Business Financial Information and Its Importance

Statement of directors’ responsibility (page 434)

The basic purpose of directors of director’s report is to provide a narrative supplement to the financial information. The directors report usually goes with official accounts. The 1985 act (as amended) requires certain information to be included in the directors report. This is very useful to the investors as it gives details and information of the company’s activities, its directors, substantial holdings of its shares, its employees and its charitable and political donations in the year under review.

Company directors are responsible for the management of their companies. They must act in a way most likely to promote the success of the business and benefit its shareholders. They also have responsibilities to the company’s employees, its trading partners and the state. As a director, you need wide powers to help you promote the company. However, you face serious penalties if you abuse those powers or use them irresponsibly. Being a responsible director means more than just acting with honesty and integrity and using your talents to the company's best advantage. It means developing an understanding and awareness of the ever increasing legal obligations and responsibilities being placed on directors, breach of which can give rise to personal liabilities under the civil and criminal law and even disqualification from holding office as a director.

The relationship between the company and its directors is partly that of principal and agent. The directors are also trustees of the company's assets. The general role of directors is to manage the business of the company for the benefit of the members. For this reason, the directors have the power to bind the company. Accordingly, a director must ensure that he is regularly provided with sufficient information to satisfy himself that he and his fellow directors are fulfilling their obligations.

Property, plant and equipment – Use the relevant IAS to explain the...