Question

Question 3

“It should be the most important document a shareholder reads - - but the annual report is often less useful than it ought to be and change is needed…It’s too difficult and detailed to see the wood from the trees. Despite the multiple disclosures, one report is far from comparable with another, so it’s hard to benchmark against competitors.”  

“Its production was evidently left to people whose primary interest was not creating an efficient piece of communication. It fails, again and again, the first test of a management document, which is that the content must not be obscured by the presentation.”

Crosland, J. (2013) The perfect annual report. Investors Chronicle, August 30.

Required:

With reference to relevant academic literature and a range of companies, critically appraise the above statements. Your essay should critically evaluate the comparability issues and other limitations of the annual reports.

Answer 1

Your essay should critically evaluate the comparability issues and other limitations of the annual reports. :

“ its too difficult and detailed to see the wood from the trees , Despite the multiple disclosure , one report is far from comparable with another , so its hard to benchmark against competitor .”

It was highlighted by BDO LLP a partnership has put together some guidance on fhe change that could improve corporate reporting without recourse to legislation

Couple of challenges in case of ‘Corporate Audit , reporting “

: Major 5 category represent limitation on the financial statement like :

a) Only Interim Report and go not give correct / exact picture – The allocation of expenses and Income will depend on the personal judgement of teh accountant .

The asset value disclose in the Balance sheet neither represents value for which fixed asset can be sold or replace. The balance sheet prepare on “going concern” basis

b) The balance sheet lose the significance of beign index current economic realities . The profitability shown also not showing correct way

c) Impact of non monetary factors – the financial statement only show the position of the financial accounting for business and not the financial position