Characteristics of Companies Without Liability

A company that offers its owners limited liability, meaning their personal assets are protected from business debts.

A company where the owners' liability is limited to the amount they've invested in the company's shares.

The legal principle stating that a company is separate from its owners, with its own rights and responsibilities.

An individual or group that has an interest in a company's success. They can be owners, employees, customers, suppliers, or investors.

Investors, who are interested in the company's profitability, growth, and dividend payouts.

Employees who care about job security, potential pay raises, and bonuses.

Customers who are interested in the company's continued existence and the availability of products or services.

Suppliers who want to ensure the company can pay its debts and will continue to purchase from them.

The system that oversees how companies are managed and controlled, ensuring resources are used for the benefit of shareholders and stakeholders.

A key objective of corporate governance is to ensure that the company's executives effectively use resources to maximize long-term value for investors.

Corporate governance requires fair compensation for directors, reflecting their performance and contributions.

Corporate governance ensures the company's resources are used efficiently and productively.

Internal controls within a company ensure financial transparency and accountability, starting from top management and flowing throughout the organization.

Independent auditors assess financial statements to ensure they accurately reflect a company's financial health.

Financial statements are important for a wide variety of users, including investors, employees, and customers.

Internal users of financial statements, such as investors, are primarily interested in the security and profitability of their investments.

A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.

Records all income earned and expenses incurred over a period, highlighting profitability.

Tracks changes in equity, including profits, losses, investments, and dividends.

Provides detailed information about the cash flow generated by the company's core operations, investments, and financing.

Provides further details and explanations about the numbers presented in the financial statements.

A company's financial data is used by the general public to assess the health of the local economy. Profitability can indicate a positive economic environment.

Special interest groups (e.g., Greenpeace) use company financial information to evaluate their environmental and social impact.

State bodies use financial statements to ensure compliance with regulations and determine eligibility for grants.

The IFRS Foundation is a legal entity that oversees the International Accounting Standards Board (IASB). It has 22 trustees who establish its main objectives.

The IASB is an independent body responsible for developing and approving sets of international financial reporting standards (IFRS). It strives for globally consistent accounting to allow investors to compare companies' financial performance.

The IFRS Advisory Council acts as a sounding board for the IASB. It provides advice on various matters related to IFRSs, including the technical agenda, project priorities, and the benefits and costs of new proposals.

The IFRS Interpretations Committee provides authoritative guidance on the interpretation of IFRSs and addresses issues encountered in their application.

The statement of financial position shows the breakdown of the assets and liabilities of a business. It presents a snapshot of a company's financial position at a specific point in time.

Assets are what a company owns, which can be used to generate future economic benefits.

Examples: property, plant, equipment, cash, and accounts receivable.

Liabilities represent what a company owes to others, including debts and other obligations.

Examples: loans, accounts payable, and accrued expenses.

Capital refers to the owners' investment in the business, including contributions made to start the business and retained earnings. This represents the owners' stake in the company.

Non-current assets are those that have a lifespan of more than one year and are expected to be used for a prolonged period. Examples include property, plant, and equipment.

Current assets are assets expected to be used or converted to cash within one year. Examples include inventory, accounts receivable, and cash.

Non-current liabilities are obligations due beyond one year. Examples include long-term loans and bonds.

Current liabilities are obligations due within one year. Examples include accounts payable, accrued expenses, and short-term loans.

An independent body that reviews a company's financial statements to ensure they are accurate and comply with accounting standards.

A committee composed of independent non-executive directors who oversee a company's financial reporting and internal controls.

The auditor must be independent, objective, and act with integrity. This means they must be free from conflicts of interest and act honestly and fairly.

If an auditor cannot be independent or objective, they have a responsibility to refuse the engagement and inform the shareholders of the conflict.

The audit committee plays a crucial role in oversight of internal controls, financial statements, and compliance matters. They also liaise with external auditors and report to shareholders.