What is Financial Reporting ?

Financial reporting is the process of disclosing financial information to various stakeholders, such as investors, creditors, regulators, and the public. It involves the preparation and dissemination of financial statements and other reports that provide information about the financial performance and position of an organization.

Financial reporting is a critical aspect of corporate governance, as it provides transparency and accountability to stakeholders. Financial reports typically include the balance sheet, income statement, cash flow statement, and statement of changes in equity, which are prepared in accordance with generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS).

Financial reporting plays a crucial role in decision-making, as it enables stakeholders to assess the financial health and future prospects of an organization. Investors use financial reports to evaluate investment opportunities, while creditors use them to assess creditworthiness and the likelihood of repayment. Regulators use financial reports to monitor compliance with laws and regulations, while management uses them to track performance and make strategic decisions.

Overall, financial reporting is a fundamental component of financial management, providing essential information for decision-making and transparency in the business world.