The Prudence Concept Of Financial Report

The most important thing to any company’s stakeholders is high-quality reporting of its financial statements. Investors, for instance, need to know the truth about a company in order to make an informed decision on whether to make private investment, buy stock or bonds. However, for stakeholders to get the truth about a company, they need to read and understand management’s discussion and analysis, the president’s letter, the notes, as well as the financial statements. Conversely, financial statements must be accompanied with disclosures to prevent them from misleading the stakeholders.

In the IASB framework, prudence is defined in terms of a degree of caution. The need to be careful implies to allow a degree of caution and therefore to permit a degree of prudence, but prevent overuse of prudence. 'Any overuse of prudence results in a loss of transparency, which is why the ASB is right to be wary of it. When it is excessively or inconsistently applied, it can make obfuscation of results and trends possible' (Paterson,2002: 1). Trends in financial reporting act contrary

Staffan Engstrom, the strategy director for a major UK company, explains what Risk Management is and why it is important in his video. Staffan does not have to use complex words and does not have to carry out a long elaborate speech. Staffan’s message is simple. This is what he said,

Showing passion and interest for safety. Risk management does not mean do thing conservative. We should keep our passion to catch any opportunity to enlarge our profits, but we have to consider the downside for different potential loss due to the uncertain risk

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:

For Epicurus, the role of prudence is the system of judgment and grounds that things avoid and things to chose are evaluated and assessed. The prudence that is argued by Epicurus is the way to view life so that you may have the most happiness, Prudence having several aspects and granted ideas and he goes over a few beliefs one should hold going into aspects of prudence.

The issue of prudence is presented to management and leadership. They must be able to tell the difference between conflicting qualities and the best action to take. In addition, the issue of responsibility to do the right thing is important in this situation. An effective leader will

However, IAS 37 contravenes the concept of prudence in the following two ways: it was pointed out that IAS 37 lacks prudence in that it does not require the recognition of, and accounting for all future expenses (D. Alexander,2014). In addition, it requires a great deal of subjective judgment, this is the problem about how to judge the liability of extremely rare case and also brings to the following question ，how reliable the measurement is. Different people have different cognition on the possible, probably that is to say people often use their subjective understanding to judge will lead to different conclusions. So that the report cannot be nature and fair to reflect the activities, causing

Leadership and management style have proven to be important factors in the effectiveness and development of an

Prudence, in concert with the mounting surfeits of the SEC 's cocktail of rulemakings, which companies must broach during the time for 2016 risk policy, renewal considerations, is of the utmost importance, as it enables companies and their carriers to head off prospective problems in this and other areas.

Financial statements we see nowadays have gone through so many changes, in its complicated yet sophisticated way. Even though it consists of a sophisticated system, a proper judgement concerning the uncertainties and outcomes from the balance sheet are still need to be done. IAS37 helps to handle that matters properly, where this standard covered on how the company should treats provisions, contingent liabilities and contingent assets in accounts. Although, the IAS 37 may lead to a high volatility in retained earnings which resulted in the increasing in the usage of creative accounting unless the standard follows the prudence concept. Hence, in this essay, there will be discussions on the relationship between IAS 37 and prudence concept

Prudence principle: when choosing between two solutions, the one that will be least likely to overstate assets and income should be picked (see convention of conservatism).

This essay will begin to look at the main financial statements used by decision makers in businesses today. This essay will go into detail about the income statement and statement of financial position and whether these two statements provide decision makers with their financial information adequately. This essay will also include the various advantages and disadvantages of each financial statement as well as describing whom the decision makers are and why financial statements are important to them. A conclusion will be present at the end of this essay to demonstrate an overall view of whether financial statements are beneficial to decision makers.

One well accepted description of risk management is the following: risk management is a systematic approach to setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues. In order to apply risk management effectively, it is vital that a risk management culture be developed. The risk management culture supports the overall vision, mission and objectives of an organization. Limits and boundaries are established and communicated concerning what are acceptable risk practices and outcomes. Since risk management is directed at uncertainty related to future events and outcomes, it is

As Miracel Griff (2014) stated accounting is a science that is involved in the reading, monitoring and assessment of the financial affairs of a business at any time. In accounting procedures one cannot make a rational choice without some framework of principle (Macve, 1981).