Unit 13 Financial Reporting

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The overall aim of this unit is to develop the knowledge, understanding and skills which are required in the preparation of financial statements. Students will become aware of the appropriate financial standards which influence and inform the production of financial statements. They will also explore the conceptual frameworks for financial reporting and how they are related to the reporting of financial information. On successful completion of this unit students will be in a position to prepare, analyse and audit financial statements in a workplace context and be able to assist senior colleagues in the interpretation of complex financial information. In addition, students will have the fundamental knowledge and skills to progress on to a higher level of study.

Learning outcomes

LO1 Analyse the context and purpose of financial reporting

Context of financial reporting:

  • Complying with regulatory frameworks.
  • The governance of financial reporting including duties and responsibilities of responsible officers.
  • Unincorporated or incorporated organisations.

Purpose of financial reporting:

  • Meeting user expectations and legislation.
  • Ensuring all organisations comply with the same rules and standards. Seeking funding/investment.
  • Predicting future financial positions and cash flow.

LO2 Interpret financial statements

Importance and purpose of analysing financial statements:

  • Using financial statements to communicate financial positions with stakeholders.

Ratio analysis:

  • These would include, but not limited to, the use of liquidity ratios, ROI, WACC and debtor periods to determine financial positions.

Cash flow, profit and loss and balance sheets:

  • Considering how to use cash flow statements to monitor inflows and outflows of cash.
  • Using the profit and loss account to summarise the financial performance of an organisation in a given time period.
  • Using a balance sheet as a snapshot of an organisation’s position regarding assets and liabilities.

LO3 Evaluate financial reporting standards and theoretical models and concepts

Financial reporting standards:

  • As a common global language.
  • How does it facilitate understanding of financial matters across international boundaries?
  • Differences between International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS).

Role and use of IFRS:

  • Benefits to organisations, governments, investors and other key stakeholders.
  • Consider the nations which adopt the IFRS and how this is advantageous and/or disadvantageous.

Theories, models and concepts:

  • Equity theory.
  • Legitimacy theory.
  • Models of reporting and models for auditing.

LO4 Evaluate international differences in financial reporting

International differences:

  • Different financial reporting principles in relation to international companies.
  • The international differences before the IFRS and how countries have responded to the IFRS.
  • International differences in external financial reporting and factors that influence differences.


  • ELLIOT, B. and ELLIOT, J. (2013) Financial Accounting and Reporting. 16th Ed. Harlow.
  • GRUENING, H. V., SCOTT, D. and TERBLANCHE, S. (2011) International Financial Reporting Standards: A Practical Guide. 6th Ed. Washington: The World Bank.


  • Journal of Business Finance and Accounting
  • Review of Finance and Accounting

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