Corporate Financial Reporting by Shashank M Hiremath

7/24/2019 Corporate Financial Reporting by Shashank M Hiremath

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Corporate Financial Report ing (3.2)

Prof. Shashank M Hiremath

[email protected]

mailto:[email protected]

mailto:[email protected]



Introduction to

Corporate Financial Reporting

Corporate financial reporting is not only to show

the financial statements of corporate but itincludes to highlight important financial data and

to show the application of financial policy.




Financial reporting is the communication of

financial information of an enterprise to theexternal world.




Definition of

Corporate Financial Reporting

Corporate financial reporting is the system of making corporate financial reports. Thesecorporate financial reports are income

statements, balance sheets, cash flowstatements, statement of retained earnings andfinancial policies explanation.

Corporate financial reporting may be shown at

the end of month or at the end of each quarteror at the end of year.




1st Corporate Financial Report:

Income Statement

It is also called profit and loss account. Inincome statement, we come to know whethercompany is earning profit or suffering loss. We

can find the main expenses of company andmain sources of earning. What amount, it isgiving in the form of dividend which is showedin statement of retained earning. Net income

after all adjustments is transferred to reserveand surplus section in the liability side of balance sheet.




2nd Corporate Financial Report:

Balance Sheet

This corporate financial report shows the

financial position at given point of time. It

provides the information of all assets and

liabilities. This financial report is useful

for balance sheet analysis.




3rd Corporate Financial Report:

Cash Flow Statement

Cash flow statement tells us the net cash flow

in operating, investing and financial activities.

These indications are helpful to analyze cashflow. This report explains the sources and

applications of liquidity of company.




4th Corporate Financial Report:

Explanation of Financial Policies & Notes

Big corporates also make some financial notes

and explain the financial policies in detail with

previous financial reports. In these policies,company shows its inventory policy,

depreciation policy, debt terms and dividend

policy. It also shows list of loss of impairment

on fixed assets.




Significant Accounting Policies



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Accounting Standards

Accounting Standards issued by the ICAI

have legal recognition through recent

amendment in the Companies Act, whereby

every company is required to comply with the

Accounting Standards.

At present there are 32 Indian Accounting

Standards.




Contents of Accounting Standards

Written documents. Policy documents.

Measurement.

Treatment.

Presentation & disclosure of accountingtransaction.

Issued by expert accounting body or by

Government or other regulatory bodies.

ExampleExample:: ICAI, ICWAI, ICSI & Other Experts.




Objectives of Accounting Standard

To conceive of and suggest areas in which

Accounting Standards needs to be developed.

To formulate Accounting Standards with a

view to assisting the Council of the ICAI in

evolving and establishing AccountingStandards in India.

To examine how far the relevant International

Accounting Standard/ International Financial

Reporting Standard can be adapted whileformulating the Accounting Standard and to

adapt the same.




• To review, at regular intervals, the Accounting

Standards from the point of view of acceptance or changed conditions, and, if

necessary, revise the same.

• To provide, from time to time, interpretations

and guidance on Accounting Standards.

• To carry out such other functions relating to

Accounting Standards, and

• To reduce the accounting alternatives in the

preparation of financial statements.

Objectives of Accounting Standard…




Accounting standards are issued by theInstitute of Chartered Accountants of India

(ICAI).

Constituted an Accounting Standard Board(ASB) on 21st April 1977.

Accounting Standards means the standard of

accounting recommended by the ICAI andprescribed by the Central Government.

Accounting Standards in India




In consultation with the National Advisory

committee on Accounting Standards (NACAs).

Present status of Accounting Standards in

India is in harmony with the InternationalAccounting Standards

Until now, 32 Indian Accounting Standards

on the following subjects have been issued by ICAI:

Accounting Standards in India…




AS 1 Disclosure of Accounting Policies.

AS 2 Valuation of Inventories.

AS 3 Cash Flow Statements.

AS 4 Contingencies and Events Occurring after the BalanceSheet Date.

AS 5 Net Profit or Loss for the period, Prior Period Items andChanges in Accounting Policies.

AS 6 Depreciation Accounting.

AS 7 Construction Contracts (revised in 2002).

AS 8 Accounting for Research and Development.

AS 9 Revenue Recognition.

AS 10 Accounting for Fixed Assets.

AS 11 The Effects of Changes in Foreign Exchange Rates (revisedin 2003).

AS 12 Accounting for Government Grants.

AS 13 Accounting for Investments.




AS 14 Accounting for Amalgamations.

AS 15 (revised 2005) Employee Benefits (revised 2005).

AS 15 (issued 1995) Accounting for Retirement Benefits in the

Financial Statement of Employers.

AS 16 Borrowing Costs.

AS 17 Segment Reporting.

AS 18 Related Party Disclosures.

AS 19 Leases.

AS 20 Earnings Per Share.

AS 21 Consolidated Financial Statements.

AS 22 Accounting for Taxes on Income.

AS 23 Accounting for Investments in Associates in Consolidated

Financial Statements.

AS 24 Discontinuing Operations.




AS 25 Interim Financial Reporting.

AS 26 Intangible Assets. AS 27 Financial Reporting of Interests in Joint Ventures.

AS 28 Impairment of Assets.

AS 29 Provisions, Contingent Liabilities & Contingent Assets.

AS 30 Financial Instruments: Recognition & Measurement, andLimited Revisions to AS 2, AS 11 (revised 2003), AS 21, AS 23,

AS 26, AS 27, AS 28 and AS 29.

AS 31, Financial Instruments: Presentation.

AS 32, Financial Instruments: Disclosures.

Prof Shashank M Hiremath

Corporate Financial Reporting by Shashank M Hiremath

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