Essay Example: Full Disclosures of Financial Reporting

Under the IFRS 7 financial instruments it a requirement for every entity to ensure that it discloses all the information that are deemed to be of value financially. The specific disclosures often relate to the transactions that take place within a business during a given financial period. The purpose of financial reporting in a way that is transparent and fully truthful is to ensure that external users of the financial report have a clear view of the firm. Example of external entities that are responsible for the use of financial reports include investors, creditors and analysts. The research paper will discuss full disclosures with respect to Verizon Communications. Verizon communications Inc. is an American company that is listed in the New York Stock Exchange. Being a listed company then it required to discloses its financial instruments.

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Accounting requirements and policies are necessity when a deep understanding is needed for the information that have been made available in the financial statements. An organization as required by IFRS is supposed to present an integral part of its financial statements during any particular financial period. All entities are required to provide an identification of the policies that have been taken into account by the organization that is reporting. Accounting policies are a particular accounting procedures that an enterprise currently uses and are to be considered by that entity to be fairly presented. For an organization to disclose its accounting policies then the organization is required to take into consideration the relevant recognition of revenue and the procedures taken while allocating assets costs to both current and the periods of the foreseeable future.

The importance of any entity providing accounting policies is that it will help in answering questions like the amortizations of assets and the method of valuing inventory. The reason for specifying the accounting treatment is because there different approaches that can be used for the same transaction. Incase an organization decides to change from one policy to another then it is required that it discloses the changes. Any particular changes that an organization will decide to adopt will have a great impact on the financial position of any particular enterprise. Examples of the transactions that can be affected by include the financial position, cash flows, and any daily operations. Therefore it is important to ensure that all the accounting policies need to be well aligned. The sole purpose for doing so is to ensure that the external users of the financial statements will get a chance of comparing organizations that operate in the same industry for instance telecommunication industry in the case of Verizon communications Inc.

To find out financial disclosures by Verizon Inc. then 2014 financial report were evaluated. Verizon goodwill and intangible assets accounting policy is going to be analyzed. The company has reach a decision to perform a test on its goodwill on a quarterly basis. There is also an option of performing the analysis in case the management found out that there is an indication of a regular impairment of goodwill at current time. Verizon has opted to do a qualitative assessment. The company in its reports discloses the approaches they use in impairment test for its goodwill. The first approach is to compare the fair value using the market approach often known as discounted cash flow. There will be a potential impairment only if the carrying value will exceed the fair value of the good will. The second approach disclosed in the financial of Verizon is the comparison of the carrying value of the asset in the reports to its fair value. An impairment charge on the assets will be recognized only if the fair value is less than the carrying amount. During the financial period of 2014 Verizon had indicated changes on its accounting standard. The update that was disclosed were that the first quarter of 2014 would be the period that the company would offset any tax that has not been recognized as a tax benefit. The management came to an agreement that any tax credit carryforward would have to be disallowed.

Management discussion and analysis (MD&A) is an interrelated part of a substance's yearly money related explanations required by the SEC. The MD and A takes into account liquidity, capital assets, and aftereffects of operations notwithstanding highlighting good and unfavorable patterns and distinguishes critical occasions and instabilities that influence these three variables. In substances, the reason for the MD&A is to give an account clarification from administration's point of view the organization's money related condition, how an element has performed in earlier years and future prospects. In this manner, the MD&A endeavors to furnish speculators with complete, reasonable, and adjusted evaluation helping with the choice of whether to put or keep on investing in an element. Specific segments that ought to be incorporated into the MD &A are the element's central goal and hierarchical structure. Specifics ought to be about the substance's execution objectives and results, frameworks, controls, and legitimate consistence; and the future consequences for the element of existing, right now known requests, dangers, instabilities, occasions, conditions and patterns (FASB, n.d.).

Verizon's MD and A portrays an examination of development of earlier years (income and administrations), patterns and future prospects of speculations. Verizon experienced income development in their Wireless business of 6.8% in 2015 contrasted with 2014 (Verizon, 2015, p. 12). The development was credited to the interest for cell phones, tablets, and other web gadgets. A 4.8% expansion in retail postpaid associations contrasted with 2014 with cell phones containing 72% of retail postpaid telephone base at December 31, 2014 contrasted with 59% at December 31, 2015; 2015 postpaid cell phones actuations rose to 86% of telephones initiations contrasted with 77% in 2013(Verizon, 2014, p. 11). From a potential financial specialist's point of view, development would show Verizon is a steady business, anticipated that would keep on increasing benefits especially later on, and in addition gainful reinvestment open doors for its own held income. Patterns incorporated into the MD and A referred to power as to rivalry with customary and non-conventional administration suppliers seeking after expanded piece of the overall industry. With interests in inventive innovation like remote systems, fast fiber and cloud administrations Verizon trusts their organization will be situated at the focal point of future development patterns. Verizon's capacity to comprehend and recognize patterns that may affect their association gives a valuable beginning stage to meet changing business sector requests from its assets and look for accomplices who offer attractive items, propelled innovation or assembling ability to maintain their presence, accordingly gives an uplifting viewpoint to potential speculators. Notwithstanding interest in development, Verizon separates itself from contenders by giving improved interchanges encounters and concentrating on basics of maintaining a fruitful business through working perfection and monetary control. Future prospects are good as Verizon trusts its interest in its abilities and in the business sectors they serve will position the organization to deliver a long haul return for shareowners, suitability of the organization, and society. Idealness is guided by their dedication to center estimations of respectability, admiration, execution perfection and responsibility (Verizon, 2014, p. 11). From a speculator's viewpoint, Verizon's dedication to concentrate on their trademark guarantees a solid client base.

Segmented information is a process whereby the financial statements are provided to investors and the creditors on matters that relate to the financial outcomes. The outcomes relates to the different departments that are set out in different entities. It is a requirement by the GAAP that all organizations should ensure that it has provided a clear classification of its division that form part of the daily operations of the company. Examples of such operating activities normally lead to generation of income, the income can only be generated after these departments has incurred a certain percentage of expenses. The advantage with segmentation of data is that it promotes transparency simply because it can reveal divisions in an organization that is making profit. It also provides the investors with platform that they can use to evaluate any potentialities in the overall performance of an organization. A good example is if a firm provides reports on earnings that are higher than the amount that had been projected then it will be the segmented information that will provide the origin of such variability.

Disadvantages of segmentation include data manipulation and analysis of only short term results. Focusing on short term performance can only give the stakeholders high pressure especially departments that are performing poorly. In order to hide the underperformance such organizations might be tempted to manipulate data so as to meet the target of the management. Another disadvantage that is associated with segmented data is that it highly expose organizations to even a more and competitive risk. The reason behind this is that the information that is provided by an entity can easily be used by its competitors to oust it in the market. There are two segments that Verizon consider to be reportable, they are the wireless and wireline. All these segments are measured and it evaluation done on a basis of segment operating income.

Auditors report is crucial source of data that authoritatively performs assessments of financials of an entity. Reviewers can give four sorts of reports: unqualified, qualified conclusion, adverse opinion, and a disclaimer of an assessment. An unfit assessment (clean report) which is issued by and large communicates the supposition that money related articulations are exhibited as per general acknowledged bookkeeping standards and is drained of distortions. The unfit report ought to incorporate "autonomous" in the titled to outline the report was set up by an impartial outsider joined by three sections. The three areas plot the obligations of the reviewer, the target of the review and the inspector's discoveries. The second report an auditor can give is a qualified supposition which contains a special case to the standard conclusion. An exemption to the standard is generally not of adequate greatness to nullify the money related explanations, however that records don't precisely adjust as per GAAP principles or there are deficient revelations. The qualified supposition report is comparable in course of action to the inadequate report with an extra section managing the reason the review report is not unfit. The third report albeit uncommon is an unfriendly sentiment. An unfavorable supposition report is required when in the reviewer's feeling the monetary explanations all in all don't comply with GAAP and are terribly distorted. The fourth and last report is a disclaimer of assessment. A disclaimer report is issued when the evaluator can't assemble adequate data relating to the money related reports that a sentiment can't be resolved. The auditors report directly affects an organization's capacity to get financing from a bank as the report brings down the expense of capital. The review report additionally gives business esteem, which means it's an affirmation the monetary information is valid and right. The free examiner for Verizon shows an unfit feeling in that Verizon's financials, as they wo...