TABLE OF CONTENTS When looking in detail at accounting rules and conventions there is a danger of being drawn into the technical detail and losing sight of the fact that financial statements are supposed to assist a user of financial statements and not blind them with science .
Remember that the companies within the EU that must apply IFRS are listed companies preparing consolidated financial statements. By definition this implies that the entities involved will be large and diverse, and a reader of their financial statements requires more than a global overview but a more detailed analysis of their performance in different markets. This is the purpose of segmental reporting, and it will be noted that IFRS rules and disclosures are more stringent than their UK equivalent.
A further expectation of an investor is that the transactions summarized in financial statements have been conducted at arms length and on fair value terms. If this is not true or the potential exists for divergence in the future it is important that users are made aware of this fact. It does not always imply that such activity is inappropriate, but this is a decision that can only be made if such information is openly available. Related party disclosures have been instigated to serve this purpose.
