Importance of the Financial Report

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Owners, managers and outside stakeholders of a company need reliable financial information to work smarter, control their costs and gain strategic operational insights respectively. This can happen by the provision of financial reporting framework which it will be discussed in the first paragraph of the essay. Then the scope of the framework will be explained base on financial reports, reporting entities and qualitative characteristics and their users. After that, financial statement will be critical analyze based on its elements, assumptions and characteristics. At this point some limitations of the financial statement will be given. Furthermore, taking into consideration that companies are care mostly about their profit maximization and their financial health, capital maintenance and its concepts will be explained. This introduce as to the fact that companies do not show the social and environmental harms that are creating due to misallocation of information which it will be a matter of discuss.
According to Financial Accounting Standard Board (FASB) conceptual framework’s scope and purpose is to underlie the preparation and presentation of financial statements and to serve as a guide the determination of accounting issues that are not attached directly in the International Accounting Standard(Alexander & Briton, 2004, pg137). Furthermore, it shows financial information to existing and potential investors, lenders creditors and further user groups (Carlon et al., 2012, pg11) This financial information are provided through the financial reporting, the qualitative characteristics of financial information, the reporting entity, measurement of the elements of financial statements and concepts of capital and capital maintenance. ...

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...ountants’ Handbook, Financial Accounting and Generak Topics, 10th ed., John Wiley, Vol. 1, pp103
David L. Kolitz, A. B. Quinn, G.A. McAllister,2009, A Concepts-Based Introduction to Financial Accounting, 4th ed., Berne convention
Ernst & Young., 2013, International GAAP 2013:Generally Accepted Accounting Principles, 1st ed., Wiley
Graeme W., Clarke F., (2003), An Evolving Conceptual Framework?, ABACUS, Vol.39, No.3 pp209-291
ICAA,2012, Chartered Accountants Financial Reporting Handbook 2012, 1st ed., Wiley
McCallig J., (2008), Introductory Financial Accounting, 2nd ed., Donmorris Books
Needles B., Powers M., (2010), Financial Accounting, 11th ed., copyrighter material
Porter G., Norton C.,(2008), Financial Accounting: The impact on decisions makers, 6th ed., Cengage learning
Watkins J., 2009, CIMA Official Learning System Financial Operations, 1st ed., Elsevier Ltd

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