Fresh Fun Inc. Accounting Case Essay

2718 WordsFeb 19, 201511 Pages
Case 14-2- Fresh Fun Inc. To: Kevin Maclean, Fresh Fun Inc. From: auditor, Doyle Republic Regarding: Jan 31, 2012 year-end financial reporting and impact of change to IFRS Overview Since the bank loan’s terms require financial statements to be prepared in accordance with Generally Accepted Accounting Principles (GAAP) that is one constraint. Another constraint is to follow the rules of Accounting Standards for Private Enterprises (ASPE). IFRS is not a constraint since you have chosen to use ASPE in preparing the financial statements. However, as per your request I will also outline how the issues would have been treated differently under IFRS in addition to ASPE. The primary users are the 3 current owners including yourself who take an active role in managing the company. You would like the financial statements to be presented in such a manner as to indicate strong financial success and growth. You have plans to expand and possibly go public and having strong financial statements will enable you to attract the right investors and resources needed to make this happen. The more money the company makes the more you will benefit financially as the owners. It is important to remember that financial statements must be presented fairly and in accordance with accounting principles as it is evident here that there is a bias towards presenting statements in a financially strong way. Another important user is the controller, Liam Hanlon who is a potential shareholder. As a potential shareholder, he may wish to present financial statements is such a way as to make it seem as if the company is not a very attractive investment to deter other potential investors and to be able to purchase shares at a lower price. Another slightly conflicting interest would be to prepare accurate

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