Financial Information Reporting Systems

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  • 1. Financial Information Reporting Systems B&F Investment Services Section Breakfast June 7 th 2005 SLA Conference Toronto Sylvia James-Consultant
  • 2. Financial Information Reporting Systems
    • SYLVIA JAMES
    • CONSULTANT
    • Address: “Daymer” Birchen Lane
    • Haywards Heath,West Sussex,UK
    • Tel/FAX: 01444 452871
    • e mail:da-james@11daymer.freeserve.co.uk
  • 3. Financial Information Reporting Systems
    • What do the Standards and Systems mean for the B&F Information Professional ?
    • Understanding company financial data more easily
      • Why the annual report is so important
      • Application to all kinds of companies; not just listed
      • Understanding the company data provided in commercial information services
  • 4. Financial Information Reporting Systems
    • Company Annual Report
    • Information about performance during the previous year
    • Management view of strategy for the future
    • One of the most important communications of listed/public companies
    • Present an overview of the company
    • Management’s discussion of
      • company’s recent performance
      • company’s plans for the future
  • 5. Financial Information Reporting Systems
    • Annual report
    • Companies create and distribute their annual reports in order to
    • Report the company’s financial performance for the more recently completed year and compare it with performance in prior years
    • Fulfil obligations for public financial reporting
      • State
      • Stock Exchange
  • 6. Financial Information Reporting Systems
    • Annual Report Components
    • Chairman’s Statement
      • “ Letter”
    • Financial Summary
      • Key ratios, measures
    • Management Statement
      • Analysis, Directors report
  • 7. Financial Information Reporting Systems
    • Annual Report Components
    • Management Statement
    • All or any combination of
      • Operations
        • Breakdowns sales/revenues/exports
        • By operational unit
      • Financial Resources and Liquidity
      • Selected Financial Data
      • Critical Accounting Policies
      • Corporate Governance
      • Risk Factors
  • 8. Financial Information Reporting Systems
    • Annual Report Components
    • Financial Statements
      • Consolidated or not
      • Profit & Loss, Earnings, Revenue
      • Balance Sheet
        • Statement of Financial Position
        • Off balance financing issues
      • Notes to Accounts
      • Auditors Report
      • Optional
      • Statement of Changes in Share Owner’s Equity
      • Statement of Cash Flows
  • 9. Financial Information Reporting Systems
  • 10. Financial Information Reporting Systems
    • On continental Europe, wherever large companies operate
    • 2 dominant systems of accounting thought
      • principles-based approach
      • rule-based approach
    • Guide economic decisions
  • 11. Financial Information Reporting Systems
  • 12. Financial Information Reporting Systems
    • IFRS in EU
    • From 2005, a European Union (EU) regulation will require listed companies to prepare their consolidated accounts in compliance with International Financial Reporting Standards (IFRS)
    • Regulation 1606/2002/EC
    • 7,000 listed companies in the EU
  • 13. Financial Information Reporting Systems
    • IFRS in EU
    • Harmonisation throughout Europe has not been successful
    • Barrier to efficient capital markets in Europe
  • 14. Financial Information Reporting Systems
    • IFRS in EU
    • The European Commission wants all companies to use IFRS
      • harmonise and increase the quality of information provided by companies
      • greater transparency of the financial affairs of enterprises
      • member states have been allowed to extend the scope of the Regulation to cover those enterprises which are not listed on stock markets
  • 15. Financial Information Reporting Systems
    • IFRS in EU
    • Main responsibility for delivering IFRS to be left to national standard setters
    • Individual member states will move at different speeds to take their national standards for unlisted companies towards IFRS
  • 16. Financial Information Reporting Systems
    • There are a number of examples of accounts prepared using IAS/IFRS
    • Roche http://www. roche .com/home/investor/inv-finance/inv-reports. htm Novartis http://www. novartis .com/downloads/annual_reports/ annualreport _2002. pdf Nestle http://www. ir .nestle.com/ pdf /English/2002_ FinancialStatement . pdf
  • 17. Financial Information Reporting Systems
    • Examples of accounts prepared using IAS/IFRS
    • Commerzbank http://www. commerzbank .com/ aktionaere / konzern / archiv /2002/gb2002/index.html RWE http://www. rwe .com/en/investor_relation/ annualreports / annualreports . jsp