Objectives and Issues of

Financial Reporting
 Objectives of Financial Reporting
• Presentation of Financial Information:The main objective is to communicate the financial and other
information to the public and the investors at large so that they can make the correct investment decisions and
attract future investors.
• Transparency: The other important objective is to maintain the clarity of the records to prevent any
miscommunications and try to present a clear picture before the stakeholders.
• Following Legal Framework: It is the demand of the legal framework also to present the financial
statements and be more unambiguous to the public at large.
• Convery the financial information: Financial reporting is not limited to presenting financial statements. The
objective is to present all financial-related and important information to the public.
• Presentation of Future Path: Financial reporting aims to attract future investors by presenting the future
path and actions.
• Purchase of Resources: Providing information about how an organization is purchasing and using various
resources.
Importance of Financial Reporting
• Its purpose is to comply with the organization and comply with various statutes and computer requirements.
ROCs, government agencies require organizations to file financial statements. In the case of listing
companies, quarterly as well as annual results should be recorded and published on the stock exchanges.
• It also facilitates statutory audit. But statutory auditors are required to audit the financial statements of an
organization to express their opinions.
• Financial reports form the backbone for all financial planning, analysis, benchmarking, and business decision
making. It is used by various stakeholders for the above purposes.
• Financial reporting helps organizations to raise capital from domestic as well as abroad.
• Based on financials, one can analyze the performance of a large-scale public organization as well as its
management.
• organizations are required to submit their financial reports and similar for bidding, Govt contracts, labour
laws etc.
• Financial statements give business owners and management direct insight into their company’s current
assets and liabilities
•  
Issues in Financial Reporting
• General-purpose financial reports do not provide all information to existing and potential investors
borrowers, and other creditors.
• users need to consider relevant information from other sources.
• In addition to officers, borrowers, and other creditors, such as members and members of the public, finance
can also be useful for common tasks. However, those formats are not explicitly directed to these other
groups.
• Information often comes from approximate measures based on assumed assumptions.
• The financial analysis might be ambiguous without the prior knowledge of the changes in accounting procedure
followed by an enterprise
• Monetary data alone is contemplated in financial analysis while non-monetary factors are
overlooked