When making this decision, IAS 8.11 requires the management to show the definitions, recognition procedures, and dimension concepts for assets, incomes, liabilities, expenses and liabilities in the accounting Framework. A good financial statement is one that is understandable to every stakeholder of the company with minimum difficulties, thus financial statements should be simple and easy to understand. Two it should be reliable in that potential investors can rely on it to make decisions. Three it should be easy to compare with other financial statements in the market. Last but not least financial statement should be relevant. The information used in the financial statement should be relevant and material for decision making. Therefore, ambiguous information should be avoided when preparing financial information. This will eliminate any essence of misguide to the stakeholders of the company. Financial reporting standards have been revised severally over years to capture the dynamics in accounting sector. They have reviewed severally to incorporate the emerging trends in global business such as mergers, foreign acquisition among others. Before 2001 the world used to prepare financial statements using international accounting standards (IAS) and any revision on international accounting standards after 2001 is referred to as international financial reporting standard. ( IFRS). According international accounting standard 10 financial statement includes a statement of financial position which shows the total assets of the company, long-term and short term liabilities and the companies equity. Second is the statement of comprehensive income which shows the total revenue and expenditures of the company. Third is the statement of changes in equity, statement of cash flow which shows the ability of the company to pay short term debts and notes to the financial position this provides explanations to the financial statement items. International Accounting Standards Board is charged with mandate of reviewing and revising accounting standards. It comprises of fifteen members drawn across the world. It was formed in 2001 as successor of International Accounting standard committee. It has the responsibility of developing international financial reporting standard and revision of international accounting standard to IFRS. (Wood & Sangster, 2005) According to international financial standards a statement of financial position should have a section of noncurrent assets at cost, their accumulated depreciation and the net book value all shown separately. A section of current asset and current liabilities on separate column and then the working capital of the company are calculated as the difference of current assets and current liabilities. Current assets are those assets that can be converted into cash easily while noncurrent assets are those that are expected to remain in the business for a long period. In this statement there is a section of financing activities which show how the company is financed. The total of noncurrent assets and working capital should always equal to finances of the company. This statement shows the total assets of the company, liabilities of the company both short term and long term
Assignment No. Assignment Title Place of Study: Canterbury Christ Church University – Business School Financial reporting standards provide a framework to monitor the actions of the management who are the agents of shareholders…
Here it has been highlighted as to whether the company complied with any revisions or changes in accounting standards like AASB 101; and other accounting standards relating to intangible asset; provisions and contingent items etc. Any change adopted by the company in financial reporting for 2009 over the previous year has also been discussed.
The essay discusses the challenges faced by International Accounting Standards Board in accomplishing its mission of introducing international financial reporting standards for general purpose financial statements. It further discusses about the key characteristics of International Accounting Standards Board’s framework.
The first issue was the credit crisis which had spread from US banks to Korea and Russia. The core of the problem is that many companies have failed to provide fair and accurate description of financial standing. Besides credit crisis other issues which are included in this article is off-balance-sheet financing and pension fund accounting.
The effort is aimed to orchestrate the financial systems of International Financial Reporting Standards (IFRS) and the US Generally Accepted Accounting Practices (GAAP). In this paper, the writer intends to analyze and evaluate this joint effort. Research Question Explain what is meant by a ‘conceptual framework’ for financial accounting, discuss the reasons why such a framework might be useful and the reasons why the IASB and FASB believe it is necessary to develop a joint framework.
External Reporting to investors, government authorities and other outside parties on the organisation's finance position, operations and related activities. This information is also used by regulatory bodies like Internal Revenue Service. Sometimes the managers in other organization also use such information in their decision making.
The annual reports of three companies Johnson Matthey plc, Smith and Nephew plc and Smiths Group plc are judged according to the criteria. The Award is given to Johnson Matthey plc since the annual report of the Company fulfils the maximum criterias.
One of the main purposes of annual reports is to provide information that is useful to their users (Day, 1986).
This paper takes an acute look at the financial reports made before and after the act, what led to the passing of this act in the US assembly and has it really augmented conservatism in discretionary revelation of financial reports. The paper also investigates if there has been a decline in aggressive accounting due to this conservatism post the Act.
Had there been no framework, accounting standards would adopt the easier solution for a particular issue. A solution which is coherent with an interconnected theory of accounting would never be the choice. The Conceptual Framework