Write a detailed note on social equality of corporate financial reporting
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In any industry, whether manufacturing or service, we have multiple departments, which function day in day out to achieve organizational goals. The functioning of these departments may or may not be interdependent, but at the end of day they are linked together by one common thread – Accounting & Finance department. The accounting & financial aspects of each and every department are recorded and are reported to various stakeholders. There are two different types of reporting – Financial reporting for various stakeholders & Management Reporting for internalManagement of an organization. Both these reporting are important and are integral part of Accounting & reporting system of an organization. But considering the number of stakeholders involved and statutory & other regulatory requirements, Financial Reporting is very important and critical task of an organization. It is vital part of Corporate Governance. Let’s discuss about various aspects of Financial Reporting in following paragraphs.
n case of listed companies the frequency of financial reporting is quarterly & annual.
Financial Reporting is usually considered as end product of Accounting. The typical components of financial reporting are:
The financial statements – Balance Sheet, Profit & loss account, Cash flow statement & Statement of changes in stock holder’s equity
The notes to financial statements
Quarterly & Annual reports (in case of listed companies)
Prospectus (In case of companies going for IPOs)
Management Discussion & Analysis(In case of public companies)
The Government and the Institute of Chartered Accounts of India (ICAI) have issued various accounting standards & guidance notes which are applied for the purpose of financial reporting. This ensures uniformity across various diversified industries when they prepare & present their financial statements. Now let’s discuss about the objectives & purposesof financial reporting.
Objectives of Financial Reporting
According to International Accounting Standard Board (IASB), the objective of financial reporting is “to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions.”
The following points sum up the objectives & purposes of financial reporting –
Providing information to management of an organization which is used for the purpose of planning, analysis, benchmarking and decision making.
Providing information to investors, promoters, debt provider and creditors which is used to enable them to male rational and prudent decisions regarding investment, credit etc.
Providing information to shareholders & public at large in case of listed companies about various aspects of an organization.
Providing information about the economic resources of an organization, claims to those resources (liabilities & owner’s equity) and how these resources and claims have undergone change over a period of time.
Providing information as to how an organization is procuring & using various resources.
Providing information to various stakeholders regarding performance management of an organization as to how diligently & ethically they are discharging their fiduciary duties & responsibilities.
Providing information to the statutory auditors which in turn facilitates audit.
Enhancing social welfare by looking into the interest of employees, trade union & Government.
n case of listed companies the frequency of financial reporting is quarterly & annual.
Financial Reporting is usually considered as end product of Accounting. The typical components of financial reporting are:
The financial statements – Balance Sheet, Profit & loss account, Cash flow statement & Statement of changes in stock holder’s equity
The notes to financial statements
Quarterly & Annual reports (in case of listed companies)
Prospectus (In case of companies going for IPOs)
Management Discussion & Analysis(In case of public companies)
The Government and the Institute of Chartered Accounts of India (ICAI) have issued various accounting standards & guidance notes which are applied for the purpose of financial reporting. This ensures uniformity across various diversified industries when they prepare & present their financial statements. Now let’s discuss about the objectives & purposesof financial reporting.
Objectives of Financial Reporting
According to International Accounting Standard Board (IASB), the objective of financial reporting is “to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions.”
The following points sum up the objectives & purposes of financial reporting –
Providing information to management of an organization which is used for the purpose of planning, analysis, benchmarking and decision making.
Providing information to investors, promoters, debt provider and creditors which is used to enable them to male rational and prudent decisions regarding investment, credit etc.
Providing information to shareholders & public at large in case of listed companies about various aspects of an organization.
Providing information about the economic resources of an organization, claims to those resources (liabilities & owner’s equity) and how these resources and claims have undergone change over a period of time.
Providing information as to how an organization is procuring & using various resources.
Providing information to various stakeholders regarding performance management of an organization as to how diligently & ethically they are discharging their fiduciary duties & responsibilities.
Providing information to the statutory auditors which in turn facilitates audit.
Enhancing social welfare by looking into the interest of employees, trade union & Government.
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