ParisGraduateSchoolOfManagement

Accounting2(AC206)
Assignment

Name:AyanlekeJulius
Student:
Lecture:Mr.Vasanthan
Title:FinancialReportingandstock
exchange

Table of Content
Topics
Pages
Introduction

Financial Statement and its Uses to investors

4-5

Evaluation of Differences

5-6

Impact on the global Financial Reporting Requirement

Conclusion

References

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Introduction
In today's financial world, complexity in the preparation of financial
statements is increasing and financial analyst must be up to the task.
Complying with company law, financial report standard, stock exchange and
annual report becomes their priority in their area or jurisdiction of operations
especially public listed companies in Malaysia. All these reports is to the
advantage of the investors. This write up will focus on whether there is too
much regulations, uses of the financial statements to the investors and
regulatory systems with its impact on global financial report.

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Financial Statement

Financial Statement is a record that summarize the financial activities of a

business, an individual or any other entity. Financial statements present
financial information of the entity in question as clearly and brief as possible
for both the entity and for readers. Financial statements for businesses
usually include: income statements, balance sheet, statements of retained
earnings and cash flows, as well as other possible statements (Needles,
2013).
The main objective of a financial reports is to provides information that is
useful in making business and economic decisions. The primary focus of
financial reports or statement is to consider information about earnings and
its components. Information about earning gives clue to managements
performance, long-term earning capabilities, future earnings and risks
associated with lending to and investing in the enterprise (James, 2007).
The general purpose of financial reporting primarily come from the needs of
external

users

who

communicates to them.

must

rely

on

information

that

management

The financial reporting has the following major

objectives:
1. It provides information that is useful to present and potential investors
and creditors and other users to make rational investment, credit, and similar
decisions. The information must be complete or broad to those who have a
reasonable understanding of business and economic activities and are willing
to study the information (Needles, 2013).
2. Financial report provide information to help investors and creditors and
other users in assessing the amounts, timing, and uncertainty of prospective
cash receipts from dividends or interest and the proceeds from the sales,
redemption, or maturity of securities or loans. Since investors and creditors
cash flows are related to enterprise cash flows, financial reporting should
provide information to help investors, creditors, and others assess the

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amounts, timing, and uncertainty of prospective net cash inflows to the

related enterprise (Needles, 2013).
3. Provision of information about the economic resources of an enterprise,
the claims to those resources and the effects of transactions, events, and
circumstances that change its resources and claims to those resources
(Needles, 2013).
4. Financial statement shows should also provide information about how
management has discharged its stewardship function to stockholders for the
use of the company resources entrusted to it (Needles, 2013).
Investors use the financial statement to understand your companys ability
for growth, in other to determine whether investing in business would be a
good investment or not. It is also used to understand capital; the company
will need to increase its volume. If there is need for substantial increase in
the share capital of the company will be able or willing to provide more than
the investor, then maybe it's not such a good investment.
However, there are some differences between the regulatory systems and it
impact on the global financial reporting
The regulatory system refer to the standard framework of guidelines for
financial accounting used in any given jurisdiction; generally known as
accounting standards or standard accounting practice. The performance
elements are Revenue or expenses, assets or liabilities, gains, losses,
comprehensive income. The required documents of the regulatory system
are Balance sheet, income statement, and statement of comprehensive
income, changes in equity, cash flow statement, and footnotes. The
inventory estimates of the regulatory systems are Last-in, first-out, first-in,
first-out or weighted-average cost. Furthermore the objectives of the
financial statement in the regulatory system in general, broad focus to
provide relevant information to a wide range of stakeholders. Regulatory
system provides separate objectives for business and non-business entities.

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The regulatory system objectives are always different and non-biased (Elson,
2011).
Global financial reporting on the other hand, makes the company accounts
understandable and comparable across international borders designed for
the business world common language. Although, there are more and more
options and consequences of international trade, especially for companies
that deal or operates in several countries but they are replaced with
accounting standards in many different countries. The performance elements
of the global financial reporting are Revenue or expenses, assets or liabilities.
The required documents of the global financial system are Balance sheet,
income statement, and changes in equity, cash flow statement, and
footnotes (Hamilton, 2013).
Impact Of The Regulatory System On Global Financial Reporting:
The management company will benefit applies to countries around the world,
and follow the simple, streamlined standards, rules and practices. This
change will be given the opportunity of enterprise management, by lowering
interest rates to raise funds, while reducing risk and operational costs (Arndt,
2009).
Investors will have to re-educate their reading and understanding the
following new accounting standards internationally recognized reports and
financial statements. At the same time, the method provides more reliable
information, and do not convert to the standard of the country will be
simplified. In addition, the new standard will increase the international flow
of capital (Arndt, 2009).
The stock market will see lower costs associated with entering the foreign
exchange, and adhering to all of the same market rules and standards, will
further the global market competition, investment opportunities in the
international arena (Arndt, 2009).

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It will also increase capital flows and international investment, which will
further reduce interest rates, economic growth leads to behaviour business
with certain countries and institutions in the country. Timely and consistent
information to the concept of the availability of all stakeholders will also
make a smoother, more efficient and more time-saving process. In addition,
the new safeguards will be put in place to prevent other countries or
international economic and financial crisis (Arndt, 2009).
Participation based on different cultural, moral, norms, beliefs, economic
types, the political system, as well as country-specific preconceived ideas, in
the cooperation process will take a different national systems and religions
do not want the rules and standards and accounting practices across the
board when the new system (Arndt, 2009).

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Conclusion
Global Financial reporting is becoming a reality but still there are many challenges.
There are many around the world unfamiliar with some regulatory system
and an investor focus for financial report. This assignment showing us the
Principle of Accounting and the important purpose of accounting. Besides
that, it also teach us how information provide can help them make decision
and take any action. We also learn whether to expand the business, source
for cheaper supplies or intensify sale campaigns. As we know that the five
basic types of accounting flows Transactions, Records, Report, Interpretation
of financial statements and Decision by internal/external users. Also the
purchase of cash is a typical business transaction. Other than that
government and other interested parties may keep a close watch on the
performance of the business for various reasons. Apart from that creditors
official obligations. Accounting ratios are also the ratios expressed and based
on accounting figures derived from financial statements or final accounts of
the firm. Accounting ratios must be compared over two different periods or
between two different companies or with the industry average to measure
business performance of the firm.

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Reference
Arndt, Sven W.; Crowley, Patrick M.; Mayes, David G. (2009).The implications
of integration for globalization. North American Journal of Economics and
Finance.
Accounting information system (2014),
Introduction to the context of
accounting. Open Learn. Retrieved 3 February.
Elson, Anthony (2011).Governing Global Finance: The Evolution and Reform
of the International Financial Architecture. New York, NY: Palgrave Macmillan.
Hamilton, Jesse; Onaran, Yalman (2013). U.S. Boosts Bank Capital Demands
Above Global Standards. Bloomberg.
Needles, Belverd E.; Powers, Marian (2013). Principles of Financial
Accounting. Financial Accounting Series (12 Edn.). Cengage Learning.
James, Paul W.; Patomki, Heikki (2007).Globalization and Economy, Vol. 2:
Globalizing Finance and the New Economy. London, UK: Sage Publications.
CFA Level 1 Volume 3, Financial Reporting and Analysis

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