Accounting Policies and Procedures Followed by J Sainsbury Plc and Tesco Plc

Current and quick ratios of J Sainsbury Plc has been compared to its rival Tesco Plc have been calculated under the liquidity head. For profitability, ratios relating to gross-profit margin and net profit margin have been prepared. Debt-equity ratio has been computed to highlight the gearing position. Return on equity and return on asset have been computed under investment. The ratios relating to the years 2009 and 2008 have been computed to highlight the trend in the direction of the ratios. A comparison with the industry has been done to highlight the position of the company in the industry. In the next part the purpose and nature of the financial statements has been discussed. After this the role of the audit committee in monitoring internal controls and practices has been discussed. This is followed by a discussion on the nature and purpose of Independent Auditor’s Report. Finally the internal auditor’s opinion and Statement on Corporate Governance with respect to internal audit and internal control has been briefly discussed.&nbsp.The financial statements of the company give summarized information about the financial performance of the company in the respective year. These are prepared as per accounting concepts and conventions. Ratios are computed using the information presented in the annual reports. These ratios are then compared with the previous years to identify any improvements or deteriorations. This can also be used for inter- industry comparison.Analysis of accounting conventions in Sainsbury
The financial statements of the company have been prepared as per International Financial Reporting Standards (IFRS).Basis of preparation- The financial data presented in the financial statements are in terms of sterling and have been rounded off to the closest million. Other than derivatives, “available for sale” financial assets and investment properties, which have been measured at fair value, all other items in the financial statements have been reported under “historical cost conventions”.