Comparison of the Jardine Matheson Group with IAS 1
The IAS 1 (Presentation of Financial Statements) sets out general requirements for the presentation of financial statements and outlines their guild lines’ structures and specific needs. Therefore, it is required for a company to submit its comprehensive set of financial statements at least yearly, with comparable quantities of the previous year. The paper compares the financial statements of Jardine Matheson Holding Company’s half-annually results for the six months ended 30th June 2020 with the IAS 1.
The Jardine Matheson Holding Company complies with various IAS 1 requirements in different ways. The company presents its balance sheet and liquidity half-annually, thus complying with the IAS 1 financial position requirement. At the end of 30th June 2020 remained strong and has taken extensive actions to control costs, preserve cash, and raise its liquidity levels. Since the IAS 1 requires the company to present its financial statement on cash flow for a particular period, Jardine Matheson Company presents extensive notes on its consolidated cash flow statement. The company’s cash flow statement revolves around the purchase of associates and joint ventures for a half year ended 30th June 2020, which primarily includes the US $ 127 million for Hong Kong Land’s investment. It further sets out the purchase of other investments for the six months, including Astra’s acquisition of securities, additions to investment assets, advancement and repayment of investment assets, sale of various joint ventures, and other investments for the six months ended 30th June 2020. Additionally, the company provides a comprehensive statement on profits, losses, and other broad statements on its overall income. It further states changes in the equity for the six months ended 30th June 2020.
However, Jardine Matheson Group does not rhyme with several requirements of the IAS 1 in different ways. The company does not provide a statement on its financial position at the start of the preceding comparative period when it involves an accounting regulation retrospectively. Besides, it does not give a general conclusion on relevant accounting regulations and other essential data.
The General Accepted Accounting Principles (GAAP) financial reporting standards aim to improve clarity, consistency, and comparative capability of communication on financial information, thus becoming comparable to the IAS 1 (Daske and Gebhardt, 2006). Both the GAAP and the IAS 1 require the accountants to give an accurate and respectable company’s financial position at a specific period. Besides, the GAAP reporting standards apply the principle of materiality, where accountants are responsible for recording fully disclosed financial information in all financial reports. Similarly, the IAS 1 financial statements involve proper preparations and presented to satisfy the general users’ data requirements. They cannot require the reporting entity in practice for the accounting reports according to their specific information requirements. Furthermore, these financial reporting procedures enable the company to apply similar financial reporting procedures from one accounting period to another, thus allowing financial compatibility between the periods.
The US GAAP and the IAS 1 differ in terms of presenting financial statements in various ways. These differences are typically depicted on how the layout and groupings of financial position statements, presentation of long-term debt, and the collections of different tax assets and liabilities. Thus, the IAS 1 provides more specific guidance than the US GAAP in terms of the balance sheet layout, classification, and the items to be included, thus contrasting views. Besides, IAS 1 describes how a company lays its current and non-current assets and liabilities as separate classifications in its financial position statement. It will not group deferred tax assets (liabilities) as existing assets (liabilities) of which the US GAAP differs from it.
References
Daske, H., & Gebhardt, G. (2006). International financial reporting standards and experts’ perceptions of disclosure quality. Abacus, 42(3‐4), 461-498.
Neal, S. (2019). Jardine Matheson: Drugs, War, and Empire. In Ethical Branding and Marketing: Cases and Lessons (pp. 159-172).
Buschhüter, M., & Striegel, A. (2011). IAS 1–Presentation of Financial Statements. In Kommentar Internationale Rechnungslegung IFRS (pp. 256-285). Gabler.