Advantages And Disadvantages Of Financial Reporting

SFAC No. 8 addresses the cost constraint on useful financial reporting, “Cost is a pervasive constraint that standard setters, as well as providers and users of financial information, should keep in mind when considering the benefits of a financial reporting requirement.” (SFAC No. 8 BC 3.47) However, the ability to place a dollar value and fully enumerate a cost or benefit is almost an impossible task for standard-setters. Additionally, there is no way to successfully identify and measure all of the economic consequences associated with a new standard. The FASB should be applauded though for advancing uniformity in accounting standards, however; uniform financial reporting suggests a one size fits all approach. “Smaller, non-publicly listed firms (and their auditors) argue that accounting standards are formulated mainly for larger, publicly traded firms” and that “compliance costs are disproportionately higher and the

Upon reviewing your post, the insights I gain are the importance of companies following the rules and regulations enforced by The Securities and Exchange commission (SEC). In addition to the (SEC) financial accounting are also monitor by the Financial Accounting Standards Board (FASB) regulate the financial statements issued to shareholders. Zimmerman, J. L. (2014). I also realized the importance of companies making certain that the financial information posted, is accurate. By doing so, they help others such as stockholders and investors to make decisions that will be most beneficial to them.

This report is written as a response to the monograph in which the ICAEW published on how financial accounting disclosures can be improved. The aim of this report is to critically discuss and evaluate the worthwhileness of the recommendations made from a financial investor’s perspective. It is done by reviewing recommendations put forward by the ICAEW and analysing if each of the disclosure recommended is worth the effort while putting in perspective what effects these recommendations have on professional investors who are one of the primary users and consumers of financial statements. The report contains information mainly from the ICAEW report and the CFA institute report

This standard outlines the presentation of financial statements for general purpose financial statements, in order to ensure that there is compariablity between the entities reporting periods as well as between other industries reports. The standard discusses the minimum requirement for reporting content and guidelines for the structure in which it is to be set at. Paragraph 117-124 distiguishes the disclosure of accounting policies in relation to judgement. Management’s judgement made in applying accounting policies that may have effected significant amounts found in financial statements and the financial position. Seen in paragraph 125-133 ‘Sources Of Estimation Uncertainty’, it is vital that entities disclose the key assumptions made regarding future prospects and other uncertain estimates that are used in identifying carrying amounts of assets and liabilities. Along side this, the nature and carrying amount must be disclosed at the reporting date.

Excello Telecommunications was presented with a dilemma on how the company should report earnings so that they would appear to have met earning estimates for the 2010 financial year. The CFO, Terry Reed, was concerned with how failure to meet earning estimates would affect bonuses, stock options, and the share price of Excello stock. On December 201, 2010, the company sold $1.2 million of equipment to Data Equipment Systems. However, Data Equipment Systems requested that Excello hold on to the product until January 11, 2011, because they do not have the

Financial accounting statements can help a user to make future decisions by showing the concerned business’s health. It shows where money is being generated, spent and lost, depicting the financial performance and financial position. The statements can also help in situations such as raising fresh capital in the form of a loan, e.g. a bank will most likely require these statements to show the business’s credibility or worthiness. The statements help influence managerial decisions on which direction the business needs to head, and how to best maximize profit.

In October 3, 2014 the Financial Accounting Standard Board (FASB) issued proposed updates to the disclosure framework for the board decision process. This disclosure framework is meant to improve the effectiveness of disclosures in notes to financial statements. According to the disclosure framework effectiveness of the financial statements could be achieved by enhancing clarity in communication of information that is most important to users of each entity financial statements. FASB agrees that reduction in volume of the notes to financial statement is note the main objective but also does not refute the fact that concentration on the most important information in note will automatically lead to reduction in the volume of notes to financial statements (Financial Accounting Standards Board, 2014).

Prior to the legislation of Sarbanes-Oxley Act, the regulations of financial statement were much more lax than current. There were only the rules declared by the SEC, the 1933 and 1934 securities laws (Carol, J., 2005). These laws required public companies to disclose the corporate information and have an independent party who reviewed and assured the company’s financial report. The public trusted the financial reports which were audited by the auditors and used in making investment decision. However, no one gave precedence to the accuracy and transparency of the financial information. Hence, many companies’ management took advantage of the lax reporting rules by manipulating the financial statement to make financial

Direct costs for the Ruger Clinic of Toledo, Ohio totaled $100,000 in 2007 and represents the total cost pool. The Ruger's uses direct cost allocation of expenses in the cost pool to three revenue-producing patient services. Drivers under consideration for the allocation of costs are patient service revenue (a direct dollar for dollar allocation) and hours of housekeeping services used (a volume-based activity for allocation). Drivers amounted to the following activity in dollars and volume, respectively:

3. Offer Data Equipment a 10 percent discount to take the product by December 31.

Regulation is design to control and govern conduct by authority that has the power to oversee how financial statement have been prepared and enforce compliance with regulatory requirements (Deegan 2009, p.59). In recent years, there have been changes in the New Zealand regulatory requirements for external financial reporting. External financial reporting in New Zealand is regulated by the legislation, Accounting standards and the Financial Markets Authority. The changes to New Zealand regulation is to the Financial Reporting Act 2013 which will replace the Financial Reporting Act 1993 and would come into effect on 1 April 2014. The Financial Reporting Act applies to all reporting entities (Deegan & Samkin, 2013). This new act will see that

The AICPA Code of Professional Conduct is the foundation of ethical reasoning in accounting. The Code of Conduct typically is used to discuss the ethical obligations of CPAs. The principles guide members in the performance of their professional responsibilities and call for an unyielding commitment to honor the public trust. Although CPAs cannot legally be held to these principles, they do represent the expectations for them on the part of the public in the performance of professional services. Excello must be cautious to follow the rules of due care, general public interest and honesty.

Regulation is defined as a set of rules that is designed to control and govern conduct by authority (Deegan 2009, p.59). On the basis of this definition, Deegan (2009, p.59) has defined regulations relating to financial accounting as rules that are developed by independent authoritative body to govern the preparation of financial statements which are accounting standards. Since decades ago, there have been arguments for and against the existence of accounting regulations. With a stance of pro-regulation, this essay is going to examine the reasons that financial accounting and reporting should be regulated and the merits of accounting regulations.

Accounting Information is made public in view of protecting those vulnerable to have to pay to get information are directed towards the public interest of the community as a whole. Regulations improve the position of the users of information to take a positive and healthy economic decision. (Cotter, 2002)

A company prepares financial statement to provide information about its financial position and performance. This information is in turn used by a wide range of stakeholders (such as investors, banks, customers, suppliers etc) in making economic decisions with respect to respective economic interest in the company. Typically, in terms of ownership by investment in shares of the company, shareholders though own the company but do not manage it. Therefore, the shareholder and other such stakeholders to get comfort in taking sound decision need independent assurance from the auditors that the financial statements reflect true and fair view of the company affairs in all material respects. Hence, in order to enhance the level of