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Financial Information Reporting Systems

B&F Investment Services Section Breakfast

June 7th 2005

SLA Conference Toronto

Sylvia James-Consultant

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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

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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

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Financial Information Reporting Systems

Company Annual Report Information about performance during the previous

year Management view of strategy for the futureOne of the most important communications of listed/public companies

Present an overview of the companyManagement’s discussion of

company’s recent performance company’s plans for the future

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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 yearsFulfil obligations for public financial reporting

StateStock Exchange

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Financial Information Reporting Systems

Annual Report ComponentsChairman’s Statement

“Letter”

Financial SummaryKey ratios, measures

Management StatementAnalysis, Directors report

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Financial Information Reporting Systems

Annual Report ComponentsManagement Statement

All or any combination ofOperations

Breakdowns sales/revenues/exportsBy operational unit

Financial Resources and LiquiditySelected Financial DataCritical Accounting PoliciesCorporate GovernanceRisk Factors

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Financial Information Reporting Systems

Annual Report ComponentsFinancial Statements

Consolidated or notProfit & Loss, Earnings, RevenueBalance Sheet

Statement of Financial PositionOff balance financing issues

Notes to AccountsAuditors Report

OptionalStatement of Changes in Share Owner’s EquityStatement of Cash Flows

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Financial Information Reporting Systems

A C C O U N T IN G -C O U N T R Y G R O U P S

U K /IR E L A N D N O R T H A M E R IC A

JA P A NS O M E A S IA

1 2 C O U N T R IE S

A N G L O -S A X O N

T H A IL A N DIN D O N E S IA

O T H E R A S IA

F R A N C E G E R M A N Y

1 9 C O U N T R IE S2 S u b G rou ps

E U

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Financial Information Reporting Systems

On continental Europe, wherever large companies operate2 dominant systems of accounting thought

principles-based approach rule-based approach

Guide economic decisions

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Financial Information Reporting Systems

A C C O U N T IN G C O N V E N T IO N S -E U R O P E

C O N T IN E N T A L E U R O P E

C O D IF IE D T A X L A W

L E G A L IS T IC

R U L E B A S E D

A N G LOS A X O N

P R E C E D E N TP R A C T IC EA U D IT O R S

T R U E &F A IR V IE W

P R IN C IP LE S B A S E D

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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/EC7,000 listed companies in the EU

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Financial Information Reporting Systems

IFRS in EU

Harmonisation throughout Europe has not been successful

Barrier to efficient capital markets in Europe

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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

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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

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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.htmNovartis http://www.novartis.com/downloads/annual_reports/annualreport_2002.pdfNestle http://www.ir.nestle.com/pdf/English/2002_FinancialStatement.pdf

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Financial Information Reporting Systems

Examples of accounts prepared using IAS/IFRS

Commerzbank http://www.commerzbank.com/aktionaere/konzern/archiv/2002/gb2002/index.htmlRWE http://www.rwe.com/en/investor_relation/annualreports/annualreports.jsp