FA Week 10 Fin Stt.s Regulation & Corporate Disclosure

Question 1

Disclosure requirements:
Which 3 groups of entities do Directors of every company are required to send copies of the accounts to?
What else are companies required to do with their financial statements?

Answer 1

1. All shareholders
2. All debenture holders
3. The Registrar of Companies

Companies are required to publish their financial statements
on their WEBSITE.
*Small & medium sized companies are allowed to send to the registrar modified accounts containing less detail than full accounts required by the Companies Act

Question 2

5 disclosure requirements under IASB framework & IAS1

Answer 2

1. Income statement
2. SoFP
3. Statement of changes in equity
4. Cash flow statement
5. Notes on accounting policies & other explanatory notes (eg. on depreciation methods, contingent liabilities)
   ^assist users in understanding the fin. stt.s

Question 3

2 purposes of the IASB - International Accounting Standards Board

Answer 3

The IASB is committed to:

1. developing a single set of high QUALITY, global accounting STANDARDS that require TRANSPARENT and COMPARABLE information in financial statements
2. promote the application of these standards & working towards the CONVERGENCE of national acct. standards

Question 4

4 supplementary reports presented in an ANNUAL REPORT in addition to financial statements

Answer 4

1. Director’s report/Chairman’s statement
   - contains both financial & non-financial information
   eg. Share ownership, directors + their financial interests in the company, change in the board of directors, subsidiary undertakings, dividend recommended, AGMs
2. Strategic report
   i) Strategic management - strategy and objectives, business model
   ii) Business environment (internal & external) - trends & factors, principal risks & uncertainties, ESG
   iii) Business performance - KPIs, analysis of performance & position, employee gender diversity
3. Corporate government statement/Remuneration report
   » stt. on how the BOARD operates
   - names of senior directors, description of work of key board committees
   - statement from directors of their responsibilities of preparing the accounts
4. Auditors’ report - appointed by Directors
   - contains auditor’s OPINION on the fin stt.s
   - considers the basis of preparation of fin. stt.s, applying ‘TRUE AND FAIR’ criteria, audit qualifications, consistency of the director’s report

• assess the validity of assumptions and estimates made
• ensure accounting conventions, standards, & legal requirements are adhered to (indicates reliability)
• indicate validity of going concern assumption - whether think likely that firm will survive