Memorandum

The common definition for a memorandum is a written document recorded for future use, something one can use in the present to see the message behind past actions. This Memorandum on Colonizing New France speaks of the plans in which the French intended to pursue their new land. Although we are not given any specific author we are able to decipher that this writer was in close proximity to the colony of New France. This shows us major insight into the mindset these newcomers had and more importantly, shows us the way they viewed the inhabitants and their land. Thus making this a very useful source when deciding if the French truly had good intentions.

Financial accounting is a subjective area that strives to provide complete and accurate information for the end user. Before the class discussion, I felt accounting was more of a science than an art – if you tested items and they fell into a certain parameter, it was an accurate representation of the facts and figures under review. The class discussion and another person’s experience has caused me to rethink this perspective because when one considers the variables incorporated into financial accounting, it is not as simple and clear cut as some would like to think. Hines (1988, p. 252-253) states “having the full picture – a true, a fair view of something – depends on people deciding that they have the full picture. Sometimes, they later decide they did not have the

IASB standard-setters are expecting to develop high quality, scrutable and enforceable world wide accounting standards that would require companies to provide high quality, transparent and comparable information for the users who may participate in the world’s capital markets. IASB has done greatly well. Take some standards as an instance, asymmetric timeliness make bad news and good news be involved timelier in the financial statements. The crucial factors of quality formerly be treated as relevance and reliability, however, there are less focuses on reliability recently by IASB and FASB. Ray Ball believed the reason of this situation is because a failure to differentiate reliability that is the result of managerial manipulation from reliability that is intrinsic in

Main Features of this Pronouncement Application Date This pronouncement makes amendments to the Framework for periods ending on or after 20 December 2013, with allowance for earlier application. AASB CF 2013-1 4 PREFACE  Main Amendments This pronouncement replaces the guidance in the Framework on the objective of general purpose financial reporting and the qualitative characteristics of useful financial information with, as an integral part of the Framework, the Appendix: Objective and Qualitative Characteristics.

This paper explores the question whether the financial statements can be made more useful. This leads to an important concept in accounting-- the concept of decision usefulness. To properly understand this concept, this paper outlines other theories from economics and finance to assist in conceptualizing the meaning of useful financial statement information.

If financial statements are designed to be “useful”, it’s worth asking the question, “useful to whom”? So far, we’ve mostly considered the interests of the long-term investor, who usually desires that statements be as accurate as possible, but conservative where estimation is required. There are other constituencies interested in financial statements, including creditors, analysts, regulators, tax authorities, and firm managers. There may even be conflicts of interest

An ongoing concern in financial reporting is the usefulness and reliability of information provided by corporations. The financial accounting standard board defines usefulness as the information that is useful for the users in decision making (FASB, 2011). Reliability is inferred when the information is verified, objective, and can be relied on. Therefore, Statement of Financial Accounting Standards No. 157 standardizes the valuation and disclosure of fair value for assets and liabilities in order to achieve both usefulness and reliability. The reasoning for the hierarchy was due to the inconsistency in previous definitions and guidance (FASB, 1992).

The analysis of a firm’s financial statements, whether it is for credit, investment, or any number of other potential purposes, relies heavily on the accounting data/information supplied by the firm in its financial reports. The presentation of such data falls under the auspices of generally accepted accounting principles (GAAP) as prescribed in the U.S. by the SEC and the FASB (Financial Accounting Standards Board) and globally by the IASB (International Accounting Standards Board) through its IFRS (International Financial Reporting Standards). The accounting principles describe the proper procedures for recording and reporting economic activities undertaken by various entities. In

To ensure information is reliable verifiability must be used and is so when independent measures are used. Faithful representation means the numbers and descriptions match the true data. Neutrality is the unbiased information and that the information does not favor one area or section of information over another.

The Accounting profession has its fiduciary duty to deliver the information and make correct decisions. To support the high quality of information accounting standards constantly faces difficulty to keep the framework up to date. In the recent global financial crisis fair value has come under the light of examination. Some critics have blamed the global financial crisis on market to market accounting (fair value accounting). I must say fair value increase firms transparency. Subsequently, through this rule, the obligation of the accounting mention above is further completed: financial specialists are getting essential data on which they make their

Most financial information is subject to some risk of being less than a faithful representation of that which it purports to portray. This is not due to bias, but rather to inherent difficulties either in identifying the transactions and other events to be measured or in devising and applying measurement and presentation techniques that can convey messages that correspond with those transactions and events. In certain cases, the measurement of the financial effects of items could be so uncertain that entities generally would not recognise them in the financial statements; for example, although most entities generate goodwill internally over time, it is usually difficult to identify or measure that goodwill reliably. In other cases, however, it may be relevant to recognise items and to disclose the risk of error surrounding their recognition and measurement.

The materiality concept has been addressed by The International Accounting Standards Committee (IASC), as well as by accounting bodies in the United States such as the American Institute of Certified Public Accountants (AICPA), the Securities and Exchange Commission (SEC), the Financial Accounting Standard Board (FASB), and the General Accounting Office (GAO). Materiality was defined by FASB Concepts Statement No. 2, Qualitative Characteristics of Accounting Information (Para. 132, 1980) as follows: “The magnitude of an omission or mis-statement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or mis-statement”(Juma 'h, 2009).

Accounting is making it easier to then demonstrate the outcomes and results of the business. With that being said, it is very clear that it is crucial for the accounts to be accurate. For the business it is important for the various reasons. First of all the business wants to see how well it is doing every year, that includes it’s gross and net profit, the worth of its assets and liabilities, etc. The accuracy of this information is vital, as the organisation’s leadership can then analyse this information and make decisions according to the outcomes. Second of all if the accounts are being produced inaccurate or incorrect, the organisation will most likely make wrong decisions, which may lead it to the loss of money or even bankruptcy. Secondly accurate accounts will help the day-to-day operations of the business. However stakeholders are also interested in the accuracy of the accounts for the various reasons presented below:

Accounting information must have both relevance and reliability but sometime the information is very relevance but not reliability. For example when a report about cost of building which have proper detail of information but the building was acquire in 1980. Information require to balance and contrast relevance and reliability when determining how to account for particular items (Alford et al. 1993). Produce information quickly and measuring the information more accurate are the benefits if the accounting information contain of reliability and relevance.

This paper would therefore evaluate how the concept prudence can be used to provide a reliable and faithfully represented financial report or used to manipulate the financial report thereby defeating its purpose of helping users of financial report make reliable and reasonable financial decisions.