Task 1. Review of the accounting system. Gaining an understanding of the control systems of IWL required a complete review and evaluation of the accounting functions of this company. My findings are therefore as a result of a complete review and evaluation on the entity’s accounting and management systems done on both its manual and computerized environment. Report keeping systems are very essential to the running of this company, although our organisation seemed to be managed by a fairly academically incompetent team and in addition, backed by an untracked record of past events. The required set of concepts and techniques that are used to measure and report financial information about an economic unit as such are very vital and crucial for economic use. For example; business managers need accounting information to make sound leadership decisions, investors hope for profits that may eventually lead to distribution from the business through dividend (although our three partners in IWL made theirs private in the case of salaries for confidential reasons), creditors are concerned about the company’s ability to repay its debts or obligations, government in this case HRMC uses information for tax purposes and probably regulation reasons. Analyst might also need information from financial reports to form opinions on which the base investment recommendations and internally, employees want to work for successful companies to further their individual careers, and having their options and bonuses tied to enterprise performance (this is the example with IWL with a handful of staffs willing to proceed with their studies and stores get bonuses accordingly). Thus, in other for the record keeping systems such as those mentioned in our case ... ... middle of paper ... ...ancies. This would further reduce the possibility of stock-outs and provide evidence of over-ordering, which would enable purchasing patterns be refined. - Management accounts are produced on more frequent basis (quarterly) to avoid end of year’s peak in work load for the accounts department, that figures relating to each shop are provided to the head office on a daily basis, and that an analysis is undertaken by head office on the performance of individual shops and warehouse. - That cost price and sales price decisions made by a more comprehensive team of sales and purchase managers. Exact sales prices should be implemented at all 60 shops. This would enable the company to experiment with the ‘loss leader’ for example, and to impose a degree of consistency across supermarkets to prevent inappropriate pricing and costing decisions being taken by local managers.
Financial statement users around the globe use financial statements to evaluate the performance of companies (Fundamentals of Financial Accounting, 2006). In order to locate a company’s reported assets, liabilities, expenses and revenues, statement users rely on four types of financial statements. The four financial statements include: Balance Sheet, Income Statement, Statement of Retained Earnings, and Statement of Cash Flows (Fundamentals of Financial Accounting, 2006, p. 6). Each of these reports provides different information to the financial statement user. The Balance Sheet reports at a point in time: a company’s assets (what it owns), liabilities (what it owes) and stockholder’s equity (what is left over for the owners) (Fundamentals of Financial Accounting, 2006, p.7). The Income Statement shows whether a business made a profit (net income) during a specific period of time (Fundamentals of Financial Accounting, 2006, p. 10). The Statement of Retained Earnings illustrates what portions of the company’s earnings was paid to stockholders and retained by the company for future operations (Fundamentals of Financial Accounting, 2006, p.12). Finally, the Statement of Cash Flows reports summarizes how a business’ “operating, investing, and financial activities caused its cash balance to change over a particular range of time” (Fundamentals of Financial Accounting, 2006, p.13).
Financial accounting focuses on providing financial statements to stockholders and internal and external users. Financial statements created under managerial accounting provide instructions and data used for internal business management purposes in effort to compute cost of product. Financial accounting provides data for the sole purpose of preparing companies financial statements. Unlike financial accounting, managerial accounting uses past records to forecast future budgets; additionally it doesn’t adhere to any set financial accounting standards such as US GAAP or IFRS (Averkamp). Financial accounting creates financial income statements, balance sheets and cash flow statements under the guidelines of US GAAP or IFRS; however managerial accounting prepares in-depth management products to include cost volume profit analysis, profit planning, operational budgeting, capital budgeting to name a few
Due to the use of the company’s annual report for users to make decisions, ensuring that the financial reports convince the objective of general purpose financial reporting and qualitative characteristics of useful financial information as outlined in the IASB September 2010 ‘Conceptual Framework for Financial Reporting’ (CF) have become extremely important. Such failure of disclosures can mislead information on the company’s financial statements.
According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.
Sahira has received employee complaints about the lengthy time it takes for her team to create financial reports. Her team explains that the computers are the problem and that the software programs are too difficult to use and that many hours of manual manipulation of data are required to complete monthly reports (Colorado State University-Global Campus, 2014, p. 6, ¶3). The management dilemma can be described as: Delays in financial reporting? (Appendix, Worksheet box 1). Upon further examination, the specific management question to be addressed is: Can financial data management be made more efficient? (Appendix, Worksheet box 2). Consequently, the research questions are: 1) How to streamline data for financial reporting? and 2) Is a new accounting software system needed? (Appendix, Worksheet box 3). Finally, a key accounting and financial management theory at play here is that of efficiency in data management to improve efficacy and timeliness of financial reporting.
In conclusion, using financial statements in managerial accounting helps with the planning, controlling, and decision making process of a company. The information from the financial statements are used to analyze and establish budgets, forecast, variance reports, and ratios relating to the stability of the company. Managerial accounting data gives information driven info to these decision which can enhance decision making over the long haul. Business directors can influence this influential device to help make their business greater by seeing how managerial accounting profits regular business decision connections...
Stair, R.M., Reynolds, G.W., Gelinas, J.U. Jr., Sutton, S.G., Hunton, J.E., Albright, S.C., Winston, W.L. & Zappe, C. (2007) Accounting Information Systems and Financial Modelling, Thomson, South Melbourne, Victoria, Australia.
This report contains information that is calculated under accrual accounting principle. Because all transactions are recorded at the time when they are made rather than when actual money has been made or received, there is a likelihood that transactions are shown on one accounting period but actual change has not be made it, and it may deliver biased information about the company’s true financial position.
In 2008, the Securities and Exchange Commission (SEC) issued a road map for the United States (US) to implement International Financial Reporting Standards (IFRS) that would eventually lead to the dissolution of US Generally Accepted Accounting Principles (US GAAP) (Cox 2008). US GAAP is rules based system of accounting that contains over 25,000 detailed pages of guidance, whereas IFRS is a principles based system of accounting that contains 2,500 pages of guidance. IFRS allows accountants to exercise professional judgment when making many decisions. This paper will compare and contrast US GAAP with IFRS on Intermediate Accounting Topics.
It is of utmost importance when operating a company or business that all financial statements are accurate. Accurate financial data is needed to get a good picture of how the company is handling its revenue and show how well the company has done in the past. This information is helpful to managers running the company, to investors that may invest in the company, and to creditors who may extend credit to the company. The financial information is also helpful in the company acquiring revenue in the future.
Financial reporting is very vital for both the companies and user groups. However, several contents of the reports are irrelevant and inaccurate. As a result, the Special Committee of the American Institute of Certified Public Accountants established the Public Company Task Force to provide guidance to resolve these issues. Therefore, the Task Force creates sample business reports to help companies to understand how to enhance their report. This paper covers Enhanced Business Reporting (EBR) and how it is different than traditional reporting. It will also discuss the EBR’s advantages and disadvantages. Lastly, the paper will assess the effectiveness of the framework.
Accounting gives companies, investors, regulators and others with a standardized way to explain the financial performance of an entity. Accounting standards present preparers of financial statements with a set of rules that they have to follow when preparing an entity’s accounts, making sure this standardization is across the market (Robert 2008). Many Companies are required to publish their financial statements in accordance with the relevant accounting standards. To simply International Financial Reporting Standards (IFRS) is one set of accounting standards, which have been established and maintained by the IASB with the purpose of those standards being efficient of being useful consistently. These two bodies work together to come
I am interested in conducting research and teaching in managerial accounting, auditing and assurance services and accounting information systems. In particular, I am interested in exploring the role of accounting information systems in decision making, internal control, and auditing. In order to gain an appreciation of these and related issues, it is essential for me to have a strong grounding accounting, accounting information systems, information technology, managerial accounting, as well as gain a general economic and management perspective.
Main view of this report is to explain how the accounting plays a major role in banking, finance and other sectors of business. To decide this, the following questions are explained as follows:
Mired in dread by most and oft an exercise in futility, business owners spend agonizing hours tracking and paying obligations, calculating payroll, balancing checkbooks, and soliciting payments from past due accounts. From a place of naiveté, most business owners initially deny delegating these fundamental tasks to a seasoned bookkeeping professional whereby reasoning this method of business operation will improve their bottom line. Furthermore, each year a growing number of business owners find themselves scrambling in a near panic, sometimes successfully, sometimes not, to assimilate records in order to present to a CPA to meet tax deadlines. According to Jason Nazars’ article “16 Surprising Statistics