Investigating The Performance And Financial Position Of An Entity

726 WordsSep 20, 20143 Pages
A Reporting Entity as per SAC 1(para 40) means, an entity which, regardless of any sector, has stakeholders who rely on the general purpose financial reports, evaluate the performance and financial position of an entity and make decisions regarding allocation of resources. Hence, an entity will be called as an reporting entity, if there are users who would rely on the analysis provided by the GPFR. 1) Users Dependent SAC 1 Paras 19-22 broadines the factors to identify whether there are dependent users. Factors Explaination/Example Reasons why Electric is a Reporting Entity Separation of Management from economic interest The higher is the spread of ownership => higher is the separation, hence, there is more likely the existence of users dependent on GPFR to make decisions for resource allocation In electric, we are assuming that the spread of the ownership as well as extent of seperation between the management and owners is higher, hence, there is existence of dependent users Economic or political importance/influence If an entity is able to make a higher impact on political and economic parties, there is a higher likelihood of existence of users dependent on GPFR In electric, we are assuming that it maintains a strong position in the market has makes a significant impact politically and economically. Hence, there is a likelihood of existence of users dependent Financial charecteristics It Includes the size of assets/employees etc. or indebtedness of an
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