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Disclosure and Financial Reporting - Essay Example
Finance & Accounting
Pages 9 (2259 words)
Disclosure and Financial Reporting Introduction The activities of a company and stakeholders are published in the financial statements which are formed by financial reporting in the form of Balance sheet, Income statement, cash-flow statement and accompanying notes…
It also helps the other market players to decide on mergers and acquisitions. Through disclosure of financial statements, the companies also endorse the financial information that has been sent to their regulating authorities like Securities and Exchange Commission (SEC). It is important to understand the key issues that affect the financial decisions of managers in disclosures and financial reporting. In this essay, the changes in regulations and standards that have improved the method of financial reporting and disclosure and the subsequent impacts on a company in terms of future cost, risk exposure and profits are being discussed. Several laws have been enacted and acts have been passed in different countries with the objective of making financial reporting and its disclosures more reliable and trustworthy. The objective of addressing the key issues is to ensure and protect the interest of the stakeholders and investors. One such act that addressed these issues is Sarbanes-Oxley Act. It was first implemented for companies listed in NYSE and has now been spread all over the world. Sarbanes-Oxley Act has redefined and changed the ways of Corporate Governance of companies leading to efficient and transparent operations (Ambler, Massaro and Stewart, 2005, p.38). ...