GROUP ASSIGNMENT 1
FINANCIAL REPORT AND CONTROL
SINDIKAT 1 YP68C
Nabilla Putri Nofela-29122301
Moh Akhim Bayu Habsoro-2912322
Owen Jacob-29122354
Nabilla Vynka Fakhira-29122359
1a) Identifying the challanges facing financial reporting
Character / Function Challenge Issues Reporting Issues
Accounting
1. Identification 1. Confidence 1. Non financial
2. Measurement 2. Future measurement
3. communication 3. Reliabilities 2. Forward looking
4. Transparancy information
3. Soft assets
4. Timelines
A company provides to help users (investors and creditors) with capital allocation
decisions about the company
1b) Guidance regarding the challenges facing financial reporting. Assist lola
by describing why the challenges facing financial reporting are
happened.
1. Non-financial measurements: companies use to measure success and performance
in certain areas without considering financial metrics to avoid using monetary
values as a measure of success or failure. Imperfection of reporting rules results
in ambiguity, lack of logic and focus and so on.
2. Forward-looking information: disclosure about possible events, conditions or
financial performance that is based on assumptions about future economic
conditions and courses of action that includes Future Oriented Financial
Information (FOFI) and Financial Outlooks.
3. Soft assets: is an intangible asset, such as brand recognition, intellectual capital,
human resources; which are employees skills and experience
4. Timeliness and accuracy of financial information: Companies are under pressure
to report their financial information quickly, which can lead to errors and
inaccuracies.
Problem Solving:
GROUP ASSIGNMENT 1
FINANCIAL REPORT AND CONTROL
1. Simplicity, necessary for correct execution and comprehension, with complexity,
flowing from the need for the most accurate reporting of substance of complex
economic activity of reporting entity (Reliability);
2. Durability of rules, which ensures consistence of calculations, with
permanent changes - keeping up- to-date with economy, users’ expectations,
accounting practices and theory;
3. Conciseness of reporting, following the need to limit information volume to
adequately comprehensible level with the need for many detailed
explanations (inflation of reporting volume);
4. she need for universal set of reporting rules with the need to address specific
individual cases, which by definition is impossible to squeeze in a one-rule-
for- all (see also reliability).
2a) What are some of the reporting requirements that their company will
have to comply with when they offer securities to investors and creditors?
When a company offers securities to investors and creditors, they will typically be
required to comply with various reporting requirements set forth by the securities
regulatory authority in the jurisdiction where the securities are offered. These
requirements may include filing periodic financial statements, such as annual and
quarterly, as well as other disclosures regarding the company's business,
management, and financial condition. Additionally, companies should show the
information about the both director and commissioners, and may be required reports
file registration statements and prospectuses with the securities regulatory
authority, like exchange securities for investor and providing detailed information
about the securities being offered and the risks associated with investing in them.
2b.) Identify the two entities that are primarily responsible for establishing
IFRS, which will be applied when preparing their financial statements.
Explain the relationship of these two organizations to one another.
The two primary entities responsible for estabilising International Financial
Reporting Standards (IFRS) are the International Accounting Standards Board
(IASB) and the International Organization of Securities Commissions (IOSCO).
IASB is an independent organization, private-sector that develops and publishes
IFRS. IASB has primary purpose to develop a single set of high-quality standards
of financial reporting that should be understandable, enforceable, and globally
accepted. Meanwhile IOSCO is an organization that brings together the world's
securities regulators and is responsible for promoting cooperation among them. its
primary objective is to improve the efficiency and effectiveness of securities
regulation in order to protect investors, maintain fair, efficient and transparent
markets, and seek to address systemic risks.
IOSCO is the organization who give assess for the quality of IFRS. IOSCO and
IASB will always have a relationship between them because the IASB involves
GROUP ASSIGNMENT 1
FINANCIAL REPORT AND CONTROL
regular comment letters of IOSCO about exposure drafts of new standards, the
attendance of IASB board members at meetings of IOSCO’s Standing Committee
No. 1, and IOSCO’s participation in the IASB’s International Financial Reporting
Interpretations Committee, the Standards Advisory Council and accounting project
advisory groups
3a) What is decision-usefulness?
Decision-usefulness refers to the concept that financial reporting should provide
information that is useful to users in making economic decisions. It is a principle
that underpins the development of financial reporting standards, including
International Financial Reporting Standards (IFRS). The goal of decision-
usefulness is to provide financial information that is relevant, reliable, comparable,
and understandable to the users.
3b) How the financial statements that Oslo prepares for its investors and
creditors will contribute to decision-usefulness?
The financial statements that Oslo prepares for its investors and creditors will
contribute to decision-usefulness by providing relevant, reliable, comparable, and
understandable information about the company's financial performance and
position.
The financial statements, such as the balance sheet, income statement, and cash
flow statement, will provide relevant information about the company's assets,
liabilities, equity, revenues, expenses, and cash flows. This information will allow
investors and creditors to assess the company's financial health and ability to
generate cash flows.
The statements will be prepared in accordance with International Financial
Reporting Standards (IFRS), which will ensure that the information is reliable and
free from material error or bias. This will help ensure that investors and creditors
can trust the information provided in the financial statements.
The statements will also be comparable across different periods and with other
companies in the same industry, allowing investors and creditors to assess the
company's performance relative to its peers. Additionally, the statements will be
presented in a clear and understandable format, making it easier for investors and
creditors to understand the information provided and make informed decisions.
Therefore, the financial statements that Oslo prepares will provide the information
that investors and creditors need to make informed decisions about the allocation
of resources such as investing in the company or providing credit.
The hierarchy affects the application of IFRS in the sense that companies are
required to apply the standards and interpretations at the highest level of the
GROUP ASSIGNMENT 1
FINANCIAL REPORT AND CONTROL
hierarchy that is relevant to the circumstances. If there is a conflict between
different sources of IFRS, the company should apply the source at the highest level
of the hierarchy.
For example, if there is a conflict between an IFRS and an IFRIC interpretation, the
company should apply the IFRS, as it is at the highest level of the hierarchy.
However, if there is a conflict between an IFRS and an IFRS for SMEs, the
company should apply the IFRS, as it is the more authoritative source.
Companies should be aware of the hierarchy of IFRS and apply the most
authoritative source when preparing their financial statements. It is important for
companies to consult professional advice if there is any confusion or uncertainty
regarding the application of IFRS.
