Published Accounts
Mr. Barry
A-level Accounting Year 13
Published Accounts
The student is introduced to:
• Basic knowledge of the rights and duties of
directors
• Directors’ report
• Basic knowledge of the functions of the auditor
• Auditors’ report
• A basic knowledge of the impact of the relevant
statutory requirements on published financial
statements
• An analysis of published company reports
Mr. Barry
A-level Accounting Year 13
Published Accounts
On completion the student should:
• Be aware of the legal requirements to produce
company accounts
• Have an appreciation of the functions and duties of
the directors and auditors of a company
• Understand the difference between accounts
prepared for internal use and for publication
• Be able to understand published company reports
and accounts
• Have an ability to discuss and comment on the
published annual reports of a limited company
Mr. Barry
A-level Accounting Year 13
IAS 1: Presentation of financial
statements
• IAS 1 Covers the form and content
of financial statements:
Balance Sheet
Income Statement
Statement of Changes in Equity
Cash flow statement
Notes to the financial Statements including
Non-current Asset Note (Schedule)
Standard gives substantial guidance on the form and
content of published financial statements. (IAS 7
Cash flows)
–
–
–
–
–
Mr. Barry
A-level Accounting Year 13
Limitations of published accounts
1 Based on historical information and take a long
time to produce. Past performance is no
guarantee of future performance
2 Summarised figures hide the detail of specific
costs
3 Window dressing occurs e.g. Revaluations
4 Human aspect is not seen which can tell possible
investors about culture or work ethic etc.
5 Not accessible/ too complex for non-specialist
users
Mr. Barry
A-level Accounting Year 13
Notes to the Financial Statements
• Contents: amplify information given in the accounts,
determined by the level of detail given on the face of
the statements.
• Gives:
– More detailed analysis or breakdown of figures in the
statements
– Narrative information, explaining figures
– Additional information, contingent liabilities or
commitments
• Order of notes:
–
–
–
–
Statement of compliance with IFRS
Statement of measurement basis and accounting policies
Supporting information
Other disclosures
Mr. Barry
A-level Accounting Year 13
NOTES TO THE FINANCIAL
STATEMENTS- STRUCTURE
• Provide information about Basis of preparation
(specific accounting policies)
• Disclose information as per IFRSs
• Show any other / additional information required
for a “fair presentation” that is not on IS or BS
• Present notes in a systematic manner and cross
referenced to IS, BS or Cashflow.
–
–
–
–
Statement of compliance with IFRS
Statement re accounting policies
Supporting information to IS, BS etc in sequence
Other disclosures as per IFRS
Mr. Barry
A-level Accounting Year 13
NON-CURRENT ASSET NOTE: Example
NON-CURRENT ASSET
NOTE
w
Op bal Q 1.4.11
ADDITIONS
3
DISPOSALS
4
E'000
E'000
E'000
E'000
E'000
LAND
BUILDINGS
PLANT & MACH
VEHICLES
TOTAL
€ 960
€
240
€
€
€
900
2,000
€
900
(10)
REVALS
IMPAIRMENT
CL BAL 31.3.12
2
€ (460)
€ 500
€
1,140
€
2,000
€
890
€ 4,100
€
900
€
(10)
€
-
€
(460)
€ 4,530
NON-CURRENT ASSET NOTE: Example continued
ACC DEP
Op bal Q 1.4.11
CHARGE FOR YR
DISPOSALS
€
-
5&6
€
200
€
400
€
300
€
900
€
10
€
320
€
100
€
430
€
(55)
€
(55)
€
-
€
-
4
REVALS
IMPAIRMENT
€
-
CL BAL 31.3.12
€
-
€
210
€
720
€
345
€ 1,275
NBV 1.4.11
€ 960
€
40
€
1,600
€
600
€ 3,200
NBV 31.3.12
€ 500
€
930
€
1,280
€
545
€ 3,255
What is a director
•
•
•
•
Stewards
Officer of the company
Responsible for running the company
Every company must have a minimum of 2
directors
• One of these can act as company secretary as
well
• Power and responsibility
• Must act in accordance with company law
Mr. Barry
A-level Accounting Year 13
Directors report
• Part of the financial statements
• Business review
Mr. Barry
A-level Accounting Year 13
Responsible Business Behaviour
• Six factors the board cannot ignore
1. The likely long term consequences of any
decision
2. The interest of employees
3. The need to foster business relationship with
customers, suppliers etc
4. The impact of their decisions on the community
5. The desirability of maintaining high business
standards
6. The need to act fairly between members
Mr. Barry
A-level Accounting Year 13
Duties of Directors
1. Approve and sign the financial statements,
ensuring they are filled with the registrar of
companies under the Companies Act
2. The financial statements must be comparable,
understandable, relevant and reliable
3. Ensure they are produced in accordance with
relevant IAS’s and IFRS’s
4. Oversee an official audit of the financial
statements
Mr. Barry
A-level Accounting Year 13
What is an audit
• An audit is an independent external review of a
company's financial statements
• Verify that the accounts have been prepared in
accordance with company law and generally
accepted accounting standards
• The product of the audit is an audit report
• The audit report expresses an opinion
Mr. Barry
A-level Accounting Year 13
Auditing
Duties laid out in Audit Engagement Letter
(ISA 210: Terms of Audit Engagement) -CRISIS
Carry Out an Audit;
Report an opinion to members
(True and Fair View, SAS 600, ISA 700));
be Independent of company;
Irregularities (Fraud, errors);
exercise Skill & care
Mr. Barry
A-level Accounting Year 13
True and Fair View
• Based on case law rather than a specific
definition
• Not saying that something is 100
% correct
• Example
– €10 error on a balance of €1million is not
significant
– €10 error on a balance of €50 is significant
Mr. Barry
A-level Accounting Year 13
Material
• A material error will change somebody's
decision
• Example
– A bank might give you a loan if you have no other
debt
– A bank might not give you a loan of they know you
owe €1m to another institution
Mr. Barry
A-level Accounting Year 13
Summary
•
•
•
•
Income Statement
Statement of Financial Position
Statement of Cash Flow (IAS 7)
Notes to the accounts
• Non current Asset Note
• Other notes
• Statement of changes in Equity
• EPS (NP attributable to ordinary shareholders /
no. of ordinary shares in issue)
Mr. Barry
A-level Accounting Year 13