FINANCIAL ACCOUNTING 3 Essay Example | Topics and Well Written Essays - 1250 words

FINANCIAL ACCOUNTING 3 - Essay Example Due to the intervention of numerous regulatory bodies and the outbreak of various accounting standards which guide the management in their financial reporting and disclosure requirements, the length of the financial statements has drastically increased. The accounting policies, treatments and disclosures are being formulated in order to meet the requirements of modern accounting and to provide the shareholder and other users a better understanding. (Li, 2005) It has been observed that the public companies, as compared to private companies, extend the size of the annual reports beyond the regulatory and other standard requirements as the standards do not provide the maximum limit for any particular disclosure. The annual report includes certain areas which are purely judgmental and are left for the directors to comment such as the area of â€Å"Going Concern assumption†. The directors use this are to comment on the going concern of the company and illustrate the going concern by shedding light on numerous reasons why they assume the company is a going concern. (Holmes 2008) One of the foremost causes of the detailed and lengthy annual report is the demand for detailed and lengthy information set forth by the requirements of the Accounting standards and the regulatory bodies. These disclosures include the detailed disclosure of the remuneration of directors, pattern of shareholding and structure of committees. International Accounting Standard I requires a disclosure of the summary of significant accounting policies. These disclosures usually remain untouched year after year, including the copying of policies from the IFRS or descriptive financial statements. These disclosures easily take up to eight pages or even more. There is a regulatory requirement for the company to include a directors’ report based on their view on the financial statements of the company. This report is used by the directors to shed some light on the