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Please Can You Discuss The Difference Between A Special-purpose Financial Report And A General-purpose Financial Report?

Auditing Financial Reporting Finance Operations Financials Finance
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Question added by Rehan Qureshi , Financial Consultant , Self Employeed
Date Posted: 2014/01/21
Upvote (12) Views (18) Followers (7) Answers (2) Report Question
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Rehan Qureshi
by Rehan Qureshi , Financial Consultant , Self Employeed

Put simply, a special purpose financial report is any report that is not classified as a general purpose financial report. A financial report is an official record of the financial activities of a business, person or other entity over a specified period of time. Special purpose financial statements are a set of financial statements that are prepared using a special purpose framework to cater to the particular needs of specific users who intend to use it. They are not intended to be viewed by the public at large and they therefore have a very limited use for anyone other than the intended users. The difference between the two types of report is the special purpose framework.  Normally, reports intended for public consumption will adopt a general purpose framework. Special purpose financial reports are usually compiled for the use of internal users such as management staff or specific external users, for instance government bodies or banks. If a report was intended for the use of the tax authorities, for instance, then the special framework used would probably be a tax regulatory framework. Financial reports may be desired by a number of different groups and individuals for different purposes, for instance: -               Owners and managers to make decisions on future operations of a company -               Employees who want to make collective bargaining arrangements with their employers -               Prospective investors who want to assess the success and viability of a company -               Financial institutions who are deciding whether to give a company fresh working capital or a bank loan

 

-               Government bodies who need to ensure that taxes have been paid correctly

mukkur srinivasan varadhan
by mukkur srinivasan varadhan , Chartered Accountant , Chartered Accountant in practice

There are many stakeholders who may be relying on the Financial Report lika shareholders, banks,creditors,workers and so on. General purpose Financial Report is the usual Audit Report which certifies the compliance with the applicable Accounting Standards only.This will  normally take care of any other purposes generally only.When a stakeholder uses a general purpose financial report for his purpose, data available may be inadequate. So Financial report as modified to suit his purpose is required. So normally, there will be a disclaimer restricting the use of it for general purpose only.

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