Paris Graduate School Of Management

Accounting2 (AC206)
Assignment




Name: Abylkassymova Altynay
Student: MAL11011
Lecture: Mr. Vasanthan
Title: Financial Reporting and stock
exchange





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Table of Content
Topics Pages
Introduction 3
Financial Statement and its Uses to investors 4-5
Evaluation of Differences 5-6
Impact on the global Financial Reporting Requirement 6
Conclusion 7
References 8

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Introduction
In today's financial world, complexity in the preparation of financial statements is increasing
and financial analyst must be up to the task. Complying with company law, financial report
standard, stock exchange and annual report becomes their priority in their area or jurisdiction
of operations especially public listed companies in Malaysia. All these reports is to the
advantage of the investors. This write up will focus on whether there is too much regulations,
uses of the financial statements to the investors and regulatory systems with its impact on
global financial report.

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Financial Statement
Financial Statement is a record that summarize the financial activities of a business, an
individual or any other entity. Financial statements present financial information of the entity in
question as clearly and brief as possible for both the entity and for readers. Financial
statements for businesses usually include: income statements, balance sheet, statements of
retained earnings and cash flows, as well as other possible statements (Needles, 2013).
The main objective of a financial reports is to provides information that is useful in making
business and economic decisions. The primary focus of financial reports or statement is to
consider information about earnings and its components. Information about earning gives clue
to managements performance, long-term earning capabilities, future earnings and risks
associated with lending to and investing in the enterprise (James, 2007).
The general purpose of financial reporting primarily come from the needs of external users who
must rely on information that management communicates to them. The financial reporting has
the following major objectives:
1. It provides information that is useful to present and potential investors and creditors and
other users to make rational investment, credit, and similar decisions. The information must be
complete or broad to those who have a reasonable understanding of business and economic
activities and are willing to study the information (Needles, 2013).
2. Financial report provide information to help investors and creditors and other users in
assessing the amounts, timing, and uncertainty of prospective cash receipts from dividends or
interest and the proceeds from the sales, redemption, or maturity of securities or loans. Since
investors and creditors cash flows are related to enterprise cash flows, financial reporting
should provide information to help investors, creditors, and others assess the amounts, timing,
and uncertainty of prospective net cash inflows to the related enterprise (Needles, 2013).
3. Provision of information about the economic resources of an enterprise, the claims to those
resources and the effects of transactions, events, and circumstances that change its resources
and claims to those resources (Needles, 2013).
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4. Financial statement shows should also provide information about how management has
discharged its stewardship function to stockholders for the use of the company resources
entrusted to it (Needles, 2013).
Investors use the financial statement to understand your companys ability for growth, in other
to determine whether investing in business would be a good investment or not. It is also used
to understand capital; the company will need to increase its volume. If there is need for
substantial increase in the share capital of the company will be able or willing to provide more
than the investor, then maybe it's not such a good investment.
However, there are some differences between the regulatory systems and it impact on the
global financial reporting
The regulatory system refer to the standard framework of guidelines for financial accounting
used in any given jurisdiction; generally known as accounting standards or standard accounting
practice. The performance elements are Revenue or expenses, assets or liabilities, gains, losses,
comprehensive income. The required documents of the regulatory system are Balance sheet,
income statement, and statement of comprehensive income, changes in equity, cash flow
statement, and footnotes. The inventory estimates of the regulatory systems are Last-in, first-
out, first-in, first-out or weighted-average cost. Furthermore the objectives of the financial
statement in the regulatory system in general, broad focus to provide relevant information to a
wide range of stakeholders. Regulatory system provides separate objectives for business and
non-business entities. The regulatory system objectives are always different and non-biased
(Elson, 2011).
Global financial reporting on the other hand, makes the company accounts understandable and
comparable across international borders designed for the business world common language.
Although, there are more and more options and consequences of international trade, especially
for companies that deal or operates in several countries but they are replaced with accounting
standards in many different countries. The performance elements of the global financial
reporting are Revenue or expenses, assets or liabilities. The required documents of the global
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financial system are Balance sheet, income statement, and changes in equity, cash flow
statement, and footnotes (Hamilton, 2013).
Impact Of The Regulatory System On Global Financial Reporting:
The management company will benefit applies to countries around the world, and follow the
simple, streamlined standards, rules and practices. This change will be given the opportunity of
enterprise management, by lowering interest rates to raise funds, while reducing risk and
operational costs (Arndt, 2009).
Investors will have to re-educate their reading and understanding the following new accounting
standards internationally recognized reports and financial statements. At the same time, the
method provides more reliable information, and do not convert to the standard of the country
will be simplified. In addition, the new standard will increase the international flow of capital
(Arndt, 2009).
The stock market will see lower costs associated with entering the foreign exchange, and
adhering to all of the same market rules and standards, will further the global market
competition, investment opportunities in the international arena (Arndt, 2009).
It will also increase capital flows and international investment, which will further reduce
interest rates, economic growth leads to behaviour business with certain countries and
institutions in the country. Timely and consistent information to the concept of the availability
of all stakeholders will also make a smoother, more efficient and more time-saving process. In
addition, the new safeguards will be put in place to prevent other countries or international
economic and financial crisis (Arndt, 2009).
Participation based on different cultural, moral, norms, beliefs, economic types, the political
system, as well as country-specific preconceived ideas, in the cooperation process will take a
different national systems and religions do not want the rules and standards and accounting
practices across the board when the new system (Arndt, 2009).

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Conclusion
Global Financial reporting is becoming a reality but still there are many challenges. There are many
around the world unfamiliar with some regulatory system and an investor focus for nancial
report. This assignment showing us the Principle of Accounting and the important purpose of
accounting. Besides that, it also teach us how information provide can help them make decision
and take any action. We also learn whether to expand the business, source for cheaper supplies
or intensify sale campaigns. As we know that the five basic types of accounting flows
Transactions, Records, Report, Interpretation of financial statements and Decision by
internal/external users. Also the purchase of cash is a typical business transaction. Other than
that government and other interested parties may keep a close watch on the performance of
the business for various reasons. Apart from that creditors official obligations. Accounting ratios
are also the ratios expressed and based on accounting figures derived from financial statements
or final accounts of the firm. Accounting ratios must be compared over two different periods or
between two different companies or with the industry average to measure business
performance of the firm.



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Reference
Arndt, Sven W.; Crowley, Patrick M.; Mayes, David G. (2009).The implications of integration for
globalization. North American Journal of Economics and Finance.
Accounting information system (2014), Introduction to the context of accounting. Open Learn.
Retrieved 3 February.
Elson, Anthony (2011).Governing Global Finance: The Evolution and Reform of the International
Financial Architecture. New York, NY: Palgrave Macmillan.
Hamilton, Jesse; Onaran, Yalman (2013). U.S. Boosts Bank Capital Demands Above Global
Standards. Bloomberg.
Needles, Belverd E.; Powers, Marian (2013). Principles of Financial Accounting. Financial
Accounting Series (12 Edn.). Cengage Learning.
James, Paul W.; Patomki, Heikki (2007).Globalization and Economy, Vol. 2: Globalizing Finance
and the New Economy. London, UK: Sage Publications. CFA Level 1 Volume 3, Financial
Reporting and Analysis