Financial reporting involves providing useful and necessary information for decision-making within an economic entity. Inside and outside an enterprise there are a number of stakeholders who have different levels of power, influence and interest in the organization. They shall, at regular intervals, request information for the purpose of taking different decisions.
Financial reporting is the process of providing information to the company's stakeholders in order to make decisions, and the financial statements are the result of the financial reporting process.
The financial statements include the balance sheet, the profit and loss account, the cash flow statement and the management report. Depending on the size of the enterprise, explanatory notes are attached to them, which contain more details on the economic performance of the company and the accounting policies used.
Until a few years ago, the annual financial statements had an additional role to play, that of providing the local tax authorities with the taxable value of the buildings owned by the company.
Starting with January 1, 2016, following the amendment of the provisions of the Fiscal Code regarding the taxation of buildings, the taxable value of the buildings owned by companies was no longer taken from the financial statements submitted by them.
Although the taxation of buildings is no longer carried out on the basis of accounting values, the Romanian Accounting Law and international financial reporting standards (IFRS) recommend performing the revaluation of assets and liabilities held by the company, in order to determine their fair value at the balance sheet date and to present a more current value of equity. Fair value is determined on the basis of valuations made by authorised valuers in accordance with current Asset Valuation Standards for financial reporting purposes (fair value recording in the books).
An assessment for financial reporting can be useful to any company, but especially to companies that meet the conditions for auditing financial statements and companies listed on the Stock Exchange.
Valuations are required for various purposes during the preparation of companies' financial statements. Examples of such purposes are: determining the value of an asset or liability to record it in the financial statements, allocating the purchase price of a business or real estate, testing the impairment of assets, or classifying leases. More about these purposes we will write soon.
In the evaluation process for financial reporting, the following steps are taken:
· Analysis of the list of assets or liabilities to be valued;
· Identification of specific elements necessary for the classification of assets or liabilities (if not performed);
· Establishing the premises of the evaluation;
· Analysis of auditors' requirements;
· Discussions with company representatives and asset inspection;
· Identifying and accessing certain public or private sources of information considered by the assessor to be necessary for the elaboration of the evaluation report;
· Communication of the estimated value and preparation of the actual valuation report.
Only an authorized assessor can prepare the valuation for financial reporting. The authorised valuers who can carry out such valuations have different specialisations: business and intangible asset (IA) appraisers, movable property appraisers (EBMs), real estate appraisers (EPI).
With over 17 years of experience in valuation, FairValue has a strong team of experts in accounting, finance, fixed assets and intellectual property. The over 70 evaluators from all over the country, who make up the #fairvalueteam, are authorized for all the specializations listed above, being ready to respond promptly to any request for evaluation in the field of financial reporting, regardless of its complexity and the location of the assets on the territory of Romania.
You can call with confidence, we guarantee for their professionalism.
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