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Essay / Research Paper Abstract
This 7 paper considers the statement that “A single set of multi-purpose financial statements are unable to satisfy the needs of Shareholders for both a stewardship report and a report to assist the prediction of future cash flows”. The writer consider this along with the role and expectations of the external reports. The bibliography cites 10 sources.
Page Count:
7 pages (~225 words per page)
File: TS14_TEexter1.rtf
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Unformatted sample text from the term paper:
company is likely to perform. However, the information they can obtain is both limited, and often out of date by the time they receive it. Historical reporting has the advantage
of being accurate as the figures it reports are a matter of record. However, it is often assumed by investors that past performance may be a guide to the future.
In investment terms the relationship between the past and the future is not as simple, and as such we may argue that a single set of reports, such as the
annual accounts may be seen as falling short of the needs of investors and other stakeholders to gain the information regarding the stewardship of the company as well as being
able to provide information for future cash flow. If we look at the expectation gap that is seen regarding the annual reports then
we can look to the role that is sought to be fulfilled by the external reports. The problem with the annual accounts if the way in which they have to
be passed by an auditor as a true and fair representation of the performance of the company. This leads to problems, as this is an external statement.
The problem with the perception of the auditors is that the duties of the audit as reaching further than they actually do. In a company
receiving the OK from an auditor the public may be reassured that all is well with the company, and this may not be the case. This is the expectation gap,
as if the investor is relying on the auditor to protect their investment then they are in a difficult situation, as the auditor has no direct liability to the decision
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