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FINANCIAL REPORTING AND ETHICS(a)(b)Consolidated Balance Sheet, dealing with the state of affairs (financialposition) of the reporting company and all its subsidiaries that havebeen consolidated in the group accounts.A consolidated profit and loss account, dealing with the profit and lossof the company and those of the subsidiaries”.This means that Consolidated Balance Sheet and Consolidated Profitand Loss Account shall combine the information contained in theseparate balance sheets and profit and loss accounts of the holdingcompany and of the subsidiaries, but with such adjustments (if any) asthe directors of the holding company might think necessary.The contents of group accounts, therefore, are:(a) Holding company’s balance sheet(b) Holding company’s profit and loss account, unless advantage is takenof section 335(10) of CAMA which is about disclosure of facts in a noteto the consolidated accounts.(c) Consolidated Balance Sheet, and(d) Either Consolidated profit and loss account, or Holding company’s profitand loss account framed as a consolidated profit and loss account and/or a statement of the holding company’s share of the profit of thesubsidiaries not consolidated.4.4 PURPOSE OF ANALYSIS AND INTERPRETATION TION OF FINANCIALSTATEMENTSTEMENTSAnalysis of financial statements entails a careful identification of key financialvariables in the opening and closing balance sheets and income statements ofa firm with a view to establishing meaningful relationships between thevariables so identified. The relationships are usually established throughaccounting or financial ratios.Interpretation, on the the other hand, involves giving meaning to the variousratios with a view to ascertaining the financial strengths, weaknesses,opportunities and threats of the firm. This is for the purpose of assessing thefinancial position and commercial soundness of the reporting entity to whichthose variables relate. It is believed that, all things being equal, accountingratios should have resemblance from period to period, hence a major variancebetween one period and another, would attract attention and comments.The financial strength or weakness of a reporting entity could be in respect ofits operation, financial position and/or prospect. Most often financial statementsare interpreted for the purpose of assessing the operations of a business. Thisis done either on a short term basis, which is for one year, or on a long termbasis, which goes beyond one year. In the former, the analysis will take theform of explanation of and comment on past year’s result and the financialposition of the reporting entity at the end of the current year, making suchdeductions as are possible in relation to the trend of the past one or two years.70
ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTSThe following are some of the matters that will usually be the subject ofcomparison and comment:(a) Adequacy of the working capital(b) Adequacy of the provisions for losses in assets value e.g. depreciation,bad and doubtful debt, etc..(c) Adequacy of long term capital(d) Consistency of accounting methods(e) The relative proportion of fixed and liquid assets(f) The general overall picture of the latest balance sheet; and(g) Impact of inter-company transactions in the case of group accounts.4.4.1 Purpose of the analysisThe specific purpose of financial statements analysis is dictated by theneeds of the group of users for whom the analysis is carried out. Thus,various groups of financial statements users are often more concernedwith different needs that include:(a) Investors are mainly concerned about the firm’s earnings andtherefore concentrate on the present and future profitability aswell as the firm’s financial structure as it relates to the earningsability and risk of the firms.(b) Trade creditors are mainly interested in the firm’s ability to meetits current obligation when due. They focus their attention on thefirm’s liquidity position or short term solvency.(c) Long term creditors, for example banks and debenture holders,need to look at the firm’s long term solvency and survival. Hencethey consider the firm’s profitability over time, liquidity fromtime to time, and capital structure. They also analyse the firm’sprojected financial statements.(d) Management is interested in every aspect of the firm, whichincludes profitability, liquidity, solvency, financial structure andactivities.(e) Other users, for example researchers, will have interest in everyaspect of the firm based on their research interest.4.4.2 Purpose of the interpretationWith respect to the interpretation and analysis on long term basis, anattempt is made at explaining the broad trends of the operation of thereporting entity over several years without giving undue regard to yearlyvariations, except where considered absolutely necessary. Some of theinferences that may be drawn from the analysis of a firm’s financialstatements on a long term basis are in the areas of considering theimplication of having a particular type of movement in selected incomestatement and balance sheet figures. Examples are:71
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FINANCIAL REPORTING AND ETHICS1.3.3
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ACCOUNTING AND REPORTING POLICIESsu
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ACCOUNTING AND REPORTING POLICIES(j
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ACCOUNTING AND REPORTING POLICIES(i
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ACCOUNTING AND REPORTING POLICIES2.
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ETHICAL FRAMEWORK, CONCEPTS AND VAL
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7THE ENVIRONMENT: CORPORATE,PROFESS
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THE ENVIRONMENT: CORPORATE, PROFESS
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8PROFESSIONAL ETHICS8. 0 LEARNING O
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PROFESSIONAL ETHICSobjectivity are
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PROFESSIONAL ETHICS(c)(d)The type o
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PROFESSIONAL ETHICSabout conflicts
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PROFESSIONAL ETHICS(d)(e)Confidenti
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PROFESSIONAL ETHICSA. III onlyB. II
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9DECISION MAKING IN ETHICS9. 0 LEAR
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DECISION MAKING IN ETHICS9.2 A FRAM
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ETHICAL THREATS AND SAFEGUARDS(d)We
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DECISION MAKING IN ETHICS4. A perso
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10ETHICAL THREATS TS AND SAFEGUARDS
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ETHICAL THREATS AND SAFEGUARDS(iv)(
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ETHICAL THREATS AND SAFEGUARDSto th
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ETHICAL THREATS AND SAFEGUARDSpayab
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ETHICAL THREATS AND SAFEGUARDS(a)Fi
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ETHICAL THREATS AND SAFEGUARDSimmin
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ETHICAL THREATS AND SAFEGUARDSHowev
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ETHICAL THREATS AND SAFEGUARDS(iii)
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11CORPORATE GOVERNANCE11.0 LEARNING
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CORPORATE GOVERNANCE11.3.1 Nature(a
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CORPORATE GOVERNANCEThe company sho
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CORPORATE GOVERNANCEtrust, possible
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CORPORATE GOVERNANCEAn agent has im
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CORPORATE GOVERNANCE(a)(b)(c)(d)(e)
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CORPORATE GOVERNANCE11.6.1 The law
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CORPORATE GOVERNANCEILLUSTRAUSTRATI
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CORPORATE GOVERNANCEimitated. They
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CORPORATE GOVERNANCE(a)(b)Greenbury
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CORPORATE GOVERNANCE11.9.2 Boards d
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CORPORATE GOVERNANCErelationship wi
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CORPORATE GOVERNANCE(e)(f)(g)(h)(i)
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CORPORATE GOVERNANCE(vi)Inquisitive
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CORPORATE GOVERNANCE(e)ConsultancyA
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CORPORATE GOVERNANCEThe incoming au
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CORPORATE GOVERNANCEIn summary, acc
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CORPORATE GOVERNANCEAccording to Th
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CORPORATE GOVERNANCE3. A body corpo
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12SOCIAL AND ENVIRONMENTALISSUES IN
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SOCIAL AND ENVIRONMENTAL ISSUES IN
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APPENDIX ISUGGESTED SOLUTIONS TO RE
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SUGGESTED SOLUTIONS TO REVISION QUE
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SUGGESTED SOLUTIONS TO REVISION QUE
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APPENDIX IICOMPREHENSIVE QUESTIONS
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COMPREHENSIVE QUESTIONS AND SUGGEST
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APPENDIX IIICASE STUDY 1Karsashi, a
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CASE STUDIES(iii)(iv)The floor sale
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CASE STUDIESShare price and dividen
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CASE STUDIESSUGGESTED SOLUTION(A) A
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CASE STUDY 3The following informati
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CASE STUDIESCASE STUDY 4Ologobojo i
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APPENDIX IVTable 1:SUMMARY OF INTER
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SUMMARY OF INTERNATIONAL ACCOUNTING
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APPENDIX VGLOSSARY OF TERMSAbsorpti
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GLOSSARY OF TERMSEthical Objectivis
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APPENDIX VIBIBLIOGRAPHYChambers Ham
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APPENDIX VIISTUDY AND EXAMINATION T
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STUDY AND EXAMINATION TECHNIQUES7.3
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INDEXAAbsorption, 17, 19, 39, 40, 4
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INDEXProfessional Behaviour, 136, 1
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