Introduction to Business Review
A business mainly large business may have very complex organisational arrangements, financing methods and operating characteristics. Though, the financial statements must reflect this complexity if they are to give a faithful portrayal of financial health. Like a consequence, the statements can frequently be lengthy, detailed and hard to understand.
To give a clearer picture for users, a narrative report can be offered that reviews the business and its results. UK (United Kingdom) law now needs all apart from the smallest companies to involve a business review in their yearly financial report. This review that is prepared though the directors, must give a balanced and complete analysis of the performance of the year and of the position at the year end. The re-evaluate must also set out information regarding
To consist of the quality of reliability, the information given must be complete. The meaning of this is that it should involve all important information which will assist assess business performance. Information which places the business in an unfavourable light must not be omitted.
The reporting framework
The specific form that a business review has to take is left to the discretion of the directors. In searching for a appropriate framework, the directors may appear to the Reporting Standard RS 1 issued through the UK Accounting Standards Board (ASB). This statement precedes the legal need for a business review but however covers similar sort of ground. It is not compulsory; it just aims to give guidance on best practice.
The framework that set out in RS 1 rests on the disclosure of information related to four main elements of a business.
Figure depicts these four key elements.
Figure: the key element of business review
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