Financial Information Reporting Systems

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Financial Information Reporting Systems

• BF Investment Services Section Breakfast
• June 7th 2005
• SLA Conference Toronto
• Sylvia James-Consultant

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Financial Information Reporting Systems

• SYLVIA JAMES
• CONSULTANT
• Address Daymer Birchen Lane
• Haywards Heath,West Sussex,UK
• Tel/FAX [phone]
• e mailda-james_at_11daymer.freeserve.co.uk

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Financial Information Reporting Systems

• What do the Standards and Systems mean for the
  BF Information Professional ?
• Understanding company financial data more easily
• Why the annual report is so important
• Application to all kinds of companies not just
  listed
• Understanding the company data provided in
  commercial information services

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Financial Information Reporting Systems

• Company Annual Report
• Information about performance during the previous
  year
• Management view of strategy for the future
• One of the most important communications of
  listed/public companies
• Present an overview of the company
• Managements discussion of
• companys recent performance
• companys plans for the future

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Financial Information Reporting Systems

• Annual report
• Companies create and distribute their annual
  reports in order to
• Report the companys financial performance for
  the more recently completed year and compare it
  with performance in prior years
• Fulfil obligations for public financial reporting
  
• State
• Stock Exchange

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Financial Information Reporting Systems

• Annual Report Components
• Chairmans Statement
• Letter
• Financial Summary
• Key ratios, measures
• Management Statement
• Analysis, Directors report

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Financial Information Reporting Systems

• Annual Report Components
• Management Statement
• All or any combination of
• Operations
• Breakdowns sales/revenues/exports
• By operational unit
• Financial Resources and Liquidity
• Selected Financial Data
• Critical Accounting Policies
• Corporate Governance
• Risk Factors

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Financial Information Reporting Systems

• Annual Report Components
• Financial Statements
• Consolidated or not
• Profit Loss, Earnings, Revenue
• Balance Sheet
• Statement of Financial Position
• Off balance financing issues
• Notes to Accounts
• Auditors Report
• Optional
• Statement of Changes in Share Owners Equity
• Statement of Cash Flows

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Financial Information Reporting Systems
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Financial Information Reporting Systems

• On continental Europe, wherever large
  companies operate
• 2 dominant systems of accounting thought
• principles-based approach
• rule-based approach
• Guide economic decisions

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Financial Information Reporting Systems
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Financial Information Reporting Systems

• IFRS in EU
• From 2005, a European Union (EU) regulation will
  require listed companies to prepare their
  consolidated accounts in compliance with
  International Financial Reporting Standards
  (IFRS)
• Regulation 1606/2002/EC
• 7,000 listed companies in the EU

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Financial Information Reporting Systems

• IFRS in EU
• Harmonisation throughout Europe has not been
  successful
• Barrier to efficient capital markets in Europe

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Financial Information Reporting Systems

• IFRS in EU
• The European Commission wants all companies to
  use IFRS
• harmonise and increase the quality of information
  provided by companies
• greater transparency of the financial affairs of
  enterprises
• member states have been allowed to extend the
  scope of the Regulation to cover those
  enterprises which are not listed on stock markets

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Financial Information Reporting Systems

• IFRS in EU
• Main responsibility for delivering IFRS to be
  left to national standard setters
• Individual member states will move at different
  speeds to take their national standards for
  unlisted companies towards IFRS

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Financial Information Reporting Systems

• There are a number of examples of accounts
  prepared using IAS/IFRS
• Roche http//www.roche.com/home/investor/inv-fina
  nce/inv-reports.htmNovartis http//www.novartis.c
  om/downloads/annual_reports/annualreport_2002.pdf
  Nestle http//www.ir.nestle.com/pdf/English/2002_F
  inancialStatement.pdf

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Financial Information Reporting Systems

• Examples of accounts prepared using IAS/IFRS
• Commerzbank http//www.commerzbank.com/aktionae
  re/konzern/archiv/2002/gb2002/index.htmlRWE
  http//www.rwe.com/en/investor_relation/annualrepo
  rts/annualreports.jsp