The Advantages And Disadvantages Of Enhanced Business Reporting

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Financial reporting is very vital for both the companies and user groups. However, several contents of the reports are irrelevant and inaccurate. As a result, the Special Committee of the American Institute of Certified Public Accountants established the Public Company Task Force to provide guidance to resolve these issues. Therefore, the Task Force creates sample business reports to help companies to understand how to enhance their report. This paper covers Enhanced Business Reporting (EBR) and how it is different than traditional reporting. It will also discuss the EBR’s advantages and disadvantages. Lastly, the paper will assess the effectiveness of the framework. What is Enhanced Business Reporting? According to the American Institute of…show more content…
The main areas that the framework focuses on are Business Landscape, Strategy, Resources and Processes, Key Processes, and Performance (AIPA, 2016). For instance, the Business Landscape allows management to assess the macroeconomic environment in the geographic area the company operates by addressing factors such as inflation rates and GDP growth. Additionally, the strategy section of the framework deals with the vision and mission, SWOT, goals and objectives, corporate strategy, business unit strategies, and business portfolio of an organization. For example, management has to include some the threats that the company faces so users can have an idea about what could impact the company’s future earnings. Furthermore, As a result, EBR is a new way to better understand a company value, long-term strategy, and…show more content…
It provides management with valuable information needed to engage in decision-making about the organization’s vision and overall strategies. Although the traditional reporting displays vital information about the financial health and activities of an organization to its potential users, it does not provide adequate record and measurement of non-financial metrics such as employee turnover and plant locations, which also contribute greatly to the overall value of the organization. The American Institute of Certified Public Accountants (2016) explains “In traditional financial reporting, the value is defined more in terms of “book value” and is historical in nature. Further, Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), and supplementary disclosures for traditional financial reporting are based on historical performance and variances in the statutory financial position according to the application of GAAP.” It is also important to differentiate financial report and financial statement. While the financial report consists of Management’s Discussion and Analysis (MD&A), financial statements, notes, Required Supplemental Information (RSI) and Other Accompanying Information (OAI), the financial statement is only a compilation of reports

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