Unit13: FinancialReporting
Unitcode K/508/0526
Unitlevel 5
Credit value 15
Introduction
Theoverallaimofthisunitistodeveloptheknowledge,understandingandskills whicharerequiredinthepreparationoffinancialstatements.Studentswillbecome awareoftheappropriatefinancialstandardswhichinfluenceandinformthe productionoffinancialstatements.Theywillalsoexploretheconceptualframeworks for financial reporting and how they are related to the reporting of financial information.
Onsuccessfulcompletionofthisunitstudentswillbeinapositiontoprepare,analyse andauditfinancialstatementsinaworkplacecontextandbeabletoassistsenior colleaguesintheinterpretationofcomplexfinancialinformation.Inaddition,students willhavethefundamentalknowledgeandskillstoprogressontoahigherlevelof study.
Learning Outcomes
By the end of this unit a student will be able to:
- Analysethecontextandpurposeoffinancialreporting.
- Interpret financialstatements.
- Evaluatefinancialreportingstandardsandtheoreticalmodelsandconcepts.
- >Evaluateinternationaldifferencesinfinancialreporting.
Essential Content
LO1 Analyse the context and purpose of financial reporting
Context of financial reporting:
Complying with regulatory frameworks.
The governance of financial reporting including duties and responsibilities of responsible officers.
Unincorporated or incorporated organisations.
Purpose of financial reporting:
Meeting user expectations and legislation.
Ensuring all organisations comply with the same rules and standards. Seeking funding/investment.
Predicting future financial positions and cash flow.
LO2 Interpret financial statements
Importance and purpose of analysing financial statements:
Usingfinancialstatementstocommunicatefinancialpositionswithstakeholders.
Ratio analysis:
Thesewouldinclude,butnotlimitedto,theuseofliquidityratios,ROI,WACCand debtorperiodstodeterminefinancialpositions.
Cash flow, profit and loss and balance sheets:
Consideringhowtousecashflowstatementstomonitorinflowsandoutflowsof cash.
Usingtheprofitandlossaccounttosummarisethefinancialperformanceofan organisationinagiventimeperiod.
Using a balance sheet as a snapshot of an organisation’s position regarding assets and liabilities.
LO3 Evaluate financial reporting standards and theoretical models and concepts
Financial reporting standards:
As a common global language.
Howdoesitfacilitateunderstandingoffinancialmattersacrossinternational boundaries?
Differences between International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS).
Role and use of IFRS:
Benefits to organisations, governments, investors and other key stakeholders.
ConsiderthenationswhichadopttheIFRSandhowthisisadvantageousand/or disadvantageous.
Theories, models and concepts:
Equity theory.
Legitimacy theory.
Models of reporting and models for auditing.
LO4 Evaluate international differences in financial reporting
International differences:
Differentfinancialreportingprinciplesinrelationtointernationalcompanies.
The international differences before the IFRS and how countries have responded to the IFRS.
International differences in external financial reporting and factors that influence differences.
Learning Outcomes and Assessment Criteria
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Pass
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Merit
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Distinction
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LO1Analysethecontextandpurposeoffinancial reporting
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D1 Critically analyse the different regulatory frameworks and governance of financial reporting for specific stakeholders.
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P1Analysethecontextof financial reporting including regulatory frameworks and governance of financial reporting.
P2Analysethepurposeof financial reporting for meeting organisational objectives, development andgrowth.
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M1Appraisethecontext andpurposeoffinancial reporting in meeting stakeholder needs and expectations.
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LO2 Interpret financialstatements
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D2 Using appropriate theories and models suggest how organisations can effectively respond to existing and potential financial problems.
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P3 Interpret profit and loss, cash flow and balance statements
P4 Calculate and present financial ratios for organisational performance and investment.
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M2 Interpret results of financial ratios of performance and financial status, and investor ratios for users of financial statements to inform decision-making.
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Pass
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Merit
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Distinction
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LO3 Evaluate financial reporting standards and theoretical models and concepts
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P5Explainthebenefitsof International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS).
P6Evaluatethemodelsof financial reporting and auditing.
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M3 Critically evaluate financial reporting and auditing through the coherent application of theoriesandmodelsto supportjudgementsand conclusions.
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LO3 and LO4
D3Criticallyevaluatethe application of IFRS in application to specific countries anddifferences in financial reporting based on models and theories.
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LO4 Evaluate international differences in financial reporting
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P7 Evaluate the differences and importance of financial reporting across different countries.
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M4 Critically evaluate the factors that influence international differences in financial reporting.
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