The Importance Of An Accurate Representation Of Financial Standing Essay

Decent Essays
Balance sheets are prepared by organizations to provide a snapshot of the company’s financial position. Balance sheets provide unique insight into the financial health of an organization. The importance of an accurate representation of financial standing cannot be overstated. Business leaders must have a firm grasp of the details found in a balance sheet in order to successfully determine if additional work is required. Leaders of corporations are obligated to understand the differences found on balance sheets prepared according to US GAAP and IFRS, have a solid understanding of terms used on a balance sheet, and successfully compare balance sheets from different organizations to determine which is in better standing.
In today’s global economy, it is normal for qualified business leaders to move from company to company in search of better opportunities. The days of being hired by a company and working to retirement are long gone. Because leaders move around, it is important for them to know and understand the different requirements for GAAP and IFRS documentation. As expected, there are format changes between the two policies, but there are also differences in current/non current distinction, offsetting assets and liabilities, and minority interest classification. IFRS format requires a detailed presentation of assets, equity, and liabilities on the face of the balance sheet. “All assets and liabilities are presented broadly in order of liquidity in such cases.
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