Financial Reporting & Disclosures

Financial Reporting

Disclosure of appropriate financial information is essential to enable sound business and investment decisions by investors. The role of financial reporting and disclosures is to communicate information that supports business decision-making by the business entities, stakeholders as well as the investing public. In order for information to be useful in the decision making process, it must be timely, relevant, accurate and reliable. No longer can a simple set of financial reports satisfy the needs of informed investors or the demands of company creditors. Financial reporting has to reflect the true and fair state of affairs of the financial position of a business entity, be consistent with applicable accounting standards and be certified by auditors and company boards and disclosed in accordance with the requirements of the Companies Act, 1956.

The phenomenon of corporate fraudulent financial reporting has battered investors' confidence in financial reporting, the accounting profession and global financial markets. It has not only caused severe damage to corporations and banks but also harmed small investors who have lost considerable amounts of money. With the increasing complexity of financial structures and the intensity of business competition, fraud has become increasingly important in the eyes of the regulators.

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