Correct Answer: Financial Reporting involves the disclosure of financial information to the various stakeholders about the financial performance and financial position of the organization over a specified period of time These stakeholders include – investors, creditors, public, debt providers, governments & government agencies Financial Reporting is very important and critical task of an organization It is vital part of Corporate Governance The objectives & purposes of financial reporting :– * Providing information to management of an organization which is used for the purpose of planning, analysis, benchmarking and decision making * Providing information to investors, promoters, debt provider and creditors which is used to enable them to male rational and prudent decisions regarding investment, credit etc * Providing information to shareholders & public at large in case of listed companies about various aspects of an organization * Providing information about the economic resources of an organization, claims to those resources (liabilities & owner’s equity) and how these resources and claims have undergone change over a period of time * Providing information as to how an organization is procuring & using various resources * Providing information to various stakeholders regarding performance management of an organization as to how diligently & ethically they are discharging their fiduciary duties & responsibilities * Providing information to the statutory auditors which in turn facilitates audit * Enhancing social welfare by looking into the interest of employees, trade union & Government
