Course Instructor:

Nadia Hassan Jaskani

Lecture 1 & 2 1
Financial Accounting Standards(FAS)

An accounting standard is a common set of

principles, standards and procedures that define the
basis of financial accounting policies and practices.
Functions of FAS
 To ensure transparency, reliability, consistency, and
comparability of the financial statements.
 Standardizing accounting policies and principles of a
nation/economy.

Lecture 1 & 2 2
Financial Accounting Standards(FAS)
 Governing Body
 Concern of Financial Accounting Standards
Recognition of financial events
Measurement of financial transactions
Presentation of financial statements in a fair manner
Disclosure requirement of companies to ensure
stakeholders are not misinformed.

Lecture 1 & 2 3
Financial Accounting Standards(FAS)
 Objectives of Financial Accounting Standards
to improve the reliability of financial statements.
Comparability
to provide the necessary disclosure requirements
and the valuation methods of various financial
transactions.
 Benefits of Financial Accounting Standards
Attains Uniformity in Accounting
Improves Reliability of Financial Statements
Lecture 1 & 2 4
Financial Accounting Standards(FAS)
Prevents Frauds and Accounting Manipulations
Assists Auditors
Comparability
Determining Managerial Accountability

Lecture 1 & 2 5
Financial Accounting Standards(FAS)
 Limitations of Financial Accounting Standards
Difficulty between Choosing Alternatives
Restricted Scope

Lecture 1 & 2 6
Financial Reporting

Financial reporting is the disclosure of financial results

and related information to management and external
stakeholders (e.g., investors, customers, regulators)
about how a company is performing over a specific
period of time.
• Objectives of Financial Reporting
Providing information to management
Providing information to investors, promoters, debt
provider and creditors
Providing information to shareholders & public at
large
Lecture 1 & 2 7
Financial Reporting
Providing information about the economic resources
of an organization
Providing information as to how an organization is
procuring & using various resources.
Providing information to various stakeholders
regarding performance management of an
organization
Providing information to the statutory auditors which
in turn facilitates audit.
Enhancing social welfare by looking into the interest
of employees, trade union & Government
Lecture 1 & 2 8
Financial Reporting
 Importance of Financial Reporting
 helps an organization to comply with various statues and
regulatory requirements.
 facilitates statutory audit.
 forms backbone for financial planning, analysis, bench
marking and decision making.
 helps organizations to raise capital both domestic as well as
overseas
 Due to this, the public in large can analyze the performance
of the organization as well as of its management.

Lecture 1 & 2 9
Financial Reporting
Compulsory documents for the purpose of bidding,
labor contract, government supplies etc.
incredible importance for both internal and external
stakeholders.

Lecture 1 & 2 10
Contents of Financial Reporting

 Contents of Financial Reporting

Balance Sheet or Statement of Financial Position
Income Statement or Profit and Loss Report
Statement of Changes in Equity or Statement of
Retained Earnings
Cash Flow Statement

Lecture 1 & 2 11