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Financial Reporting & Statements

Factors Influences Financial Reporting

Relevance:
Reported information must be relevant to investors and other users as an aid in making
decisions based on an entitys financial position, performance, risks, and business prospects.
Investors and other external stakeholders want information that is relevant to the decisions
they face.
For investors, relevant information can help them to answer two questions: What is the
expected return on an investment, and what is the potential risk associated with that return?

Understandability:
Financial reports must be clear and avoid unnecessary complexity or inconsistency that may
limit the ability of users to comprehend the information.
Two main issues typically affect the understandability of financial statementscomplexity and
inconsistency:

Complexity and inconsistency in financial reporting may contribute to investors low use of reports and
high reliance on other sources, which often simplify the information and render it more comparable..
Complexity in reporting may make it difficult for investors, lenders, and creditors to understand an
entitys financial position and performance, and may present challenges to preparers, auditors, and
other stakeholders.

Factors Influences Financial Reporting

Timeliness:
In todays fast-moving markets, information must be
communicated quickly if it is to be useful in supporting
investors decisions.
The timing and manner in which financial information will be
delivered in the future may represent the most profound
change ahead.
We see the trend in reporting as moving away from providing
reports and schedules that were developed before the current
technology platforms, and toward a demand-driven model
where users will receive and retrieve the information they deem
most relevant, and on a more real-time basis.
To the extent possible, information should be made available for
users to access and retrieve in a manner that meets their needs
and, when possible, in real-time or close-to-real-time.

Factors Influences Financial Reporting

These characteristics have long been recognized
as essential qualities of information that aim to
support financial, investment, and other
economic decision making.
Similarly, the chief objectives of financial
reporting will largely remain the sameto
portray the position and performance of the
entity in question so that investors in equity and
debt, among other stakeholders, can make
decisions based on accurate information
regarding potential risks and returns.

Presentation of Financial Statements

IAS - 1
It lays out the guidelines for the presentation of
financial statementsand sets out minimum
requirements of their content; it is applicable to all
general purpose financial statements that are based on
International Financial Reporting Standards (IFRS).
IAS 1 was originally issued by the International
Accounting Standards Committee in 1997, superseding
three standards on disclosure and presentation
requirements,and was the first comprehensive
accounting standard to deal with the presentation of
financial standards.

Purpose & Features of IAS - 1

IAS 1 sets out the purpose of financial statements as the provision of

useful information on the financial position, financial performance and
cash flows of an entity, and categorizes the information provided into
assets, liabilities, income and expenses, contributions by and distribution
to owners, and cash flows. It lists the set of statements, for example the
statement of financial position and statement of profit and loss, that
together comprise the financial statements.
IAS 1 also elaborates on the following features of the financial statements:

fairly presented and compliant with IFRSs;

prepared on a going concern basis;
prepared using the accrual basis of accounting;
does not offset assets and liabilities;
prepared at least annually;
includes comparison with previous periods; and
presented consistently across periods