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One of the major components in Malaysian Financial Reporting Standard 101 is financial statements. The financial statements are a structured representation of the financial position and financial performance of an entity. The objective of financial statement is to provide information about the financial position, financial performance and cash flow of an entity that is useful to a wide range of users in making economical decisions. Financial statements also show the result of the management's quality of the resources delegated to it. To meet the objective, financial statements provide information about an entity's:
Income and expenses, including gains and losses;
Contributions by and distributions to owners in their capacity as owners; and
A complete set of financial statements comprises:
A statement of financial position as at the end of the period;
A statement of comprehensive income for the period;
A statement of changes in equity for the period;
A statement of cash flows for the period;
Notes, comprising a summary of significant accounting policies and other explanatory information; and
A statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or make a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.
An entity may use titles for the statements other than those used in this standard.
There are some general features that must be obeys by every financial reports according to MFRS 101.
Fair presentation and compliances with MFRSs
Financial statements shall present fairly the financial position, financial performance and cash flow of an entity. Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the MFRSs.
When preparing financial statements, management shall make an assessment of an entity's ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. The entity shall disclose every uncertainties and facts that may cause the entity cannot prepare the financial statement with going concern.
Accrual basis of accounting
AnÂ entityÂ shallÂ prepareÂ itsÂ financialÂ statements,Â exceptÂ forÂ cashÂ flow information, using the accrual basis of accounting. When the accrual basis of accounting is used, an entity recognises items as assets, liabilities, equity, income and expenses when they satisfy the definitions and recognition criteria for those elements in the MFRSs.
Materiality and aggregation
An entity shall present separately each material class of similar items. An entity shall present separately items of a dissimilar nature or function unless they are immaterial.
An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by MFRS.
Frequency of reporting
An entity shall present a complete set of financial statements at least annually. When an entity changes the end of its reporting period and presents financial statements for a period longer or shorter than one year, an entity shall disclose.
An entity shall disclose comparative information in respect of the previous period for all amounts reported in the current period's financial statements, except when MFRSs permitted or required not to do so. An entity shall include comparative information when it is relevant to an understanding of the current period's financial statements.
Consistency of presentation
An entity shall retain the presentation and classification of items in the financial statements from one period to the next unless it is apparent, following a significant change in the nature of the entity's operations or a review of its financial statements, that another presentation would be more appropriate having regard to the criteria for the selection and application of accounting policies in MFRS 108 or MFRS requires a change in presentation.
B)Explain the background of the company.
Background of Lonpac Insurance Bhd.
Lonpac Insurance berhad is incorporated in Malaysia on July 1994, which is the name, is shortcut from London & Pacific Insurance Company Berhad. In 1 may 1999, Lonpac insurance become the general insurance business. The company operates of 21 branches in Malaysia and also have foreign branch in Singapore. The paid-up capital of the company is RM 200,000,000 comprising of 200,000,000 ordinary shares of RM 1.00 each. In September 2005, Lonpac has reaffirmed by Rating Corporation berhad to be general insurance strength rating "AA" because reconfirming its reliability and financial stability in the insurance industry. Besides that, in September 2011, the A.M. Best Co. has affirmed the financial strength rating of "A-" and issuer credit rating (ICR) of "A-" to Lonpac, because lonpac is ability to gain market share underwriting performance and regardless of the competitive operating environment in its core markets, namely Malaysia and Singapore.
Background of Kurnia Insurance
30th December 1978 is the incorporated of the Kurnia Insurans Berhad. The kurnia insurance company which is buys of present owners in 1991 it is in the present shape and has another name, industrial and commercial insurance. Kurnia insurance in Malaysia is the most of the successful insurance companies. The success can be founded from the fair of business practices which is offers business opportunities service and protect the legitimate interests of policyholders. With the total of capitalization between RM 600milion and the total asset around RM2bilion in the kurnia insurance stands as stability and strength. Besides that, kurnia also boasts the extensive into the social network in industry; with the annual turnover in excess of RM 1 billion and target force in 5500 the country. In the Malaysia insurance market, kurnia expect to rising unbridled competition already undertaker in several of protective measures. Kurnia firmly believes that e-commerce will bring Kurnia to a higher level of performance and quality of service to its customers, business partners and agents in line with its motto "Excellence in Service". One predominant move is strategizing towards e-commerce and seizing a prominent position by being the forerunner in providing online insurance services.