Objectives of Financial Reporting
Objectives of Financial Reporting (Professor)
I like your reference to “useful” information. I think that is very applicable in today’s world. There is so much information available, but unless that information has some purpose, it becomes a question of garbage in-garbage out. Financial information is only as good as the information that goes into it.
This leads me to think about internal users and the different reports that are used. In my experience, designing reports for management is more challenging than putting together financial statements for banks or investors. Internally, there is generally a lot of information to choose from, and narrowing the focus to what the user wants to see can be a challenge. For example, our project management leadership wants to see reporting around project closures and project performance. In a large construction project, there are many different aspects of the job to choose from. Creating a report that shows enough information to satisfy the needs of senior management, but not too much information that they have to sift through, becomes a bit of an art form.
Does anyone have some examples or thoughts around the challenges of internal reporting?
#7 GAAP and the Accounting Cycle (Professor)
enjoyed reading your post. I especially think your point regarding comparability is a very good one, and I would like to expand upon it a bit. Without GAAP, it would be impossible to accurately compare two similar companies. A good example of an accounting treatment that would have a major impact to comparability is the treatment of inventory among oil companies. If one company valued its inventory on a FIFO basis, while a competitor valued on a LIFO basis, they could show drastic differences in their numbers, even if their actual numbers were quite similar. Without guidelines such as GAAP, there would be no way to compare these types of companies, and we wouldn’t have an “apples-to-apples” situation when making investment decisions.
I am curious to hear everyone’s thoughts on the topic…
#8 Standard Setting (Student Post)
There are three main organizations involved in the setting of accounting standards and they are:
Securities and Exchange Commission (SEC): part of an independent government agency that protects the investors. They assist in standard setting in the private sector and maintaining securities markets.
American Institute of Certified Public Accountants (AICPA): assist in advancing written expressions of accounting principles, determining appropriate practices, and narrowing the areas of differences and inconsistencies in practice.
Financial Accounting Standards Board (FASB): responsible for establishing and improving standards for the guidance and education of the public. Sets forth codification which relates to the way GAAP is documented, presented, and updated.
Solution preview for the order on objectives of financial reporting
APA
425 words