Accounts Theory
Companies annual report includes
Income statement
Balance sheet
Cash flow statement
Directors report
Independent auditors report
Financial statements checked by
Owner: to see overall wellbeing of business.
Shareholders: want to see Net profit of business, to see if there are enough assets to
cover liabilities as this affects EPS and DPS.
Employees: want to see if company is profitable as this will ensure they will have
jobs. Also to see if wages and salaries can be increased.
SARS: to see profit or loss and the tax that is paid.
Audit Report
Qualified = bad, not transparent.
Unqualified = good, transparent fair.
Directors are responsible for the internal control systems.
Vital that principles of IFRS and companies act are adhered to at all times to ensure
transparency.
Companies Act
Company keep certain records as evidence of decisions.
Shareholders have the right to query certain processes of the company and
directors.
Shareholders have the right to information.
FOUR ways in which the Act provides for the protection of the shareholders, potential
shareholders and creditors.
Proper incorporation and registration of the company.
Maintenance of proper and complete accounting and other records.
A fair presentation and disclosure of the financial position and financial results of the
company in the annual financial statements.
Proper management of the company by its directors.
IFRS – international financial reporting standards
All companies need to obey these rules to ensure no fraud is taking place. By obeying these
rules, shareholders have confidence in the company.
Faithful: unbiased, reliable & fair to all users.
Fairness: interest of all stakeholders is taken into account.
Accountability: company is held responsible for all decisions and actions.
Responsibility: take responsibility for incorrect behavior.
Transparency: honest, authentic and reliable as is understood by everyone.
Verifiability: supported by evidence.
Companies annual report includes
Income statement
Balance sheet
Cash flow statement
Directors report
Independent auditors report
Financial statements checked by
Owner: to see overall wellbeing of business.
Shareholders: want to see Net profit of business, to see if there are enough assets to
cover liabilities as this affects EPS and DPS.
Employees: want to see if company is profitable as this will ensure they will have
jobs. Also to see if wages and salaries can be increased.
SARS: to see profit or loss and the tax that is paid.
Audit Report
Qualified = bad, not transparent.
Unqualified = good, transparent fair.
Directors are responsible for the internal control systems.
Vital that principles of IFRS and companies act are adhered to at all times to ensure
transparency.
Companies Act
Company keep certain records as evidence of decisions.
Shareholders have the right to query certain processes of the company and
directors.
Shareholders have the right to information.
FOUR ways in which the Act provides for the protection of the shareholders, potential
shareholders and creditors.
Proper incorporation and registration of the company.
Maintenance of proper and complete accounting and other records.
A fair presentation and disclosure of the financial position and financial results of the
company in the annual financial statements.
Proper management of the company by its directors.
IFRS – international financial reporting standards
All companies need to obey these rules to ensure no fraud is taking place. By obeying these
rules, shareholders have confidence in the company.
Faithful: unbiased, reliable & fair to all users.
Fairness: interest of all stakeholders is taken into account.
Accountability: company is held responsible for all decisions and actions.
Responsibility: take responsibility for incorrect behavior.
Transparency: honest, authentic and reliable as is understood by everyone.
Verifiability: supported by evidence.
