Published Limited Company Accounts

The Directors of the Company are a group of people with expertise in managing a company which are appointed by shareholders and are accountable to them to run the business on their behalf.

- Prepare financial records for shareholders which show a true and fair view of the company's state of affairs.- Ensure accounts have been prepared in accordance with accounting standards and law (Companies Act 2006 and IAS)- Keep accounts which are reasonably accurate.- Apply consistently the accounting policies- Sign and approve the financial records which are then filed with Registrar of Companies.- Safeguarding assets/prevent fraud and irregularities.- Write up a Directors' Report to the shareholders.

Statutory auditors are independent accountants who are required by law (Companies Act 2006) and are responsible for:- Check that financial statements are the same as the accounts prepared by the directors of the company.- Forming and expressing an opinion on the financial statements.- Prepare an Auditors' Report with a qualified or unqualified opinion on the financial statements.
Auditors are appointed by shareholders because of the divorce of ownership and control.

To ensure:- Proper accounting records have been kept.- Accounts are in agreement with accounting records prepared by the directors.- Accounts are prepared in accordance with the accounting standards and law (Companies Acts 2006 and IAS).- Financial statements show a true and fair view of the state of the company's affairs and results for the accounting period.- Make tests and enquiries which are necessary to form an opinion as to the reliability of the accounting records as a basis for the preparation of the accounts.

Employees - to see how profitable the company is.Help to:* Decide if their jobs are secure.* See if the company can afford to pay higher wages.
Trade Payables - to check the company's liquidity.Help to:* Assess the performance of the company in relation to them receiving payment for their liability.* Determine the possibility of bad debts and therefore need to make a provision for doubtful debts.
Investors - to make decisions on whether to invest by buying shares in the company on the stock exchange.Help to:* Assess historical performance as a basis for future investment.* Calculate accounting ratios such as return on capital employed from information in the Balance Sheet.* Make informed decisions about the company's profitability.
Lenders - assess the profitability of the company.Help to:* See if the company can pay its interest and loan payments on time.* Determine the level of gearing in the company to assess the riskiness of their decision to lend.* Ensure interest from loans are paid to date by looking at Statement of Changes of Equity.

- Law:* Legal requirement under Companies Act 2006 because of the divorce of ownership and control.* The directors' report to the shareholders on the performance of the company enables shareholders to judge if the directors' stewardship is successful.
- Potential Investors:* Help make decisions on future investments based on the reported performance of the company from profits made and dividends paid.* Calculate accounting ratios such as return on capital employed from information in the Balance Sheet.
- Shareholders:* Inform current shareholders about the performance of the company based on profits and current dividend policy.* Inform the shareholders about the direction of the company is headed.
- Publicity:By using accounts to publicise the products or services and present the company in the best light. (Glossy Magazines)They can also do so by donating to charity and having a good social responsibility.* Persuade current shareholders to retain their shares.* Persuade potential investors to invest.* Attract interests and attention.

Income Statement:* Historical information - does not show what is going to happen in the future.* Information might have been disguised (Window Dressing) to hide profits or show a greater profit.* Expenses can be delayed until the next accounting period and not disclosed in the Balance Sheet as expenses owing. (Reduces the expenses and liabilities of the company)
Balance Sheet:* Historical information - does not show what is going to happen in the future.* Information might have been disguised to distort the Balance Sheet. (Window Dressing)* Balance Sheet DO NOT include intangible assets ( Goodwill, Brand Names, the skill of the the workforce as they are hard to estimate or could change quickly)
Non-financial data:* Qualitative data is not always shown due to the Monetary Concept (Only things that can be quantified are shown in the accounts)However, there are other items that are unable to be quantified that are also in the business. * E.g. Expertise of management, State of the economy (Recession or Boom)Staff Morale: Happy workers = Less absentees and more productive workers.

To dress up accounts to make them look as flattering as possible.Be misleading to users of the published accounts.
Window dressing is done:* To appeal shareholders - improve the performance of the business to keep shareholders happy.* To attract investment - persuade lenders to lend you money by improving liquidity or reducing gearing.* To influence share price - manipulate the accounts to show the business is performing well so that the share price does not fall.* To reduce taxation - Less tax = more profits.
Methods of manipulation:- Depreciate the assets at a faster or slower rate. Affects the level of expenses and therefore profit.- Changing the values of trade payables and trade receivables can change the liquidity of the business. Bills could be hidden until after the balance day to reduce trade payables.- Firms can delay writing off bad debts.- Changing inventory valuation method could cause the value of inventory to be increased or decreased.- Gearing can be improved by selling assets and leasing them back. The firm is lower geared but expenses are increased and profits fall.The liquidity of the firm is improved by cash generated by the sale and gearing is reduced by paying back the debts of the business.