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Financial Information Reporting Systems

Financial Information Reporting Systems. B&F Investment Services Section Breakfast June 7 th 2005 SLA Conference Toronto Sylvia James-Consultant. Financial Information Reporting Systems. SYLVIA JAMES CONSULTANT Address: “Daymer” Birchen Lane Haywards Heath,West Sussex,UK

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Financial Information Reporting Systems

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  1. Financial Information Reporting Systems B&F Investment Services Section Breakfast June 7th 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.htmNovartis http://www.novartis.com/downloads/annual_reports/annualreport_2002.pdfNestle 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.htmlRWE http://www.rwe.com/en/investor_relation/annualreports/annualreports.jsp

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