Financial Reporting Regulations and Requirements

Accounting regulations and the reporting requirements are essential in the preparation of the financial reports. One of the accounting regulations and reporting requirements is the reporting of the control procedures. The reporting of the control procedures in the accounting requirements and reporting is required to demonstrate the materiality and faithfulness of the financial information released (Gabriel & Marcus, 2010). This aspect is demonstrated by the clarification on the procedures followed and the internal control measures in deriving the financial report of the firm. Thus, the control procedures requirement seeks to assure the users of the financial information that the results have been derived with due diligence (Gabriel & Marcus, 2010). Indeed, the information required under the control procedures of the Starbuck Corporation is on disclosure controls and procedures employed, and the report of the management towards the internal control measures in preparing the financial report. The extent of the control procedure section to disclose the controls and the procedures employed in deriving the consolidated financial statements allows the users of the financial information to have a clear reflection on the quality and reliability of the financial statements. Equally, the report by the management detailing the internal controls that have been employed in ensuring the financial information is fair is vital in demonstrating the materiality of the financial information. 

Another essential requirement in the preparation of the financial reports is the reporting of the segment information. The segment information is required to inform the creditors and the investors interested on the financial position and results of the firm about the essential operating units of the corporation that they can employ in their investment decisions (Gabriel & Marcus, 2010). This rationale is reflected by the disclosure of the operating segments the company runs in the financial statement. Thus, the information disclosed regarding the segment information disclosure of the Starbuck Company entails the four operating segments the company runs. These operating segments include Americas (69%), China and Asia Pacific (13%), Europe, Middle East, and Africa (EMEA) (6%), channel development (9%), and the other segments at 3%. Consequently, the investors and creditors evaluating the financial results of the Starbucks can make an informed decision based on the distribution of the operating segments towards the consolidated financial report. 

Moreover, the reporting of the estimates and assumptions employed in financial report preparation is another requirement disclosure in the financial report. The estimates and assumptions disclosure is required in the financial report to inform the users of the financial information of the judgments that have been applied in realizing the financial information (Gabriel & Marcus, 2010). The users of the information can assess if the financial results have been exaggerated. The information disclosed regarding the reporting of the estimates and assumptions of the Starbuck include the estimation of inventory reserves, income derived from unredeemed value cards, impairment of assets and goodwill, forfeiture rates of stock-based compensation, possible future tax consequences, and the retirement obligations in the future. 

The reporting of the investments and fair value is also required in the financial report preparation. The disclosure of the investments and fair value is necessary for the preparation of the financial report to inform the investors, creditors and the shareholders of the firm’s liquidity position if the investments held are liquidated. This element is reflected by the determination of the market price of the various investments instead of the historical price of the investments (Gabriel & Marcus, 2010). Accordingly, the investments and fair value information of the Starbuck reflected in its 10-k statement entail the determination of the fair value using the active market’s quoted prices, carrying value to value cash and cash equivalents, and the use of the internal valuation model. Thus, the Starbuck’s assets and liabilities disclosed using the fair value include plant and equipment, property, and the intangible assets.

 Equally, the reporting of the leases is an essential part of the financial reporting. The disclosure of the leases is necessary to the role and the extent of the leases the company has undertaken to the investors, shareholders and the creditors. The information helps the shareholders, investors, and the creditors of the value the lease creates and the risk involved (Gabriel & Marcus, 2010). Consequently, the investors and the creditors can decide on the value of engaging the firm based on the type and the extent of the leases. The information disclosed regarding the lease structure of the Starbuck Company entails the operating leases and the financing lease arrangement. 

The operating leases include the leased retail stores, warehouse facilities, distribution facilities, roasting, and the office separate. In contrast, the financing lease arrangement entails the leased buildings the Starbucks is involved in their construction. This lease is recorded in the property, plant and equipment assets while the compensating lease financing is recorded under the other long-term obligations. Consequently, the accounting regulations and the reporting requirements involved in the financial report preparations are instrumental in ensuring the financial reports are relevant to the users. The users of the financial report can make an informed decision through evaluations due to the regulations and requirements that improve the quality of the financial results.

References

Gabriel, S. J., & Marcus, A. (2010). Financial Accounting. New York: McGraw-Hill Education.