Arden University BUS0002: Financial Statement Principles Report

This report examines the guiding principles of constructing financial statements, emphasizing the importance of providing a true and fair view of a company's financial position and performance. It explores the application of International Financial Reporting Standards (IFRS), focusing on the ...Read More

ASSESSMENT PART 3

 The financial statements are prepared on the principle
that users will be provided with true and fair view of
the financial position and financial performance of
reporting entity.
 The information presented in the financial statements
would help investors to evaluate the position of entity
in generating cash and in assessing their financial
adaptability.
GUIDING PRINCIPLES OF CONSTRUCTING
FINANCIAL STATEMENTS:

 The direct and indirect controls are accounted for
which helps in determining the scope of control of
reporting entity.
 Effect of such transactions will be recognized if the
newly acquired liabilities or assets can be measured in
monetary amount having sufficient reliability (Macve
2015).
 Moreover, there should be sufficient evidence about the
creation of new liabilities or assets along with the
information about existing liabilities or assets.
GUIDING PRINCIPLES OF CONSTRUCTING
FINANCIAL STATEMENTS:

 The basis of measurement can either be at historical
cost or current value in drawing up the financial
statements. Assets or liabilities measuring at
historical costs are initially recognized at historical
cost.
 There should be sufficient evidence about the
transactions related to creation of new liability or
assets
 . Noncurrent assets on other hand are stated at lower
of fair values minus cost to sell or the previous
carrying amount

 Financial statements have been prepared at the
historical cost conventions except for some financial
instruments that are stated at fair value. This
incorporates financial instruments that are available
for sale or are classified as fair value through profit or
loss and derivative financial instruments (Biaek and
Matusiewicz 2015).

 The consolidated financial statements of Pet at home
are prepared according to IFRS (International financial
reporting standard) and in accordance with the
provision of Companies Act, 2006.
 The financial statements of Pets at home are
constructed under the companies Act, 2006, where the
organization is required to report. Financial statements
prepared under such Act are of the opinion listed
below:
APPLICATION OF PRINCIPLES TO THE
FINANCIAL STATEMENTS OF PET AT HOME

 Parent company has not kept adequate accounting records and any
adequate returns for audit have not been received from the branches.
 The part of remuneration report of directors and the financial
statement of parent company which are to be audited are not in the
agreement with the return and accounting records (petsathome.co.
2018).
 There are no disclosures of remuneration of directors as specified by
law
 All the explanations and information that is required for audit have
not been received.
 The company has not prepared a statement of corporate governance.
APPLICATION OF PRINCIPLES TO THE
FINANCIAL STATEMENTS OF PET AT HOME

Organization is required to make a report about any
identified material inconsistencies between the statement
of director and the knowledge that is acquired during the
audit (petsathome.co. 2018).
Such reporting is done to ensure that the financial
statements as a whole are balanced, fair and
understandable. In addition to this, they provide the
stakeholders with necessary information that helps in
assessing the performance and position of their strategy
and business model.
Furthermore, the matters that are communicated by the
organization to the audit committee are not appropriately
addressed by the audit committee report.

 Pet at home incorporate the principle of measuring the items
or transactions at fair value. At the date of acquisition, the
goodwill of organization has been measured at the fair value.
In addition to this, it also takes into account the net recognized
amount at fair value of the identifiable assets that is acquired
and liabilities that have been assumed.
 Recognition of any contingent payable at the date of
acquisition is done at fair value.
 All such instances are the examples of the fact that reporting
entity implies with the principles of making reporting of any
transaction at either fair value or historical costs.
 Sufficient evidences have been provided about the transactions
relating to any existing assets and liabilities and any assets and
liabilities that have been acquired in the business.

The auditor of company has framed the opinion that the
financial statements of Pet at home provides investors
with a true and fair view of the affairs of the parent
company as well as group.
CONCLUSION

 Investors.petsathome.com. (2018). [online] Available at:
https://investors.petsathome.com/media/213705/pets_at_ho
me_2017.pdf [Accessed 18 Jul. 2018].
 Macve, R., 2015. A Conceptual Framework for Financial
Accounting and Reporting: Vision, Tool, Or Threat?.
Routledge.
 Biaek-Jaworska, A. and Matusiewicz, A., 2015.
Determinants of the level of information disclosure in
financial statements prepared in accordance with
IFRS. Accounting and Management Information
Systems, 14(3), p.453.
REFERENCES LIST: