Financial reporting

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1.

Financial reporting is traditionally external.

It is concerned with collating and providing information to external stakeholders, the financial markets and the public.

Contrasted with management accounting, which provides information for internal stakeholders.


External reporting is mandatory for all limited liability companies, regardless of who owns them.

However, smaller and privately owned companies do have relatively lighter (mandatory) reporting requirements.

All companies may choose to publish more than the minimum mandatory information.


2.

The term 'financial reporting' is also used by some organisations in a broader sense, to include internal reporting (as well as external).


Financial reporting is also known as financial accounting.


The objective of financial reporting (International Financial Reporting Standards overview)
The users of financial information need to assess:
  • Prospects for future net cash inflows to the reporting entity; and
  • Management's stewardship of the entity's economic resources.


Accordingly, financial reporting seeks to provide information about:
  • The entity's economic resources (assets), claims against the entity (liabilities) and changes in those resources and claims; and
  • How efficiently and effectively management has discharged its responsibilities to use the entity's economic resources.


See also