26 Aug Financial Reporting
What is financial reporting?
Financial reporting is the action of creating the reports that are called statements. These financial reports disclose a company’s current financial status to investors, management and the federal government.
There are four basic reports:
- Balance sheets
- Income statements (Profit and loss statements)
- Shareholders’ equity statements
- Cash flow statements
Microsoft Excel can be used to compile financial reporting, but the experts recommend the automation of the financial reporting process. This can be achieved by using an ERP (Enterprise Resource Planning) system’s finance module. An alternative to ERP is the use of industry-specific financial reporting software. Most of these products come with an XBRL (eXtensible Business Reporting Language) tagging engine, which, according to analysts, reduces manual labor.
What does financial reporting include?
Financial reporting includes all the external financial statements – balance sheet, statement of cash flows, statement of income and the stockholders’ equity statement. Except for these it also includes:
- Financial statements notes
- All conference calls and press releases that regard quarterly earnings and related information
- Annual and quarterly reports to the stockholders
- The financial information posted on an organization’s website
- Quarterly and Annual reports to governmental agencies
What is the purpose of financial reporting?
The purpose of financial reporting is to provide information about the financial performance, financial position and cash flows of an organization. This information is very useful to a large amount of users when making economic decisions. They also show the results of the managing staff’s stewardship of the resource that were entrusted to them.
To meet its purpose, financial reporting must provide the information about an organization’s:
- Gains and losses
- Contributions by and distributions to owners in their capacity as owners
- Cash flows
This data helps management in predicting the company’s future cash flows and their timing and certainty.
What are International Financial Reporting Standards (IFRS)?
These financial reporting standards are designed as a common global language for business affairs. Their purpose is that a company’s accounts are understandable and in one alignment with other companies from other countries. The need for IFRS rose from the growing of international shareholding and trading.
International Financial Reporting started as an attempt to unify accounting across the EU. The value of the unification process very quickly caught on around the world.
How can Xadat help you with financial reporting?
With more than 7 years of experience in the area, we offer exclusive services that are executed by professionals:
- Designing financial reporting
- Building financial reporting
- Financial reporting tests
- Financial reporting maintenance
With this vast experience behind our backs, we can confidently say that we will surely make your financial reporting task much easier and smarter.