The Preparation And Presentation Of Financial Reports Essay

The Preparation And Presentation Of Financial Reports Essay

Length: 1000 words (2.9 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

The preparation and presentation of financial reports is intended to convey faithful financial performance and position of an entity to its stakeholders to enable them make economic decisions. In preparing these financial reports, managers tend to make a number of assumptions in arriving at the figures they present. As in positive accounting theory (Watts and Zimmerman, 1978), there tends to be a degree of self-serving interest by managers as agents. In other words, to ensure a central point of interest, there must be some guiding principles within which financial reports are prepared to minimize the effect of this agency relation.
The conceptual framework of accounting provides the basis upon which accounting standards are set and interpreted, and the development of future standards. It also helps users of accounting reports to understand the basis on which the reports were prepared. The framework of accounting contains some qualitative characteristics such as usefulness, reliability, timeliness, completeness and comparability. This will help investors and other information users to assess the amount, the timing and the certainty of cash flows to the business (Biondi, et al, 2011). Other principles, such as the going concern, allow the business transactions to be reported on the historical values, except in instances where the business may not be able to operate in the foreseeable future.
Accounting standards are essential to eliminate false information as well as to ensure homogeneity of information. The standards are expected to serve as social norms supporting measurement, recognition and the disclosure system. Management may have some reasons to disclose private information about the business, such as to avoid investor...


... middle of paper ...


...s. Also, a body that made a persuasive lobby for instituting single purpose and universal international accounting standards is the International Organization of Securities Commissions (IOSCO), the world’s securities markets regulator. The body asserts that inconsistent, nationally imposed accounting standards often lead to ambiguity for investors in reading financial reports (Zhang and Andrew, 2014). The need for uniform and strong financial reporting standards cannot be over emphasized.
In conclusion, the current state of the conceptual framework of IFRS needs some revision to incorporate certain issues as discussed, which will pave way for the harmonization of the IFRS with other national standards, such as the US. The revised framework will help in the disclosure of relevant value enhancing information to help investors and other users to make economic decisions.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Preparation of Financial Information Essay

- Preparation of financial information is a critical role of the management of all public companies. For instance, access to accurate and timely information enhances the ability to manage the business of the company effectively. Moreover, it makes investors to put confidence in financial reports of the company if the company needs to increase its capital in the public securities market. The ability of the management to fulfill financial reporting roles depends on the design and effectiveness of the process as well as the security that is put in place over financial and accounting reporting....   [tags: Accounting Quality, Management, Public Companies]

Better Essays
1154 words (3.3 pages)

Essay on Financial Statements Of A Company 's Annual Performance

- “Companies’ Annual Reports have become increasingly complex over the years, sacrificing understandability for complexity”. An annual report is a detailed report for shareholders and other business partners on a company’s activities throughout the year. It is a legal requirement from the Companies Act 1985/9 that requires companies to publish their annual report and accounts. Its purpose is to present a true and fair view of the company’s annual performance and provide financial statements that are useful to existing and potential investors, shareholders, lenders and other creditors....   [tags: Financial statements]

Better Essays
1067 words (3 pages)

The Conceptual Framework for Financial Reporting: Bega´s Current Accounting Practice of Property, Plant and Equipment

- Overview of the report This report analyses the disclosures of objective of general purpose financial reporting and the qualitative characteristics of useful financial information according to The Conceptual Framework for Financial Reporting. It investigates Bega’s current accounting practice of Property, Plant and Equipment in accordance with AASB 116 Property, Plant and Equipment, and how it satisfies the objective of general purpose financial reporting and the qualitative characteristics of useful financial....   [tags: financial statements, disclosure]

Better Essays
2075 words (5.9 pages)

Presentation Of Pricewaterhousecoopers Audit Report Essay

- Minutes The minutes of the June 19, 2015 meeting were approved. Presentation of PriceWaterhouseCoopers Audit Report Mr. Eric Schwartz of PriceWaterhouseCoopers (PwC) provided the Audit Committee with a presentation of the audit of fiscal 2015 consolidated financial statements of Dartmouth Hitchcock-Health and Subsidiaries. PriceWaterhouseCoopers issued an unmodified opinion on the consolidated financial statements. Areas identified for audit procedures for NLHA include entity levels controls, revenue, long-term debt, fixed assets, salaries and benefits and consideration of fraud....   [tags: Auditing, Audit, External auditor]

Better Essays
989 words (2.8 pages)

International Financial Reporting Standards vs US Generally Accepted Accounting Principles

- Introduction 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....   [tags: accounting system reports]

Better Essays
1719 words (4.9 pages)

Importance of the Financial Report Essay

- Owners, managers and outside stakeholders of a company need reliable financial information to work smarter, control their costs and gain strategic operational insights respectively. This can happen by the provision of financial reporting framework which it will be discussed in the first paragraph of the essay. Then the scope of the framework will be explained base on financial reports, reporting entities and qualitative characteristics and their users. After that, financial statement will be critical analyze based on its elements, assumptions and characteristics....   [tags: lenders, creditors, investors]

Better Essays
1829 words (5.2 pages)

Financial Position Of An Organization Essay

- Equity Owner 's equity or shareholders ' equity is also referred to as capital. Equity is equal to total assets minus total liabilities. This is known as the basic accounting equation. Owner contributions (share capital) and income increase equity. Owner withdrawals (such as the payment of dividends) and expenses decrease equity. Income Income includes revenues (the amount an organisation earns in the ordinary course of business such as pro-fessional fees) and gains (the amount an organisation earns via other activities (such as selling plant and equipment))....   [tags: Generally Accepted Accounting Principles]

Better Essays
1330 words (3.8 pages)

Evaluation Of An Undertaking Proposal And Presentation For Engg951 Assignment 2 Successful Time Administration

- Time Management For the arrangement of the undertaking proposal and presentation for Engg951 Assignment 2 successful time administration was discriminating. Time was a standout amongst the most inflexibly obliged and critical components in accomplishing what was to be situated out in the achievement articulation for the undertaking, with considerable scholarly punishments for not submitting the work in the permitted time. Poor time administration in the early phases of the undertaking could prompt an absence of accessible assets, eventually bringing about a decrease of extension, or quality, or both....   [tags: Project management, Gantt chart, Management]

Better Essays
2000 words (5.7 pages)

Accounting Is The Measurement, Processing, And Communication Of Financial Information

- Accounting is the measurement, processing, and communication of financial information about economic entities such as businesses and corporations. Accountants do a wide variety of activities such as preparing financial statements and record business transactions, including calculating costs and gains from technologies, engaging in strategies for mergers and acquisitions, quality management, developing and using information systems to track financial performance, and tax strategy. All businesses need some type of accountant or an accountant assistant....   [tags: Business, Accountancy, Need, Accountant]

Better Essays
931 words (2.7 pages)

Essay on Generally Accepted Accounting Principles

- Generally Accepted Accounting Principles (US GAAP) are a set of rules for accounting used to prepare and standardize the reporting of financial statements, such as balance sheets, income statements, and cash flow statements. The U.S. Securities and Exchange Commission (SEC) impose these rules on publicly traded and some privately traded companies located within the United States' borders. Although, GAAP is not written into law, the Financial Accounting Standards Board (FASB) sets GAAP. US GAAP designed to make financial statements useful to creditors, investors, and shareholders, providing insight into the financial stability of a company....   [tags: financial statements, income, accounting]

Better Essays
1155 words (3.3 pages)