4. Other contents and features of published FS

Question 1

What does the annual report include?

Answer 1

• the strategic report or business review
• the directors’ report
• the directors’ remuneration report
• the corporate governance statement
• the auditor’s report
• audited financial statements
  (- statement of financial position
  – statement of profit or loss and OCI
  – statement of changes in equity
  – statement of cash flows
  – notes to the financial statements
• notes to the financial statements)

Question 2

What is the Strategic report?

Answer 2

Detailed report written in non-financial language

Clear and coherent info about the co’s activities perf, position, the strategic position of the business and risks

Question 3

Benefits of annual report

Answer 3

Key communication with SH

Question 4

Duty of the strategic report?

Answer 4

FRC Guidance
Report enhances holistic picture
Promotes integrity, trust and transparency
Required under Co Act for quoted companies

Question 5

Purpose and contents of strategic report

Answer 5

Purpose
Provide info assess how directors performed duties and functions

Contents
Fair review
KPI’s
Risks and uncertainties
Going concern
Refer to financial statements

Question 6

What is the directors report?

Answer 6

Financial doc
Prepared by directors
Inform members of financial state + compliance with FR and standards
Report is governed by company law
Must be approved by board

Question 7

Purpose and contents of directors report?

Answer 7

SH make informed decision when voting at AGM
Info on:
- Does company have good finances?
- Capacity to expand and grow
- How well performing in market
- Company complying with regulations

Question 8

What must be included in the directors report?

Answer 8

Names of directors
Summary of trading activities and future prospects
Principal activities
Amount of dividend recommended
Significant changes of NCA
Audit info

Question 9

What does a directors statement of responsibilities include?

Answer 9

Promote success of company
Prepare annual report, rem report and financial statements
Fs true and fair
Appointment of chair, rem report etc best practice

Question 10

What do the notes of financial statements include?

Answer 10

Detailed analysis of figures
Narrative info
Additional info

IAS 1 = Specific acc policies applied
Info req by IFRS not presented elsewhere

Systematic and cross referenced

Question 11

Structure and contents of notes

Answer 11

Compliance with IFRS
Statement of measurement bases (historical cost, current cost)
Supporting info

Question 12

Segment reporting

Answer 12

Financial performance and position of operating segments of company

Helps understand:
- past performance
- profit characteristics
- risk and returns
-potential for future growth

IFRS 8

Question 13

What are the IFRS 8 disclosures? (segment reporting)

Answer 13

how operating segments identified
info on segment assets and liabilities
reconciliations
changes to internal structure

Question 14

What is substance of transactions?

Answer 14

Economic benefits/ losses/ implications related to transaction

Includes substance over form

Question 15

Examples of when economic substance will differ from legal form?

Answer 15

Sale and leaseback arrangements
Consignment stock
Debt factoring/ invoice discounting
Sale and repurchase arrangements

Question 16

Limitations of published financial statements

Answer 16

Historical cost basis
Creative accounting
Intra-group transactions
Ignoring non-financial maters
Not forward looking
Seasonality of trading
Not always comparable
Only covers specific time period