Topic 8: Financial Statement Problems – Dates, whether they can be compared etc.

@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.

@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.

@sipo

Hi, 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.

Hi 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!

@rayman417

I 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 Chapter

hie
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.