Question

Ron Abrams, VP Operations for Wilson Bros. has come wandering into your office muttering under his breath (clearly exasperated) after reading the financial statements for one of the plants in Western Europe. After composing himself somewhat he says, "How can a Canadian finance executive sign off on these statements? They look nothing like any statement I’ve seen in Canada before! I know we paid a translator to present these in English, but I cannot make heads or tails of these. Are we profitable there or not?" Knowing what you have read about financial statements briefly describe if these financial statements could be correct, and if so why? Provide constructive feedback to at least two other students’ postings.

managerial accounting

Answer 1

It is clear from the question that the financial statement is not in a prescribed format. Accountants can make financial statement meaningful by preparing the report in a standardized manner.

The Accounting Standard Board ensure certain standards for presentation of the Financial Statements so that the users can obtain most valuable financial information for making business decisions.

The International Financial Reporting Standards(IFRS) allow for transparency, accountability and efficiency to financial markets around the world. This assists in ease in comparing financial information across the globe. Both the GAAP and IFRS has a goal in diminishing the differences in accounting practices by encouraging the use of international standards. In Canada, the IFRS is followed by Public Accountable Enterprises. For most private companies, additional information can be obtained if required. The accounting standards for private enterprises can be used in place of IFRS which requires less information.

There are reporting differences between both IFRS ans ASPE. It is important that users of financial statements understand which standards the company needs to follow which may have resulted in Ron Abrams to view the statements and information differently. Companies need to account for this in their financial statements.