3
Nature, principles and scope of financial reporting
Financial accounting and management accounting are different. The FFA/FA syllabus focuses on
financial accounting.
You may have a wide understanding of what accounting and financial reporting is about. Your job may
be in one area or type of accounting, but you must understand the breadth of work which an accountant
undertakes.
3.1 Financial accounting
So far we have dealt with financial accounts. Financial accounting is mainly a method of reporting the
financial performance and financial position of a business. It is not primarily concerned with providing
information towards the more efficient running of the business. Although financial accounts are of
interest to management, their principal function is to satisfy the information needs of persons not
involved in running the business. They provide historical information.
3.2 Management accounting
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