Management Extra: Financial Management
With numerous examples used throughout, this book aims to provide learners with the necessary understanding to input into the financial management of their organization.
TABLE OF CONTENTS Management Extra: Financial Management
Chapter 5: External reporting
Overview
Companies are legal entities which are required by law to publish their financial accounts. Increasingly, organisations in the public and not-for-profit sectors are also required to publish similar accounts to report on their financial performance during the year. This theme describes some of the requirements and issues around the publication of financial information for public consumption.
In this theme you will:
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Consider the requirement to publish financial accounts
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Identify the key issues in the preparation of financial information
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Consider the international dimension to financial reporting.
External Reporting
This theme describes UK external reporting requirements but there are substantial similarities across all the advanced economies. The theme ends with a consideration of international reporting requirements.
Published Accounts
In a limited liability company, the shareholders' potential loss is limited to the value of the shares held in the company. This contrasts with a sole trader or a partnership where the creditors of the business can pursue the owners for their private assets. All limited liability companies are required to publish accounts so that the creditors and other trading partners of the company can assess its creditworthiness.
A limited liability company that offers its shares to the public is known as a public company, and a whole further set of reporting requirements must be met before the shares can be actively bought and sold. In the UK, the stock exchange is where this trading in shares takes place. Having shares traded on the stock exchange is attractive to:
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shareholders because they...
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