- 15 Marks
CR – Nov 2014 – L3 – SC – Q5 – Introduction to Corporate Reporting
Evaluate IFRS management commentary requirements and their relevance in financial reporting.
Question
Critics of traditional corporate financial reporting under Generally Acceptable Accounting Practice (GAAP) argue that financial statements alone are not considered sufficient without a narrative that provides a context within which to interpret the financial position, financial performance, and cash flows of an entity.
A financial expert within the board of Abcon Kombe Plc, aware of the above criticism, has proposed that Abcon Kombe Plc should include in its financial statements, management commentary to satisfy the numerous analysts that use its annual reports.
Required:
(a) Advise the Board on FIVE elements of information which IFRS Practice Statement expects to be included in management commentaries to meet its objectives. (5 Marks)
(b) Relate the FIVE elements of information above to the needs of the various primary users. (7 Marks)
(c) Justify why management commentaries should be made compulsory in Nigeria’s financial reporting environment. (3 Marks)
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CR – Nov 2014 – L3 – SC – Q5 – Introduction to Corporate Reporting
Evaluate IFRS management commentary requirements and their relevance in financial reporting.
Critics of traditional corporate financial reporting under Generally Acceptable Accounting Practice (GAAP) argue that financial statements alone are not considered sufficient without a narrative that provides a context within which to interpret the financial position, financial performance, and cash flows of an entity.
A financial expert within the board of Abcon Kombe Plc, aware of the above criticism, has proposed that Abcon Kombe Plc should include in its financial statements, management commentary to satisfy the numerous analysts that use its annual reports.
Required:
(a) Advise the Board on FIVE elements of information which IFRS Practice Statement expects to be included in management commentaries to meet its objectives. (5 Marks)
(b) Relate the FIVE elements of information above to the needs of the various primary users. (7 Marks)
(c) Justify why management commentaries should be made compulsory in Nigeria’s financial reporting environment. (3 Marks)
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