Better Communication in Financial Reporting

Better Communication in Financial Reporting

Better Communication in Financial Reporting is an IFRS.org initiative to focus financial reporting on users. There is a general view that financial reports have become too complex and difficult to read and that financial reporting tends to focus more on compliance than communication. See also narrative reporting as a discussion on alternative ways of reporting.

At the same time, users’ tolerance for sifting through information to find what they need continues to decline.

This has implications for the reputation of companies who fail to keep pace. A global study confirmed this trend, with the majority of analysts stating that the quality of reporting directly influenced their opinion of the quality of management.

To demonstrate what companies could do to make their financial report more relevant, there are several suggestions to ‘streamline’ the financial statements to reflect some of the best practices that have been emerging globally over the past few years. In particular:

  • Information is organized to clearly tell the story of financial performance and make critical information more prominent and easier to find.
  • Additional information is included where it is important for an understanding of the performance of the company. For example, we have included a summary of significant transactions and events as the first note to the financial statements even though this is not a required disclosure.

Improving disclosure effectiveness

Terms such as ’disclosure overload’ and ‘cutting the clutter’, and more precisely ‘disclosure effectiveness’, describe a problem in financial reporting that has become a priority issue for the International Accounting Standards Board (IASB or Board), local standard setters, and regulatory bodies. The growth and complexity of financial statement disclosure is also drawing significant attention from financial statement preparers, and more importantly, the users of financial statements.

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What are Consolidated Financial Statements about?

What are Consolidated Financial Statements aboutWhat are Consolidated Financial Statements about – Consolidated Financial Statements are the financial statements of a group of entities in which the assets, liabilities, equity, income, expenses and cash flows of the parent entity and its subsidiary entities are presented as those of a single economic entity.

IFRS 10 applies both to traditional entities and to special purpose (or structured) entities and replaced the corresponding requirements of both IAS 27  Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities.

In mainstream financial reporting IFRS 10 has not affected the scope of consolidation involving control through ownership of a majority of the voting power in an investee. However, more complex and borderline control assessments have been purposely … Read more

The Main Statements of Financial Statements – 1 Updated Reward to

The Main Statements of Financial StatementsThe Main Statements of Financial Statements

This is some explanation of the basic presentation of Financial Statements into a categorised format that is useful for the most of the users for Financial Statements.

There are four main financial statements:

  1. Statement of Financial Position,
  2. Statement of Profit or Loss and Other Comprehensive Income,
  3. Statement of Cash Flows,
  4. Statement of changes in Shareholders’ Equity.

Then to complete the contents of Financial Statements there are the ‘Notes to the Financial Statements‘. The Main Statements of Financial Statements

Keep in mind that as part of the Better Business Reporting project (Better communication in financial reporting) by among others IFRS and audit firms, reporting is more and more about better (easier, aligned to Read more

What are IFRS Financial Statements?

What are IFRS Financial Statements – The objective of financial statements is to provide financial information about the reporting entity’s assets, liabilities, equity, income and expenses that is useful to users of financial statements in assessing the prospects for future net cash inflows to the reporting entity and in assessing management’s stewardship of the entity’s economic resources.

A content page of IFRS Financial Statement may look similar to the following content listing: What are IFRS Financial Statements?

  • Statement of Financial Position: This is also known as the balance sheet. IFRS prescribes the ways in which the components of a balance sheet are reported. This statement recognises assets, liabilities and equity. This comprises information about a reporting entity’s economic resources,

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