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
The Securities and Exchange Commission requires that publicly owned businesses provide annual reports, which are available to the public. Many different people use annual reports, to make informed business decisions. Management from the company uses the information to determine a number of items. Some of these items are the profitability of the company, the inventory turnover rate, and the accounts receivables rate. Creditors use the annual report to determine how well a company can satisfy its current liabilities, as well as, how the company is doing in the aspect of long tem survival. Another group of people who use the annual reports furnished by companies are the investors, who can purchase shares of stock from the publicly company. Annual reports are very important to these people, because they are an over all picture to help them determine the over all stability and reliability of the company’s financial outlook. These annual reports are important because they do not only contain the financial statements of the company, but there is a management ‘s note to discuss reasons for any unexpected numbers, and an auditor’s report, from an independent accounting firm, who either agrees or disagrees with the financial numbers. Market reporter Matt Krant said, “Ignoring these reports is akin to driving down the freeway blindfolded.”
The government designates certain professionals within society as mandated reporters. This means that if a person, who holds a position identified by the government, suspects that a child is being abused or neglected, they must go through the process of reporting the abuse/neglect to their local Department of Health and Human services office (“Michigan Child Abuse Laws”, 2017). This policy is relevant not only to those working within the social work field, but also to those who work closely with children, such as teachers and day care workers. Michigan’s Child Protection Law identifies citizens in the following positions as mandated reporters:
In researching the topic of Non GAAP vs. GAAP Reporting, Group 6 was able to understand the effects that reporting has on the company and how it affects overall market conditions. We were able to find that the guidelines companies follow for reporting can be influenced and portrayed in a more appealing way if Pro Forma reporting is chosen.
XBRL, the eXtensible Business Reporting Language, is an open standards-based reporting system built to accommodate the electronic preparation and exchange of business reports around the world. XBRL started back in 1999 with 12 organizations as the founding members. There are now in excess of 450 organizations worldwide in over 30 countries involved in its development. It provides major benefits in the preparation, analysis and communication of business information. It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data. The idea behind XBRL, eXtensible Business Reporting Language, is simple. Instead of treating financial information as a block of text - as in a standard internet page or a printed document - it provides an identifying tag for each individual item of data. This is computer readable. For example, company net profit has its own unique tag. The introduction of XBRL tags enables automated processing of business information by computer software, cutting out laborious and costly processes of manual re-entry and comparison. Computers can treat XBRL data "intelligently" as they can recognize the information in a XBRL document, select it, analyze it, store it, exchange it with other computers and present it automatically in a variety of ways for users. XBRL greatly increases the speed of handling of financial data, reduces the chance of error and permits automatic checking of information. Companies can use XBRL to save costs and streamline their processes for collecting and reporting financial information. Consumers of financial data, including investors, analysts, financial institutions and regulators, can receive, find, ...
Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources. Capabilities describe environment and strategic environment. Core competencies include knowledge and technical capability. In this section we will attempt to describe in detail the three segments which are resources, capabilities, and core competencies.
EBS (entity business states) are the entity’s business strategies, conditions, and processes and economic actions or events and relationships with other entities such as competitors and alliance partners and its economic web. MII are transforming information intermediaries such as internal control frameworks (including oversight by corporate governors) and applicable financial reporting, computer networks and information systems, documentation (e.g., invoices), people and policies. MBR (management business representations) are management’s representations of selected EBS within accounting journals or ledgers, conference calls, financial statements (including footnotes), interviews, MD&A, presentations, and press releases.
Heenetigala, K., & Armstrong, A. (2010). The Use of Internet Reporting for Small Business. Journal Of Business Systems, Governance & Ethics, 4(4), 41-52.
...r financial reporting were efficient and the maintenance of records is in reasonable detail, accurate and fairly reflect the transaction and the disposition of the company’s assets. It also provides reasonable assurance of the transaction recorded which made it possible to prepare the financial in accordance with GAAP. Also the expenditure has properly authorized and provides assurance of any violation to be present in the company and provide assurance regarding timely detection of unauthorized acquisition which could material effect on the financial statements.
Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external users such as stock holders, creditors, regulating authority and others. (Garrison, Noreen, & Brewer, 2010) On the other hand Managerial accounting is concern with providing information that deals with the internal viability of the organization and is tailored to meet the needs of an individual organization. (Albrecht, Stice, Stice, & Skousen, 2002)
Business strategies and activities play a very crucial role in the future development of the organization. These strategies become more important, in case of e-business organization such as Amazon.
Schofield (2014) researches the difference between public and private company financial reporting. For instance, a private company has fewer consumers reviewing their financial statements, whereas public companies could have multiple consumers reviewing financial statements. In addition, private companies typically have less specialized accounting personnel, whereas public companies will have several. Lastly, Schofield (2014), reviewed the number of amendments proposed and finalized to help benefit private companies financial reporting.
According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.
One purpose of this course is to train you to assess an organization’s strategy. Part of your skill development is utilizing knowledge to address the real problems of a business organization. At the same time, technology is increasing your ability to obtain information rapidly from multiple sources. Being able to gather and use such information will become a competitive necessity for anyone in business and management. To prepare you for this, we used information technologies to analyze, discuss, and present business issues throughout the semester.
...lopment industry as well as the strengths and weaknesses within the company. The Business Strategy should reflect the main issues that determine the long-term
Nowadays with the implementation of new emerging technologies, the way businesses keep this financial information has become computerised. At the moment businesses use computers with a computerised accounting system in order to perform many other new activities than what they were able to do in the past. Businesses can access financial information from different department in the organisation, access to the information through computers and find financial data very fast, being more efficient. (Beliss, 2013)