AC491 Financial Accounting, Reporting And Disclosure (2)

Financial AccountingFinancial accountancy is governed by both local and international accounting standards. Representatives of the Financial Accounting Standards Board (FASB) and the Organismo Italiano di Contabilità (OIC) met on 21 July 2015 in Rome, Italy. The Accounting Standards Board of Japan (ASBJ) has responded to the proposed revenue ASU on licensing and identifying performance obligations the FASB published for comment in May. The Canadian Accounting Standards Board (AcSB) has issued its Draft Strategic Plan 2016 – 2021.

Additionally, the IASB will discuss insurance contracts; IFRS implementation issues; financial instruments with characteristics of equity; the disclosure initiative; equity method; dynamic risk management; provisions and contingent liabilities (IAS 37); pollutant pricing mechanisms; and revenue. If data cannot be monetized, it most likely would not be included in financial statements.

It will also monitor the effective date decisions of jurisdictions applying IFRSs and work with others to encourage a common date for global adoption of new standards. The final stage in the function of management is controlling, this stage is important in the establishment of performance standards and ensuring these standards are adhered too while also taking corrective actions against deviation. An example of technical skills could be introducing and teaching a new accountant the accounting system used by the firm.

While a solid grasp of management functions is important management should also have a sound skill base, a report by Hay’s Group suggests this is a weak area for most individuals in management and is one of the biggest threats to business success (Financial Advisor, 2007). Financial accounting states the financial position of entities and provides information about their revenue generation, profitability and other information to stakeholders.

Management accounting is not legally required; it is used solely at the discretion of an organization’s managers. Financial accounts are produced for external users, and there is a legal requirement for this in the case of limited liability companies. However, one should note that lenders and suppliers may be interested in the financial accounts of all businesses.

Financial AccountingFinancial Accounting