Issues in Financial Reporting

In: Business and Management

Submitted By Arunpailoss
Words 1080
Pages 5
Introduction
Businesses of all sizes face many challenges at present. Key challenges in relation to corporate reporting are to ensure that the annual report and accounts provide relevant and reliable information to stakeholders, comply with relevant law and accounting standards and tell a consistent story. All directors, both executive and non-executive, have a legal responsibility for preparing accounts and must not approve accounts unless they are satisfied that they give a true and fair view of the assets, liabilities, financial position and profit or loss. It is important not to underestimate your legal responsibility as a non-executive director to prepare accounts that give a true and fair view and that comply with the law and accounting standards. Following are the three issues in Financial Reporting which I consider are significant:

1. Going Concern - the continuing challenge
The going concern assumption is a fundamental principle that underlies the preparation of the vast majority of financial reports. A company is a going concern when it is considered to be able to pay its debts as and when they are due, and continue in operation without any intention or necessity to liquidate or otherwise wind up its operations for at least the next 12 months.

The continuing difficult economic conditions mean that the assumption that the business is a going concern may not be clear-cut in some cases and directors may need to make careful judgements relating to going concern. Directors need to ensure that it is reasonable for them to prepare the financial statements on a going concern basis. Where directors are aware, in making their going concern assessment, of material uncertainties relating to events or conditions that may cast significant doubt upon the company’s ability to continue as a going concern.
To minimise the risk involved with going concern, when…...

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