Welcome to your next module, FNSACC414 - Prepare financial statements for non reporting entities.
Accounting and the process of preparing financial statements enable business owners, managers, and key stakeholders to make informed operational, financial, and strategic decisions. This process involves collecting and recording financial data and presenting it in an easily understandable and usable format for decision-making purposes. The most common financial statements are:
- Profit & Loss Statement: This statement summarises the revenues, expenses, and resulting net income or loss of a business over a specific period, typically monthly, quarterly or yearly.
- Balance Sheet: The balance sheet provides a snapshot of a business’s financial position at a particular point in time, detailing its assets, liabilities, and equity.
- Cash Flow Statement: This statement tracks the inflows and outflows of cash and cash equivalents within a business, grouping them into operating, investing, and financing activities.
A reporting entity is any entity where it’s reasonable to expect there are users that depend on the report to understand the financial position and performance of the entity so they can make decisions. These users could be members, employees, creditors, lenders, etc. Reporting entities are required to prepare a general-purpose financial report according to the Corporations Act and adhere to all accounting standards.
A non reporting entity is an entity where the people responsible for its governance have decided there aren’t any users who depend on having a report prepared in line with the full accounting standards. They may have a limited group of users or only need to report for specific purposes like bank reporting, industry reporting, or grant acquittal. Non-reporting entities can create a special-purpose financial report. However, they must still comply with legislative requirements to maintain proper records, fulfil taxation obligations, and meet any other specific requirements dictated by their organisational structure or activities.
In this module, you will be presented with the skills and knowledge required to prepare special-purpose financial statements for entities that do not have a statutory duty to file financial reports with government agencies and regulators.
It applies to individuals who use specialised knowledge and systematic approaches to collate and prepare financial information in line with accounting standards.
The knowledge covered in this module is included but not limited to:
- Compiling data required for preparing financial statements for non-reporting entities
- Preparing financial statements for non-reporting entities
After each topic, you will have the opportunity to engage in learning activities. These learning activities will allow you to test your understanding of the topic before undertaking the assessment.
Solutions to the learning activities are provided; however, we encourage you to attempt the activity before viewing the answer. Contact your trainer if you have questions regarding your answers and/or the solutions provided.
At the end of this module, you will be required to undertake three assessments: a theory assessment and two case study assessments.
The case study assessments use simulated businesses. Assessment two is based on a not-for-profit organisation called Bounce Fitness. Assessment 3 is based on a partnership called ShineBright Cleaners. Both assessments use Xero accounting software.
Xero Free Trial | Xero You must access the free trial version of Xero and complete the assessments within 30 days of creating the simulated company file.
Please be aware that the Xero license provided to you is a trial version only. It is crucial to complete these assessments within this 30-day timeframe. We encourage you to manage your time effectively and plan your coursework accordingly. Failure to complete the assessments before your trial expires will result in losing access to your Xero file, and any work you have completed to date will be irretrievably lost.
Before you begin the assessments, we recommend downloading and reading 'Prepare to Use Xero'. This document gives clear, step-by-step instructions on how to use Xero for the case studies. It also includes links to Xero Central for more help if needed.
