Financial Reporting
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Financial reporting is the process of disclosing financial information about a business or organisation to various stakeholders, including investors, creditors, regulators, and the public. It involves preparing and presenting financial statements and reports that accurately reflect the financial position, performance, and cash flows of the entity.
Components of Financial Reporting
1. Income Statement:
Also known as the profit and loss statement, the income statement summarises the revenues, expenses, and net profit or loss generated by the entity during a specific period.
2. Balance Sheet:
The balance sheet provides a snapshot of the entity's financial position at a given point in time, presenting its assets, liabilities, and shareholders' equity.
3. Cash Flow Statement:
This statement tracks the cash inflows and outflows from operating, investing, and financing activities, helping stakeholders assess the entity's liquidity and cash management.
4. Notes to Financial Statements:
Supplementary notes provide additional information, explanations, and disclosures about specific items presented in the financial statements, enhancing their clarity and transparency.
Process of public limited company
1. Data Collection:
Financial data from various sources such as accounting records, transactions, and internal reports are collected and compiled for financial reporting purposes.
2. Preparation of Financial Statements:
Based on the collected data, financial statements are prepared by relevant accounting standards and regulatory requirements.
3. Review and Analysis:
Financial statements are reviewed and analysed by management, auditors, and other stakeholders to ensure accuracy, consistency, and compliance with reporting standards.
4. Disclosure and Communication:
Once approved, financial statements and reports are communicated to stakeholders through annual reports, regulatory filings, investor presentations, and other channels.
Conclusion
Financial reporting plays a pivotal role in corporate governance, transparency, and accountability by providing stakeholders with timely and accurate information about the entity’s financial performance and position. By adhering to best practices in financial reporting, entities can build trust, enhance investor confidence, and drive sustainable growth and value creation
