تقارير إعداد التقارير المالية والتقييم لأغراض مالية

Valuation for Financial

Also called financial statements, they are written reports that explain quantitatively how a company uses or distributes its funds and assets.

Companies issue financial reports regularly and include detailed information to ensure accuracy. Typical financial reports also include income and cash flow statements, the capital statement, and the general budget.

Financial reports have different types, and their preparation is governed by the International Reporting Standards, which is known as IFRS. It is applicable in nearly 120 countries, including the European Union, most of Asia, and the Americas, and in the United States of America, the generally accepted accounting principles (GAAP) are still applied.

Before starting to prepare financial reports according to the fixed asset’s standard, companies must receive a full valuation of the company’s assets, and this valuation is usually called an accounting valuation, or valuation for financial purposes.

What are the types of financial reports?

  • Income Statement

This report reveals the financial performance of an organization for the entire reporting period. It begins with sales and then subtracts all expenses incurred during the period to arrive at a net profit or loss. Earnings per share figure may also be added if the financial statements are being issued by a publicly held company. This is usually considered the most important financial statement since it describes performance.

  • Balance Sheet

This report shows the financial position of a business as of the report date (so it covers a specific point in time). The information is aggregated into the general classifications of assets, liabilities, and equity. Line items within the asset and liability classification are presented in their order of liquidity so that the most liquid items are stated first. This is a key document, and so is included in most issuances of financial statements.

  • Statement of Cash Flow

This report reveals the cash inflows and outflows experienced by an organization during the reporting period. These cash flows are broken down into three classifications, which are operating activities, investing activities, and financing activities. This document can be difficult to assemble, and so is more commonly issued only to outside parties.

  • Statement of Change in Equity

This report documents all changes in equity during the reporting period. These changes include the issuance or purchase of shares, dividends issued, and profits or losses. This document is not usually included when the financial statements are issued internally, as the information in it is not overly useful to the management team.

What is the purpose of issuing financial reports?

According to the International Accounting Standards Board (IASB), the goal of financial reporting is to provide information about the financial performance, and changes in the financial status of an organization, which is useful to a wide range of bodies in making economic decisions.

Objectives financial reports:

  • Providing information to the company for planning and making decisions.
  • Providing information to investors, shareholders, and financiers.
  • Providing information to protect the rights of employees in the public and private sectors.
  • Providing sufficient information about the companies listed in the stock market.
  • Facilitating the legal audit process.

What is IFRS?

International Financial Reporting Standards (IFRS) set common rules so that financial statements can be consistent, transparent, and comparable around the world. IFRS is issued by the International Accounting Standards Board (IASB). They specify how companies must maintain and report their accounts, defining types of transactions, and other events with financial impact. IFRS was established to create a common accounting language so that businesses and their financial statements can be consistent and reliable from company to company and country to country.

What does valuation have to do with financial reporting?

Valuation companies provide valuation services to companies in financial reports, to help legal auditors and accountants calculate the exact value of the assets owned by the company, also called accounting evaluation, or evaluation for financial purposes, which is the process of evaluating the company’s assets to prepare financial reports.

Many accounting evaluation methods are used when preparing financial statements to evaluate the assets of the company.

Valuers usually follow choose the appropriate valuation method.

based on the type of assets that the company owns, available information, and the previous financial reports of the company.

valuation process of the company’s assets for financial reporting is extremely important, since errors in estimating the value of the assets, whether intended or unintended, may lead to legal problems that would harm business owners, and may give incorrect results about Net income or loss, which negatively affects investors or shareholders.

Objectives of valuation for financial reporting purposes:

  • Ensure that the company provides true information about its financial status.
  • Providing valuation reports that apply to IFRS in cases of corporate mergers or acquisitions.
  • Determining and recognizing cases of depreciation of assets according to the market situation.
  • Determining the exact value of intangible assets according to IVS
  • Checking financial flows and comparing them to provide an acceptable opinion about the company’s financial assets following the International Financial Reporting Standards.
  • Adopting international financial statements and ensuring that international standards are met.

How to come up with the best valuation report?

  • Look up different valuation companies present in the Saudi market, which provide valuers accredited by the Saudi Authority for accredited valuers, who hold a fellowship.
  • Contracting with the company to provide valuation services for financial purposes.
  • Determining the scope of work, the type of assets, their size, and all the data that the valuer needs to start their work.
  • Executing the valuation without interference from the client or one of their employees.
  • Issuing valuation report, which includes the final results of the valuation, the reasons leading to these results, their reliability, and the reasons that prompted the valuer to come out with this valuation.
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