Major Disclosure And Conceptual Objectives Of Consolidated Financial Statements

Finance  in business refers to any activity  which is concerned  with the management of money whereas management  refers to  a broadly activity concerned with  planning, controlling and administering   of  used the business, financial  statements is essential in virtually all the firms because  it is helpful  during financial analysis ,it is believed that  investors judge  the merits  of the investment and the comparability  of investments    before any  allocation of  capital  is done, it  builds the  confidence of investors , the management of finance can be  grouped into two section, that is the private and public  finance, private can be individual  firms or corporate  financial activities whereas public finance  implies to  revenue and  the disbursement  of government  funds  and normally it is done by the central government.

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However, the general purpose of financial reporting is to provide  financial  information report  which further  encourages the investors, lenders and other  creditors  in making decisions about providing resources, In this case, many existing  and potential investors  and lenders  require  report  which also  builds confidence during their service delivery.

The conceptual framework  underlies the preparation and presentation of financial statements, it comprises of qualitative  characteristics of useful  financial information, recognition  and measurement  of the elements  from which the  financial  statements are constructed  and basically, the capital concepts  and its maintenance,(Stickney, C.P.2007)

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In order for anyone to meet the target objectives, financial statements are always prepared on the basis of accounting, here, accrual accounting depicts the transaction effects and the event circumstances surrounding the claims of economic resources. It accounts on   the period of occurrence even if the cash receipts and payments occur in different period, this  fundamental information about reporting the economic resources and incase the claims are to be made, provides a good base for assessing the  future and the past of the company seeking assistance.

Moreover, financial statements are  normally  prepared  purposely for an assumption of an entity and how it will foresee the effects of the  future, the  qualitative  features are likely to be  useful when seeking  potential investors, lenders and other creditors  who will be   approached for funding .

On the other hand, measurement  as commonly used in accounting implies to  process of  determining the monetary  amounts  at which the  elements  of the financial  statements are to be  recognized and  thereafter it is narrowed down in  a balance sheet.

Furthermore, financial management  acts as a fundamental  area which is directly  formally   functional part of personnel ,production and marketing departments, in other words ,it  has multidimensional approach whereby its concepts are both macro and micro approach, it uses  the economic  equations  like money  value  and discount factor which immensely contribute to  finance and economic development sectors.( Barber and  Lyon1997).

Also its scope entails production management which also forms a part of business concern, in these , it acts as an operational engine of any business enterprise because it helps to maximize multiple of money to make profit. It also influences the production performance of an enterprise. The manager should  therefore be aware of operational process and the finance required for the production activities, thus he  greatly  relies on  the information provided by the financial information.

In addition to this, finance manager should precisely evaluate the  prerequisite  requirement  of manpower   in  virtually every department  because the human resource needs wages salaries and even remuneration  and other  monetary benefits .

According to Bradshaw and Miller.(2007),Financial manager should also carefully evaluate the requirement of manpower in each department and allocate the finance to the human resource department  in terms of wages, salary, remuneration, commission, bonus, pension and other monetary benefits to the human resource department that will ensure full  realization of the companies objectives. Ultimately, the financial management is directly related with human resource management. Also ,effective procurement also  utilize the  knowledge of   finance comparability  since it leads to  proper utilization  of finance  so as to maximizes profit and  wealth.

The Financial Accounting Standards Board (FASB)  emphasizes the comparability which  implies to  quality of information  which assist the users to  identify similarities  existing  between the two  sets of economic  subject ,a structure is always added to  by mapping out  the events of financial Statements.

It normally represented in an equation form, that is:

Financial statement =fi (economic events)

Where economic events fi  ( ) stands for system unit firm i

A relevant  financial statement  is represented  in  structured  manner and its form should be easily understood by the external user, it has the reports ranging from the  company’s assets, liabilities  and the general ownership ,in simple terms, it  summarizes the company’s cash flow  and particularly it is   used in investing  and  in doing  other  financial activities. For expanded corporations, these statements  might be difficult  and complex  because the information  of   items might be  typically  described  In the  balance sheet thus forms part of integral  financial statements.

Owners and managers greatly rely on financial statements   so that they can make appropriate decisions that might affect its continued operations, the analysis is used as part of the management  especially in annual report  which they give to the stakeholders,(Bhojraj and  Oler,2003),

In  the near future, there  is need to  make digital financial  statements  that is commonly used in banks  so that  can companies can too have easy access , it can be  a structure which  is   readable format designed in  a computer, these  helps  promote electronic  market which  will drive the economy to a global standard ,the government too can take the initiative  by promoting transparency on how  the public resource has been used. These will help reduce the case of the embezzlement of public funds.

However, though financial statements are perceived to be effective in the management of company’s  accountings, it has limitations, for instance, it only discloses the historical information  which  does not  consider changes  in terms of  fluctuations of price level ,value of the currency  hence correct  prediction  for the future  is not  narrowed down, it also influences  personal judgment  which lead to an individual making his own  manipulation  while preparing  the statements .it encourages biasness  leading to  inaccurate data, furthermore , the  statements based on accounting concepts and conventions  might sometimes be unrealistic  due to difference  in conditions  and generally the changes  in the economy. Financial statements too emphasizes only the monetary facts, for example the quantitative information and ignores qualitative information.

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