Sarah has recently joined a company as an accountant. The Finance Manager has appointed her to oversee the production of the annual report which includes the audited financial statements, auditor’s report, directors’ report and various unaudited disclosures.

Required

a) Advise Sarah of three ways or formats for presenting information in the annual report, outlining the strengths and weaknesses of each format.

b) The first page(s) of the annual report often include financial highlights and the Chairman’s Report. Assume that a user reads these pages before reading the rest of the report. Using the following heuristics, explain how the user might formulate a decision about investing in the company. In your answer, you should also outline the strengths and weaknesses of each heuristic.

i) Anchoring and adjustment

ii) Representativeness