Financial Reporting

Definition

Financial Reporting is the provision (Disclosure) of financial information produced by Financial Accounting activities of a reporting entity. The purpose of that Reporting is to provide useful (e.g., actionable) information to existing and potential investors, lenders and/or other creditors and stakeholders of the organization.

The focus of financial reporting is primarily on clarifying the context of past, current and potential future financial returns for any external parties that hold claims on the entity. This is achieved by:

• explaining the amount, timing and uncertainty of Cash Flow linked to the entity's operations
• disclosing (selectively) some aspects of the management of the entity’s economic Resources

Issues and Challenges

• Financial reports are, to a large extent, based on estimates, judgements and models of an entity's activity rather than exact depictions
• There is a variety of reporting standards and interpretation of standards that hinders comparison between entities
• There is limited information about general economic, sectoral or political conditions
• There is no information addressing Sustainability issues beyond economic performance

See Also

• Financial Reporting Standards