Accounting System

[Name of the Course]

[Name of the Tutor]

Introduction

Financial disclosures pertain to the information that a company provides in order to clarify or to make the shareholders understand the financial position regarding the company. This disclosure is made through financial statements through the quarterly and annual reports. The disclosures in the financial statements are there to help the outside people to make their decision regarding their investment in the company. The management also utilizes these disclosures to testify the accuracy & the validity of the financial information that has been reported.

The paper aims to discuss the motives and reasons for financial reporting, the ethical concerns and how accurate financials of an organization can be helpful to the outside business concerns.

Discussion

The need for informed decision making and investor confidence has led to the existence of the financial statements. Financial information has become an integrated set of financial statements and notes to express the financial condition, results of operations and changes in financial position of a company. Financial information is an important element to be presented to users to formulate conclusions on the financial performance of the entity (Conroy, 2010). Through this and other evidence, a general user can evaluate the future of the business and make economic decisions based on it.

Revelation of accurate financial information is a debate that is prevalent throughout the business globe. There are number of big scandals that have brought concerns for transparent disclosure of financial of a business enterprise. Despite regulations, there are number of reasons why accurate financial disclosures are required and an important aspect for outside business interests (Hodge, 2010). The industry would lose confidence on key stakeholder's that includes executives and auditors especially. This lack of trust will cause the industry difficult to control and operate efficiently.

Need for Accurate Financial Information to Business Interests

Financial Information entails the detail analysis and information about the company. It helps all the stakeholders (external and internal) to have a proper and comprehensive understanding about the company. Creditors, Investors, Regulatory Bodies, Central Bank, Suppliers and government bodies can take information about the company as well. Financial information aide investors' insight as they are better able to make decision concerning the investment. Their needs and wants must be kept in mind, and they must be given most importance. It gives a complete picture of the company to various classes of society to enable informed and astute business decisions (Hodge, 2006). The annual report includes not only the financial performance of the company but informs about overall business information of the company. The main components of the Annual Report include Balance Sheet, Income Statement, Cash Flow, Financial Notes, Risk factors and Financial Highlights.

Transparent and detailed financials reflect the company positions and safeguards investors from several risks countering the market. These statements are of interest to suppliers, competitors, current and potential investors, employees, as well as ministries, agencies and the public. Financial statements contain the information necessary to develop an investment policy and decision making on the loan, estimates ...