Issues In Financial Reporting (Questions for the final exam) Essay

Issues In Financial Reporting (Questions for the final exam) - Essay Example There are few assumptions of a financial statement. Such as, a business entity is assumed to carry on its operation forever which refers to a going concern concept. Financial statements should be prepared periodically, basically after a specified interval which is termed as ‘accounting period’. All the transaction recorded in a statement should be at cost, not market price. As per the money measurement concept, the information recorded in the statement should be in monetary terms. The business entity concept says that the legal entity of a corporate business should be different from the owners. The method or the practice that has been adopted by a company initially for presenting an event should be followed life long in order to maintain the consistency. Preparation of financial statements is subject to quite a few regulations. For the purpose, Accounting Standards should be followed. Accounting Standards are issued by Accounting Standard Board (ASB). ASB is a part of Financial Reporting Council (FRC). It is a self -regulatory body in UK and is responsible for promoting quality corporate governance. ASB collaborate with the International Accounting Standard Board (IASB) to ensure the acceptance of Accounting Standard at the international level. UITF plays major role of assisting the ASB while solving a conflicting and unsatisfactory interpretation regarding the requirements of Companies Act. Financial Reporting Review Panel (FRRP) is also a part of FRC, which check the financial statement of private and public companies to ensure that statements are presented as accordance with Accounting Standards and Companies Act, 2006. Accountability and transparency are absolute necessity for maximising long term share holder’s value. The rules and procedures of gathering data must be flexible and consistent; otherwise a scope of misinterpretation of data will