SOUND FINANCIAL REPORTING IS A GOOD THING FOR BRINGING CONFIDENCE BACK TO THE CORPORATE WORLD
Ahmed Shafiul Huq
Principle of Accounting (EIB505)
Executive Master of Business Administration
Mr. Mohammad Rakib Uddin Bhuiyan Assistant Professor
Department of International Business Faculty of Business Studies
A company’s financial reporting amalgamates important documents to create an effective spreadsheet to simplify the financial data of an organization. It captures much of the information that organizations prepare, publish, and use. Financial reporting plays an integral role in the capital markets and economic stability and growth, and efforts to enhance its quality are vital. A Sound Financial Reporting provides us relevant, meaningful, reliable, accurate and comprehensive reporting of management stewardship whether in the form of numbers or other operating data. It is increasingly important for businesses to be financially transparent and for governments to establish a sound regulatory environment for corporate financial reporting. Sound financial reporting can benefit business by some ways just like valuing business, easy to identify items, present business to prospective buyers effectively, able to explain changes in the business over time, spend less money on accounting and consulting fees etc. When we need to sell the business accurate financial data helps a lot by many ways. These are streamlining valuation, making it easy to answer buyers' questions, confirming your company's value during due diligence, avoiding cash outlays after closing the sale. Financial reporting is the fundamental source of independently certified information about the performance of executives; it provides valuable information to corporate control mechanisms that help to alleviate the agency problem which results from the separation of managers and financiers. It can be used in achieving corporate transparency to alleviate corruption by interacting financial reporting with corporate governance, transparent corporate disclosure, transparent corporate financial reporting. Moreover sound financial reporting makes financial analysis easier thus lowers an investor's risk when investing in stocks thus investors get confident to invest.
TABLE OF CONTENTS
What is financial reporting?
Why financial reporting?
Why ‘Sound Financial Reporting’?
Effective and Transparent Financial Reporting is Good for Business
The role of financial accounting information in corporate control mechanisms
The role of financial reporting in achieving corporate transparency to alleviate corruption
Transparent corporate financial reporting to combat financial statement fraud
WHAT IS FINANCIAL REPORTING?
Most novice business owners will ask themselves what is financial reporting? The core purpose of financial reporting is to determine the profit or loss of an organization. Financial reporting amalgamates important documents to create an effective spreadsheet to simplify the financial data of an organization. Financial reporting must clearly and factually state the financial position of the organization, so that investors can make sound financial decisions based on such data. WHY FINANCIAL REPORTING?
During the past few years, successful businesses have become more customers and service oriented rather than product oriented. Entities are concentrating on human resources, information and data, and research and development as they adapt to rapid changes in technology and increased competition. The new focus replaces the traditional objective of managing and controlling raw materials, direct labor,...
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