Sources of regulation that apply to their financial accounts

Document Type:Research Paper

Subject Area:Accounting

Document 1

IFRS requires that Bae systems should prepare their accounts under historical cost convention. The historical cost convention revalues and modifies financial assets and other relevant financial instruments. Revenue and profit recognition The recognition of revenue and profit on long-term contracts of Bae Systems are regulated under IAS 11. The accounting policy requires that revenue on long-term contracts to be recognized when the performance of the company milestones have been completed. Profits under the same policy are recognized and estimated based on the estimated costs and revenue. Chairman’s letter: “Another year of solid performance. ” Sir Roger Carr Chairman How the letter might be useful to a user Helps a user to understand the company problems and key issues in a particular period; the letter by Bae chairman highlights several key issues that the company faced in the year 2016.

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The key issues include unexpected changes in the political, social and economic aspect, growth and existence of regional instability and terrorism as well as military aggression. Secondly, it is useful to a user since he/she will be able to understand several accomplishments, commitments, changes and plans of the company. Sir Roger stated several accomplishments like strong operational performance and success, secured long-term position on a number of major programs, and how the Electronic Systems sector has remained buoyant. The accounting policies and standards are mandatory to be applicable in accordance with the Companies Act 2006 for periods ending March every year. Furthermore, Article 4 of the EU IAS Regulation requires that National Grid as a plc should prepare its finance statements in accordance with IFRS.

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National Grid financial statements for the years 2016/2017 have been prepared on a going concern basis and in accordance with the interpretations of IFRS. Secondly, the statements have been prepared on an historical cost basis except on some specific assets and liabilities like pension scheme assets. Other items in the financial statements have been classified as available-for-sale. National Grid chairman affirms the society in his statement that the company is responding positively to a wide range of developments in the operating environment and that they are taking steps to build a stronger foundation for future ties. Finally, the letter/statement explains the woes and the successes of the company to users like potential investors. The chairman of National Grid explains the developments in detail e.

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g. effect of change in government leadership, the cost of energy and the impact of investment in new technology and growth in distributed generation of energy. Liam explains that the board is committed to support the standards of governance and the ethical conduct required. He also explains specific roles of the board like setting strategies, leading and managing effectively, and mitigating appropriate controls. Another importance or usefulness of the letter is that sets a ground for differentiating Smurfit Kappa from other companies by elaborating unique characteristics associated with the company like geographic diversity, segmentation (best-positioned supplier of differentiated paper-based packaging solutions) and a unique consumer-focused, cost-efficient and sustainable packaging. Finally, the letter is useful since it sets the capital structure of the company up to date.

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