Financial reporting: practices that help summarize the financial information of the company and provide a honest and transparent view of its financial situation and performance to the stakeholders.
Stakeholders include owners, managers, employees, investors, institutions and government who need the valuable information offered by financial reports about investments, credit extensions, cash flow in… to be able to make good informed decisions towards the business.
Financial reports include 4 documents called financial statements:
– Balance sheet: a statement that shows the value of a company’s assets and its liabilities.
– Income statement: a document that shows a company’s profit or loss in a particular period of time.
– Cash flow statement: a document that shows the money coming into and going out of a company during a particular period.
– Statement of charges in equity: includes profits or losses from operations.
These various documents serve the objective of looking at the company from different angles to give the reader a complete and well-rounded view of its financial situation and performance .
The benefits of financial reporting:
. Provides managers with important information for planning and decisionmaking.
. Provides investors, dept providers and creditors with information to help them make rational prudent decisions about investments and dept.
. Facilitate the statutory audit.
. Improve dept management by tracking the assets and liabilities.
. Improve financial efficiency over the time by relying on the accurate and robust data served by the financial reports
The IFRS :
The international financial reporting standards, are some accounting standards issued by the IASB (international accounting standards board) so that financial statements can be consistent, transparent and comparable around the world.
These are the IFRS norms as set by the IASB:
IFRS 1 First-time Adoption of International Financial Reporting Standards
IFRS 2 Share-based Payment
IFRS 3 Business Combinations
IFRS 4 Insurance Contracts
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
IFRS 6 Exploration for and Evaluation of Mineral Resources
IFRS 7 Financial Instruments: Disclosures
IFRS 8 Operating Segments
IFRS 9 Financial Instruments
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IFRS 14 Regulatory Deferral Accounts
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IFRS 17 Insurance Contracts
IAS 1 Presentation of Financial Statements
IAS 2 Inventories
IAS 7 Statement of Cash Flows
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10 Events after the Reporting Period
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 21 The Effects of Changes in Foreign Exchange Rates
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosures
IAS 26 Accounting and Reporting by Retirement Benefit Plans
IAS 27 Separate Financial Statements
IAS 28 Investments in Associates and Joint Ventures
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 32 Financial Instruments: Presentation
IAS 33 Earnings per Share
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture
According to the IASB, 144 countries around the world adopt these norms .