Forums › OBU Forums › Topic 8: Financial Statement Problems – Dates, whether they can be compared etc.
- This topic has 161 replies, 52 voices, and was last updated 8 years ago by trephena.
- AuthorPosts
- February 18, 2016 at 11:05 pm #301094
@huzaifa.abdurrauf
Huzaifa, you should use March 2014, March 2013 & March 2012 for inter-temporal comparison of company A and for competitor (bench-marking) with company B:
Use latest available accounts of company B and you may adjust their financial statements for example for year ended June 2014 of company B, you can deduct quarter ended June 2014 from annual financial statements until June 2014 and add quarter until quarter until June 2013 for aligning year ends. You should do this if you feel that there are different rules, economic situation etc, which effected during difference of 3 months.
Otherwise, you need to write different year ends under limitation of bench-marking and information gathering, also you need to tell how did you overcome this.
Regards,
Hammad Ahmed Qureshi – OBU Registered Mentor.March 5, 2016 at 9:07 am #303536AnonymousInactive- Topics: 0
- Replies: 3
- ☆
Hi,
I’m doing T8 for my research. The problem i’m facing now is the main company n the competitor r using different accounting standards. The main co. includes results of its JV &associates to arrive at operating profit while the competitor doesn’t. Shld i adjust the competitor’s accounts to be consistent?
Please help..Best regards,
DeniseMarch 5, 2016 at 2:54 pm #303608@denise87
Yes, you can compare but mention it under limitation of information gathering and your analysis also state how did you try to overcome this limitation. You may give an idea that whether different frameworks doesn’t affects heavily or if they do so then your analysis highlight it.
Regards,
Hammad Ahmed Qureshi – OBU Registered Mentor.March 9, 2016 at 3:39 pm #304773AnonymousInactive- Topics: 0
- Replies: 3
- ☆
Hi everyone
I am currently doing topic
I have a problem regarding the year end for my comparator it has the year end up to 31 DEC and my main company year end is up to 31 march. The comparator has only intrims results up to June and no quarterly results
It is correct to adjust the comparators figures month by month to come up with annual results for three years?
The other option is using another company which is fourth in the competition line ?
March 9, 2016 at 7:08 pm #304916Hi, Sipo, Hope you are well! Answer to your questions are:
If you have monthly figures then it is right to adjust it by absolute available authentic numbers, if you don’t have any then search on internet that how much political, economic and other circumstances changed between Jan To Mar. So, you use Latest Dec available for competitor and Latest March statement for main company and write different year ends in limitations of information gathering section of RAP, then in response that how you overcome this limitation write that political and other circumstances were quite stable and references.
There is no restriction in info pack over not using companies which have different year ends for comparison purpose.
Regards,
Hammad Ahmed Qureshi – OBU Registered Mentor.March 12, 2016 at 2:04 pm #306033@denise87
I am understanding your question. Suppose If your main company is using IFRS and Competitor is preparing Financial Statements under GAAP. first question should be raised in your mind whether both accounting practice are acceptable? Answer is yes yes. If both are acceptable then you will not find major variances, significant difference. but for save
Otherwise you can share link of financial statements I will review and try to give you my best advise how to handle situation. Whatever option you chose please write appropriate reason under limitation heading in part two to make your report understandable for examiner and inform them how you overcome this issue.
Hope the answer of the question,
Regards,
ALI FAROOQ
OBU Registered MentorMarch 13, 2016 at 2:32 pm #306182Hi everyone, i need some advice about the financial information i’ve obtained so far.
For my main company,
They published their annual report FY ended 30 Sep 2015, and the latest result was Quarterly report ended 30 Dec 2015.For the comparator company,
Their annual report FY ended March 31 2015 , and the latest result was Quarterly report ended 30 Dec 2015.Do you know how should i cope with the fact that they have different reporting period (6 months difference in annual reports)?
Do i need to adjust my comparator’s financial figures manually to match my main company’s timeline?Many Thanks in advance!
March 13, 2016 at 5:13 pm #306205Yes, you need to align comparator to 30 Sep 2015 by adding half year or 2 quarters figures up to 30 Sep 2015 and deducting April-Sep 2014 half year or quarterly accounts.
If you still unable to do this, let me know i will further advice on how to cater if figures cannot be altered.
Regards,
Hammad Ahmed Qureshi – OBU Registered Mentor.March 15, 2016 at 5:25 pm #306508I can give you best advise. you have two option.
First option: You can align or adjust only Profit and Loss account by adding half year income and expense, you can not touch balance sheet figures you know what I mean. If you chose this option It will change complete picture your ratios result, you have to support your evaluation by providing reasons from authentic sources. i.e annual reports , director reports, other independent sources. I can conclude that It will create unnecessary differences.
Second option: you have to evaluate three year performance. 2015, 2014 & 2013 irrespective of different reporting period. you can highlight this limitation under part two and explain how you work on it.
Further, you can review six months result of the competitor if you can find significant change you can incorporate in your evaluation by maintaining word limit.
Many students face this issue (different accounting period) and they prefer to select second option..
Hope the answer of the question,
Regards,
Ali farooq
BSC Registered Mentor and ACCA Member USA ChapterMarch 16, 2016 at 1:23 am #306548@Rayman417 – This very much depends on which sector the companies operate in. If they are pharmaceuticals just mention it in your limitations section.
If airlines you will need to adjust – this is because operations are seasonal
If telecoms normally you don’t need to adjust -again mention in limitations.
March 18, 2016 at 2:42 am #306867hie
my company of focus year end is 31 December 2015 while its comparate year end is 31 March 2015.can l be able to use this companies in my rap.March 18, 2016 at 8:25 am #306882 - AuthorPosts
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