Within the financial statements there is a section that discloses the accounting policies used by the company for the financial year. The purpose of this will be discussed in this assignment while being applied to Morrison’s final accounts. The IASB will also be discussed; the discussion will include legislation which will show the legal requirements that the company has to keep to. It will then go on to explain why they may use those policies and who do they disclose them onto the financial statements for i.e. stakeholders. Accounting policies can be very important to stakeholders for multiple reasons which will be discussed below. The Accounting policies section of the financial statements are there for many reasons including shareholder information, legislation and for many other stakeholders which would take interest in what policies the company use and what the financial information is based on. Although Morrison’s have two sections for accounting policies in their annual report, only one will be discussed as one is for the group and the other solely for the company. The accounting policy section for the whole group of Morrison’s plc will be discussed below as it may portray a fairer view of the financial position of the company.
Morrison’s and their Policies
Morrison’s is large supermarket group which operate in the UK, they have over 403 stores in the UK. Their annual turnover was in excess of £14 billion and they currently employ over 124 000 employees [WM Morrison’s Annual Report, 2009] Morrison’s have many accounting policies stated in their Annual Report these accounting policies will only be stated as there are many descriptions. The accounting policies include Revenue Recognition, Other Operating Income, Segmental Reporting, Cost of Sales, Supplier Income, Property Transactions, Borrowing Costs, Deferred and Current Tax, Business Combinations and Goodwill, Property Plant and Equipment, Investment Property, Impairment of non-financial assets, Stocks, Non-current Assets Classified as held for sale, Leases, Lessor Accounting, Lessee Accounting, Provisions, Foreign Currencies, Retirement Benefits, Share Based Payments, Financial Instruments, Net Debt, Share Capital, Treasury Shares and Use of Critical Accounting Assumptions and Estimates [ WM Morrison’s Annual Report, 2009 ]. These Accounting Policies are all the policies that are stated in the Annual Report. The purpose of these being stated in the Annual Reports could be for stakeholders mainly shareholders however at the beginning of the Accounting Policies Section the Annual Report WM Morrison’s State “The financial statements have been prepared for the 52 weeks ended 1 February 2009 (2008: 3 February 2008) in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretation Committee (IFRIC) as adopted by the European Union and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. IFRS and IFRIC are issued by the International Accounting Standards Board (the IASB) and must be adopted into European Union law, referred to as endorsement, before they become mandatory under the IAS Regulation. Shown below are recent standards and interpretations that have been issued by the IASB, indicating their status of endorsement.” [Annual Report, 2009] this suggests that the main reason why Morrison’s state their Accounting policies in the Annual Report is for legal reasons and not specifically for stakeholders. They also may use these specific policies so they are in line with law decided by IASB for example they state that they use policies such as revenue recognition and business combination and Good will which could be found very useful information for entities that are interested in the financial stance of WM Morrison’s. They would be interested for example in the revenue recognition so they can see where WM Morrison’s receive their annual...