Essay Database

Before we get into the needs of regulations in financial reporting, first we have to know: What is financial reporting? , Who uses these reports? , What are the regulatory bodies involved in the regulation of these reports? And finally How this system of regulations and standards works? Financial reports allow the organization to communicate information about their performance to the “outside world”. So, financial reports provide summarized information about an organization’s transactions for external decision …

…wants to attract investment finance can not make the necessary judgment of how much information is necessary and what form it need take so, it couldn’t take the actions necessary to attract investors and may bankrupt. Some of the standards are lack of a conceptual framework this means they haven’t got a clear defensible logic and the rules tend to be rather arbitrary. This causes the standards to lose its credibility and acceptability.