability in enhancing
qualitative characteristics (Gaynor and et.al., 2016).
Scope
In accordance with the conceptual framework of the organisation, there has been
influence of such characteristics of presenting the fruitful disclosure of the financial data set in
the firm. Therefore, it will facilitate the reliability and validity of such financial information.
Thus, it will influence investors to make the fruitful investments in the business as well as make
the adequate increment in the operations (Chen and et.al., 2016). These are the useful tool in
terms of enhancing the efficiency of firm, quality in operations, profitability, productivity as well
as strengthening the capital structure.
Example
Fundamental Qualitative Characteristics:
Relevance: The information which is being fetched by the managers in terms of making
adequate decision, there is need to make the suitable decision which are relevant with the
business operations on the basis of predictive and confirmatory values (Picker and et.al., 2016).
Here, the predictive values are being estimated by the managers in terms of making budgets and
forecasting the requirement of products, funds and efforts in the coming time. On the other side,
confirmatory values are based on the materiality and the actual figures which are being required.
Faithful representation: The presentation of the financial statements must be faithful on
behalf of completeness, neutrality as well as it must be free from errors (Cayanan and
Valderrama, 2016). Therefore, it will help in facilitating the relevant information related with all
the industrial operations.
Enhancing Qualitative Characteristics:
Comparability: This technique facilitates the adequate comparison within the
organisation which is based on the outcomes of various years. Therefore, such financial
information of various previous years was compared with the current year of the recent outcomes
that together facilitate the adequate analysis and result which describes growth of business.
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Verifiability: The information which is presented in the financial data set should belong
to the faithful sources and have the reliability and validity of each transactions. Therefore, it
must be containing the accurate transactions so it will be verifiable by the professionals or users
of such information.
Timeliness: It must be prompt and quick while facilitating the outcomes to the users of
such information. Therefore, it will help them in quick decision making whether relevant with
making investment in the organisation or reducing the costs of business operations (Qualitative
characteristics of financial information, 2017).
Understandability: In accordance with the influences of various accounting standards
and boards, the business will present reports which are easily understood by each user. The
motive of the institution is that all the reports must be prepared on the basis of universally
accepted framework that will be helpful for users to fetch the corrective information (Flower,
2016).
CONCLUSION
By analysing the above report, it will be concluded that IASB and the relevant accounting
boards or standards are facilitating the adequate framework to the organisation. Therefore, the
managerial professionals in the firm must satisfactorily present the financial statement of
organisation.
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REFERENCES
Books and Journals
Cayanan, A. S. and Valderrama, H. A. S. (2016). Financial reporting practices of listed
Philippine firms. Philippine Management Review. 7
Chen, L. and et.al., (2016). Audited financial reporting and voluntary disclosure of corporate
social responsibility (CSR) reports. Journal of Management Accounting Research. 28(2).
53-76.
Flower, J. (2016). European financial reporting: adapting to a changing world. Springer.
Gaynor, L. M. and et.al., (2016). Understanding the relation between financial reporting quality
and audit quality. Auditing: A Journal of Practice & Theory. 35(4). 1-22.
Picker, R. and et.al., (2016). Applying international financial reporting standards. John Wiley &
Sons.
Online
Qualitative characteristics of financial information. 2017. [Online]. Available through
:<http://www.accountingverse.com/financial-accounting/introduction/qualitative-
characteristics.html>.
Users of the Financial Statements. 2012. [Online]. Available through
:<http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of
%20Financial%20Statements.aspx>.
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