FINANCIAL REPORTING

Financial Reporting



Sports Direct International Plc

1. IASB's Conceptual Framework and Sports Direct International

IASB has formulated conceptual framework in order to set a common standard for the preparation and presentation of financial statements. The main purpose behind this framework is to improve Financial Reporting. Companies have been preparing their financial statement with respect to conceptual framework. This should be noted that Conceptual Framework on qualitative has been dealing with those characteristics which construct financial statement more beneficial (accaglobal). These characteristics are as followed:

1. Relevance and Faithful Representation: Qualitative Characteristics

2. Timeliness, comparability, verifiability and understand ability: Enhancing Qualitative Characteristics

Qualitative characteristic in annual report of Sports Direct International that establish the effectiveness of information in financial statements are as followed:

Understandability: Information presented in Annual report should be in a way that is easily recognized and comprehend by users. Users usually have limited knowledge that is limited to business, economic activities and also limited knowledge of accounting. Sports Direct annual report comprises of information that is easy to understand. They have separated their each section and financial information. With such clear information, users would capable of making investment decision as fact and figures clearly define their actions (higheredbcs).

Relevance: This factor states that information in financial report should be relevant and accurate. Such as if economy is not doing good, this will impact on financial information of the company and figure are improving then it is perceived by the users that information is not relevant. Sports Direct annual report information is relevant as company trend has been fluctuating with the economy and they have posted notes for each figures justification.

Reliability: Information that is presented din financial statement should be reliable that is it should be free from errors. Such as Sports Direct annual report has applied this factor as they have been posting each damages with full amount in their annual report and in order to verify the damage or any other such event, notes has been given in the foots notes for better reliability.

Comparability: This factor assists in comparing companies within the industry in order to make better decision (after analysing company trend) whether to hold, sell or purchase share. Sports Direct has been showing a comparison of their past performance. This can be enhanced via making a comparison with similar companies' figures and this has not been opted by Sports Direct (ifrs.org). With this framework, Sports Direct is able to recognize qualitative characterized i.e. comparability, verifiability, timeliness and understandability and these assist in enhancing the usefulness of information i.e. relevant as well as faithful representation of financial statements. Beside this, Sports Direct has highlighted how company can employ these characterise for different purposes such as they can employee this in depicting certain economic transactions & events. Enhancing Qualitative Characteristics might be useful in keratin situation but this is not always the case (ifrs.org).

2. Main External Users of Sports Direct International Financial Statements

External users of financial statements range from regulators to public, competitors to investors and traders to ...