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Eksternt regnskab (slides samlet)
Page 1: Introduction
Statssautoriseret revisionspartnerselskab
An independent member of the global advisory and audit network.
Lesson 1: The Annual Financial Statement and Conceptual Framework for Accounting.
Page 2: Instructor Experience
Instructor: Casper Jensby
Experience:
Beierholm, Aarhus (June 2013 - present)
Ernst & Young, Aarhus (September 2005 - June 2013)
Ernst & Young, London (October 2009 - December 2009)
Education:
Authorized Auditor (November 2015)
Cand.merc.aud (January 2013)
HD in Accounting and Management Accounting (June 2009)
Other roles:
Lecturer at Aarhus University (January 2017 - present)
Examiner at written exams for authorized auditors (August 2017 - present)
Approved Censor for economic master’s programs (April 2018 - present)
Contact: cje@beierholm.dk
Page 3: Learning Objectives
After participating in accounting, the student should be able to:
Analyze and interpret financial information for decision-making.
Discuss the implications of different accounting concepts, methods, and principles on financial statements.
Conduct financial calculations and analyses pertaining to corporate profitability, liquidity, growth, and risk.
Perform an analysis of a company's financial statement based on annual report data.
Prepare a budget estimating future earnings and cash flow derived from financial and strategic value drivers.
Assess a company’s cost of capital based on capital structure, operational, and credit risk.
Reflect on the company's financial and economic results.
Page 4: About Learning
Education: Not something you receive but something you take; your actions lead to learning.
At the university: Much of learning occurs outside class times.
Lectures provide an overview of the subject; examples will help you solve problems.
Completing assignments before practical sessions is essential.
One-third of your workload this semester is on external financial statements, needing 12-13 hours of study each week.
Knowledge gained in accounting is crucial for the remainder of your education.
Page 5: What We Do Here
Understand how a company operates through its annual financial statement.
Regardless of your future role (auditor, controller, consultant, analyst, etc.), knowing how accounts are created and read is essential.
General knowledge of financial statements facilitates following societal debates.
A prerequisite subject for the rest of your education.
Page 6: What is External Annual Accounting?
External accounting contains information about a company's financial situation for external users.
The annual report aims to assist users in making better decisions.
The annual report is the most important informational document for stakeholders (investors, banks, customers, employees, competitors).
Page 7: What We Will Learn Today
What does external accounting include, and who reads it? (Textbook pp. 37-41)
What is the legal basis for Danish companies?
What is the function of the conceptual framework and what does it contain? (Textbook pp. 42-46)
What does an accounting statement consist of, and how are its components connected? (Textbook pp. 46-54)
Page 8: The External Annual Statement
Page 9: The Flow of Accounting Information
Flow of Accounting Information:
Recorded in accounting business system activities leading to financial statements.
Page 10: The Annual Report as an Information Medium
Prepared by management for stakeholders, summarizing the implications of previous transactions and production actions.
The annual report is a primary communication tool for a company.
Reviewed by an independent auditor who certifies the legality and accuracy of the report.
Page 11: The Annual Financial Statement
Prepared by management, summarizing all transactions with the environment regarding:
The value of resources and obligations at year-end – balance sheet
Value creation within the year – income statement
Cash transactions – cash flow statement
Transactions with owners – equity statement
Additional information and calculations – notes.
Page 12: Legal Basis
Page 13: Legal Framework
Annual Accounts Act
Bookkeeping Act
Company Act
Stock Exchange Act and information obligations for listed companies
IAS/IFRS - International Financial Reporting Standards (mandatory for listed groups since 2005 and for listed companies since 2009)
Decisions from accounting control (formerly the Fund Council)
Danish accounting guidance for accounting classes B and C (published by the FSR)
Page 14: The Annual Accounts Act
Main legal framework
New annual accounts act came into effect – Amendment law passed on August 8, 2019.
Increasingly inspired by international accounting standards – Allows the use of IFRS 9, 15, and 16.
Covers all commercial companies except:
Companies under Financial Supervisory Authority accounting rules
Companies covered by the law of state accounting
Companies covered by accounting rules in accordance with the law of municipal governance.
Page 15: Building Block Model
Class D: Listed and state-owned limited companies: § 102
Class C: Medium/Large companies: § 78 - § 101
Class B: Small companies: § 22 - § 77
Class A: Personally liable companies: § 18 - § 21
Fundamental requirements for the annual report: § 11 - § 17
Accounting requirements determined by company size and ownership → Building Block Model
Page 16: Classification of Accounting Classes
According to the Annual Accounts Act § 7, accounting classes can be classified as illustrated.
If a company exceeds two of the specified sizes for two consecutive years, they must move one class up, and vice versa.
Page 17: Calculation of Net Revenue, Balance Sheet Value, and Employees
Net Revenue: Sales value of products and services, minus discounts, VAT, and other taxes directly related to sales. Includes financial income/returns from investments.
Balance Sheet Value: Calculated based on the assets' accounting and measurement requirements according to the accounting class previously applicable to the company.
Average number of employees: Calculated according to ATP (Labor Market Retirement Savings) method.
Page 18: Example of Calculation
Example of the calculation of net revenues for Ejendomsselskab A/S for the years 20X2 and 20X1
Analysis of balance sheet and number of employees.
Page 19: Conceptual Framework
Page 20: Conceptual Framework in the Annual Accounts Act
The conceptual framework provides general guidelines for how an annual report should be structured to be informative for users.
Theoretical foundation for the Annual Accounts Act, serves as a basis for new legislation.
Based on the International Accounting Standard Board’s (IASB) conceptual framework, Conceptual Framework.
Page 21: Objectives of Financial Reporting
To provide useful financial information to existing and potential investors, lenders, and other creditors.
Financial reports should provide information on the entity's economic resources, claims, and changes in economic resources and claims.
Qualitative Characteristics:
Fundamental: Relevance and Faithful Representation
Enhancing: Comparability, Verifiability, Timeliness, Understandability.
Constraints: Cost and Accrual Basis.
Page 22: Components of the Conceptual Framework
The conceptual framework consists of:
General Clause (§11)
Quality Requirements and Users’ Information Needs (§12)
Fundamental Assumptions and Implementation Rules (§§13-16)
Page 23: General Clause
The annual report must provide a true and fair view (§11).
Relevance and Reliability (§12, stk. 3).
Note that provisions of ÅRL may be deviated from if application does not provide a true and fair view (ÅRL § 11, stk. 3)
Rarely occurs in practice.
Page 24: Users' Information Needs
ÅRL §12:
Stakeholders: Users are those whose financial decisions are affected by an annual report
Purpose of financial reporting;
Investment of the user's own resources
Management of the company's resources
Distribution of the company’s profit.
Page 25: Company Stakeholders
Primary stakeholders include:
Current and potential shareholders
Creditors
Employees
Customers
Strategic partners
The local community
Granting and fiscal authorities
Page 26: Recognition and Measurement
Recognition: When should transactions and events be posted on the income statement and balance sheet?
Recognition criteria:
Relevance: Information must make a difference in financial decisions.
Reliability: Information must be verifiable, credible, and neutral.
Measurable: The item must have a relevant measurable characteristic.
Page 27: Relevance and Reliability?
Consider whether the following accounting items are relevant and reliable:
Breakthrough research for a diabetes vaccine at Novo Nordisk.
Danske Bank purchases 1,000 Danish government bonds.
The Lego trademark.
Compensation claim against a former sales agent.
Page 28: Basic Assumptions
ÅRL § 13 includes the following fundamental assumptions:
Clarity
Substance
Materiality
Going Concern
Cautious Neutrality
Periodicity
Consistency
Gross Value
Continuity
Page 29: Relationship Between Components of the Financial Statement
Page 30: Components of the Financial Statements
Relationship Between Balance Sheet and Income Statement:
Balance Sheet: ASSETS = LIABILITIES + SHAREHOLDERS' EQUITY (SE)
Income Statement:
Revenues - Expenses = Net Income
Retained earnings: this is the portion of a company’s net income that is not paid out as dividends to shareholders, but is instead retained in the company to finance future activities, investments, or repayment of debt.
Page 31: Components of Balance Sheet
ASSETS:
Resources under a company’s control resulting from past events, from which future economic benefits are expected to flow into the company.
LIABILITIES:
Existing obligations of the company arising from past events, the settlement of which is expected to result in an outflow of future economic benefits.
EQUITY:
The difference between assets and liabilities.
The asset side can be thought of as capital use while the liability side can be thought of as capital sourcing.
Page 32: Components of Income Statement
Net Revenue: ÅRL Appendix 1 C, no. 13 states that net revenue is the selling value of goods and services, minus discounts, VAT, and other taxes directly related to the sale.
Net Revenue (revenue) + Incoming revenue - Expenses (costs)= Year's result (profit).
Income Definition: ÅRL Appendix 1 C, no. 12 states that income means increases in economic benefits in the accounting period in terms of inflow or increase in assets or decrease in liabilities that increase equity.
Costs: ÅRL Appendix 1 C, no. 14 states that costs are decreases in economic benefits which exist in the accounting period in the form of outflow or decrease in assets or increase in liabilities negatively impacting equity.
Page 33: Example: Hummel A/S
Page 34: Summary of Today’s Learning
External accounting provides information about the company’s financial situation for external users and helps in decision-making.
The legal framework for Danish companies is primarily the Annual Accounts Act and IFRS.
The conceptual framework of the Annual Accounts Act provides general guidelines on how an annual report should be structured to be informative to users, thereby providing a true picture of the company.
Recognition and valuation are based on relevance and reliability.
The annual accounts consist of balance (assets, liabilities, and equity), income statement (net revenue, income, and costs), equity statement, cash flow statement, and notes.
Page 35: Next Time: Bookkeeping and VAT
Prepare: HHTS chapter 2 and additional A + B. I will not explicitly cover the various accounting items on pages 95-97, please read them carefully at home and consider their names in Danish.
Follow closely examples of postings in the book.
Page 36:STATSAUTORISERET REVISIONSPARTN ERSELSKAB
Independent member of the global advisory and auditing network.
Lesson 2 - Bookkeeping, Balance Sheets and VAT
Page 37: What Did We Learn Last Time?
External accounting provides information about the financial situation of the company for external users and assists in their decision-making process.
The legal framework for Danish companies includes the Annual Accounts Act and IFRS.
The conceptual framework of the Annual Accounts Act provides guidelines for how an annual report should be structured to be informative, i.e., present a true view of the company.
Recognizing relevance and reliability in accounting.
The annual financial statement consists of balance (assets, liabilities, and equity), income statement (net revenue, income, and expenditures), equity statement, cash flow statement, and notes.
Page 38: What Are We Learning Today?
General bookkeeping process – Textbook pp. 93-97
Registration of transactions (balance sheet) – Textbook pp. 97-105
Bookkeeping rules – debit, credit, and T-accounts – Textbook pp. 105-120
Forms required
VAT and calculation of purchases and sales VAT
Basic bookkeeping of VAT
Page 39: The General Bookkeeping Process
Page 40: Accounting and Bookkeeping Process
The Recording Process: JOURNAL-> Invoice -> LEDGER
Accounting System Activities lead to Financial Statements.
Page 41: Product and Cash Flow in a Manufacturing Company
Manufacturing Plant A/S: Cash Flow -> Inventory Flow
Page 42: Transaction Registration
Page 43: Balance Sheet
Shows the relationship in bookkeeping: Assets = Liabilities + Owners' Equity.
Page 44: Example: Review of Task 1a
Page 45: Financial Numbers
Page 46: Bookkeeping Rules
Credit: Eliminate liabilities to make room for income.
Debiting: Records what resources are applied to.
Page 47: Rules for Debit and Credit
Se also Exhibit 2-8 in HHTS
Debit (D) and Credit (K) rules established for different accounts are included.
Page 48: The Accounting and Bookkeeping Process
Ending Statement -> Annual Report
Page 49: Accounting Context
Date: 31.12.x3, with given data and context.
Page 50: Bookkeeping and Account Concept
A bookkeeping system consists of a collection of accounts; a comprehensive overview of all company accounts can be found in a chart of accounts.
Page 51: Examples
Review of task 1b.
Page 52: Form Requirements
Page 53: Chart of Accounts
Companies have significant freedom regarding the establishment of their chart of accounts, but the chart must align with operational needs.
Page 54: Examples
Consider how the following events impact the balance sheet.
Company issues new shares for 100,000 kr.
Company buys a machine for 50,000 kr. in cash.
Company buys a machine on credit for 50,000 kr.
Company finishes producing a new product costing 5,000 kr. with an estimated selling price of 10,000 kr.
Page 55: 201X - Financial Overview
Page 56: VAT
General Consumption Tax imposed on consumption expenses by individuals.
Page 57: Value Added Tax (VAT)
Merchants selling over 50,000 kr. annually must register for VAT with the Danish Business Authority.
Page 58: Updates to VAT Regulations
Full VAT deduction for hotel overnight stays – 25% deduction for breakfast.
Page 59: Sales Tax and Purchase VAT
VAT-registered Danish enterprises must charge sales VAT of 25%:
Example: Selling a product for 1,000 kr., which total is 1,250 kr with VAT included.
Page 60: VAT Accounting Example
Sales Transaction: 1,000 kr + 250 kr VAT = 1,250 kr.
Page 61: VAT Recording Example
Purchase Transaction: Costs 1,000 kr including VAT.
Page 62: VAT Recording Example Continued
Financial transactions must be recorded accurately.
Page 63: Summary of Learning
Accounting accounts primarily follow the flow of goods and money in the company.
Page 64: Next Time: Periodization and Matching
Prepare HHTS chapter 3.
Page 65: Statssautoriseret revisionspartnerskab
Page 66: Last Session Recap
Page 67: Today's Learning Goals
Page 68: Task 1
Page 69: Balance and Income Statement Relationship
Page 70: Double Entry Bookkeeping
Page 71: Components of the Accounting Statement
Page 72: Additional Information
Page 73: Balancesheet Format - T Accounts
Page 74: Market Classification of Assets
Page 75: Periodization & Matching Principles
Page 76: Accounting and Bookkeeping Process
Page 77: Periodization (Accrual Accounting)
Page 78: Periodization and Timeliness
Page 79: Earnings Recognition
Page 80: Expendable Transactions
Page 81: Matching Principle
Page 82: Summary of Periodization
Page 83: Indirect Donations
Page 84: Situational Assumptions
Page 85: Closing Transactions
Page 86: Accounting and Bookkeeping Process - Closing Schedules
Page 87: Closing Accounts
Page 88: Depreciation
Page 89: Depreciation Procedure
Page 90: Definition of Depreciation
Page 91: Overview of Depreciation
Page 92: Methodologies for Depreciation
Page 93: Example Calculation
Page 94: Posting Example
Page 95: General Summary of Learning
Page 96: Next Session Topic
Page 97: Lesson Overview
Page 98: Last Lessons Overview
Page 99: Overview of Learning Goals
Page 100: Homework Assignments
Page 101: Overview of Financial Reporting
Page 102: Comprehensive Financial Reporting
Page 103: Risk Assessments
Page 104: Investment Management Specialization
Page 105: Sector Evaluations
Page 106: Financial Strategies Overview
Page 107: Recap of Learning Objectives
Page 108: Financial Reporting Recap
Page 109: Financial Management Principles
Page 110: Financial Auditing Practices
Page 111: Transitioning to Standard Procedures
Page 112: Standard Operational Procedures
Page 113: Financial Reporting Methodologies
Page 114: Financial Debt Management
Page 115: Planning for Economic Development
Page 116: Financial Measurement Impacts
Page 117: Overview of Corporate Structure
Page 118: Transparency in Financial Reporting
Page 119: Corporate Governance Guidelines
Page 120: Future Financial Planning
Page 121: Financial Marketing Principles
Page 122: Financial Presentation Formats
Page 123: Student Advice
Page 124: Upcoming Lectures
Page 125: Financial Framework Structures
Page 126: Financial Reporting Obligations
Page 127: Contextual Financial Insights
Page 128: Macro-Economic Factors
Page 129: Risk Management Strategies
Page 130: Overview of Student Financial Literacy
Page 131: Interactive Classroom Activities
Page 132: Conclusion of Today's Lesson
Page 133: Next Sessions Overview
Page 134: Next Lecture Overview
Page 135: Recap of Last Lessons
Page 136: Overview of Upcoming Goals
Page 137: Insight into Financial Structuring
Page 138: Insights into Financial Structures
Page 139: Overview of Income Statements
Page 140: Key Definitions in Accountability
Page 141: Financial Reporting Basics
Page 142: Overview of Income Reporting
Page 143: Summary of Revenue Types
Page 144: Introduction to Sales Recognition
Page 145: Rationale for Income Recognition
Page 146: Best practices in Recognition Standards
Page 147: Insights into Income Reporting
Page 148: Recognition of Revenue Processes
Page 149: Treatment of Revenue Recognitions
Page 150: Sales Process for Financial Transactions
Page 151: Revenue Recognition Details
Page 152: Matching Principle in Financial Accounting
Page 153: Business Operations Overview
Page 154: Financial Reporting Techniques
Page 155: Evaluating Financing Methods
Page 156: Sales Recognition Applications
Page 157: General Revisiting of Structure
Page 158: Reflections on Documentation
Page 159: Future Plans Overview
Page 160: Evaluation and Overview
Page 161: Upcoming Learning Goals
Page 162: Goal Setting for Future Education
Page 163: Next Session Recap
Page 164: Classroom Interactive Session
Page 165: Classroom Management Strategies
Page 166: Preparing for Future Lessons
Page 167: Forward Planning
Page 168: Course Evaluation
Page 169: Knowledge Retention Techniques
Page 170: Overview of Task Examples
Page 171: Business Project Procedures
Page 172: Project Types Overview
Page 173: Operational Models
Page 174: Conceptual Understanding of Models
Page 175: Business Strategy Evaluation
Page 176: Structuring and Management
Page 177: Practical Implementation Review
Page 178: Future Planning Models
Page 179: Insightful Practice for Planning
Page 180: Financial Clarity Review
Page 181: Business Situational Analysis
Page 182: Business Process Overview
Page 183: Effective Fundraising Practices
Page 184: Business Collaboration Recommendations
Page 185: Future Business Insights
Page 186: Corporate Responsibility Insights
Page 187: Operational Business Practices
Page 188: Strategic Business Management
Page 189: Recommendations for Corporate Structure
Page 190: Assisting Corporations in Strategy
Page 191: Business Models in Production
Page 192: Future Focus Areas
Page 193: Corporate Structure and Management
Page 194: Financial Planning Overview
Page 195: Accounting Framework Structures
Page 196: Corporate Accountability Insights
Page 197: Corporate Responsibility
Page 198: Insight into Financial Realities
Page 199: Practical Financial Applications
Page 200: Corporate Reporting Obligations
Page 201: Practical Reporting Advice
Page 202: Framework Applications
Page 203: Financial Integrity
Page 204: Business Flow Structure
Page 205: Financial Efficiency
Page 206: Effective Business Practices
Page 207: Overview of Business Resources
Page 208: Practical Insights for Business
Page 209: Reporting Standardization
Page 210: Business Ethics Review
Page 211: Integrating Corporate Practices
Page 212: Financial Networking Practices
Page 213: Resource Allocation
Page 214: Operational Effectiveness
Page 215: Business Leadership Insights
Page 216: Future Business Goals
Page 217: Reassessing Business Strategies
Page 218: Business Assessment Framework
Page 219: Corporate Strategy Overview
Page 220: Business Accountability
Page 221: Future Leadership Strategies
Page 222: Corporate Structure Analysis
Page 223: Presentation Readiness
Page 224: Business Ethics Overview
Page 225: Future Growth Strategies
Page 226: Corporate Development Insights
Page 227: Insightful Planning Practices
Page 228: Business Review
Page 229: Employee Relations Overview
Page 230: Employee Independence Practices
Page 231: Business Connectivity Overview
Page 232: Operational Governance
Page 233: Business Practices in Context
Page 234: Financial Integration Strategies
Page 235: Financial Efficiency Trends
Page 236: Overview of Business Insights
Page 237: Insights on Economic Challenges
Page 238: Corporate Reassessment Plans
Page 239: Future Planning Techniques
Page 240: Performance Review and Next Steps
Page 241: Overview of Financial Practices
Page 242: Relationships and Policies
Page 243: Community Engagement Overview
Page 244: Integrative Financial Policies
Page 245: Group Financial Strategies
Page 246: Business Overview
Page 247: Business Insight Advertising
Page 248: Economy Management Practices
Page 249: Performance Goals
Page 250: New Business Direction
Page 251: Business Planning Framework
Page 252: Corporate Income Guidance
Page 253: Corporate Development Evaluation
Page 254: Future Evaluation Criteria
Page 255: Community Influence Overview
Page 256: Community Cooperation Insights
Page 257: Event Roundup
Page 258: Future Event Planning
Page 259: Event Execution Plan
Page 260: Event Evaluation Criteria
Page 261: Forward Looking Assessment
Page 262: Event Management Overview
Page 263: Strategic Events Analysis
Page 264: Corporate Collaboration Practices
Page 265: Event Planning Essentials
Page 266: Financial Responsibility Insights
Page 267: Business Resource Insights
Page 268: Business Strategy and Analysis
Page 269: Financial Overview Assessment
Page 270: Corporate Financial Summary
Page 271: Corporate Financial Assessment
Page 272: Corporate Strategic Goals
Page 273: Corporate Financial Insight
Page 274: Corporate Economic Decisions
Page 275: Financial Insight Overview
Page 276: Importance of Community Relationships
Page 277: Corporate Compliance Strategies
Page 278: Incorporating Financial Insights
Page 279: Generating Business Integrity
Page 280: Critical Financial Decisions
Page 281: Corporate Decision-Making Framework
Page 282: Future Trends Overview
Page 283: Ongoing Assessment Plans
Page 284: Corporate Collaboration Review
Page 285: Reviewing Innovations in Business
Page 286: Business Strategy and Analysis
Page 287: Future Business Approach
Page 288: Assessment Practices Overview
Page 289: Corporate Resource Value
Page 290: Resource Management Overview
Page 291: Devise Financial Strategies
Page 292: Community Influence Assessment
Page 293: Consolidation Principles Overview
Page 294: Financial Reassessment Guidelines
Page 295: Corporate Strategy Evaluation
Page 296: Collaboration Guidelines Guidance
Page 297: Community Engagement Practices
Page 298: Integrative Practice Guidelines
Page 299: Corporate Partnerships and Collaboration
Page 300: Business Strategy and Planning.
NoteStudied by 7 peopleNoteStudied by 31 peopleNoteStudied by 22 peopleNoteStudied by 6 peopleNoteStudied by 142 peopleNoteStudied by 17 people