Financial Reporting: Stakeholder Needs, Objectives, and Regulations

This essay provides an overview of financial reporting, emphasizing its importance to various stakeholders, including government agencies, debt providers, creditors, and investors. It highlights how financial reporting assists organizations in complying with regulatory requirements, facilitates statutory audits, and serves as the backbone for financial planning, benchmarking, analysis, and decision-making. The essay also outlines the major objectives of financial reporting according to the International Accounting Standard Board (IASB), which include providing information for decision-making, performance management, and resource procurement. Furthermore, it contrasts financial reporting requirements for private firms in Europe and the US, noting that European regulations often mandate private companies to disclose financial reports to the general public, unlike the US, where such requirements are primarily for public companies with significant asset values.

Running head: FINANCIAL REPORTING
Financial Reporting
Name of the Student:
Name of the University:
Author Note:

1FINANCIAL REPORTING
Introduction: Financial reporting can be described as the publishing of the financial
information to the different types of the stakeholders associated with the business entity. The
financial information consists of financial position and the financial performance of an
organization over a specific period of time. The various types of the stakeholders include the
government agencies, governments, debt providers, public, creditors, investors (Leuz &
Wysocki, 2016). This study will include a brief account of the financial reporting.
The importance of financial reporting can be emphasized and it is based on the each and
every stakeholder for the different. The financial reporting is needed by every stakeholder for a
different purpose and reasons. The financial reporting highlights the following importance. It
assists the organization to comply with the different types of the regulatory requirements and the
statues; Statutory audit is if facilitated through the financial reporting; financial reports are called
the financial backbone of financial planning, bench marking, analysis and decision making;
financial reporting helps the organizations to raise the capital both at the overseas and at the
domestic level (Nobes, 2014).
The major objective of the financial reporting according to the International Accounting
Standard Board (IASB) are: financial reporting provides information so that an organization can
be managed and is used for the purpose of je decision making, benchmarking, analysis, planning;
financial reports provide information for the creditors, debt providers, promoters, investors and is
used for prudent and rational decision making; financial reporting provides information for the
public, shareholder and in different aspects of an organization; financial reporting provides
information regarding how an organization is procuring the various resources; financial reporting
provides information for the various stakeholders regarding the performance management of an
organization (Pelger, 2016).

2FINANCIAL REPORTING
Financial reporting and institutional features in the private firms that are located in
Europe and US- the United States Securities Exchange Act states that only the public companies
that have the asset value of exceeding 10 million dollar have to produce the financial statements.
Whereas, in comparison to the public firms the private firms need not to provide the financial
reports to the general public. The 7.6 million companies in Europe is required by law to file the
financial statements. The regulatory framework of the financial reporting in the European
countries states that the private companies were provided with an institutional environment that
are based on the listing status rather than the legal form of a firm. The European regulations
requires that the private companies need to disclose the financial reports to the general public
(Habib, Ranasinghe & Huang, 2018).
Conclusion- From the above discussion it can be concluded that that financial reporting is
vital from the perspective of a shareholder and stakeholder. Although at certain situations
publishing or disclosing the financial reports can be complex, but it has some benefits attached
with it. Financial reports consist of the information that are both relevant and reliable and it is
used by a number of the stakeholders for the various purposes.

3FINANCIAL REPORTING
Reference
Habib, A., Ranasinghe, D., & Huang, H. J. (2018). A literature survey of financial reporting in
private firms. Research in Accounting Regulation, 30(1), 31-37.
Leuz, C., & Wysocki, P. D. (2016). The economics of disclosure and financial reporting
regulation: Evidence and suggestions for future research. Journal of Accounting
Research, 54(2), 525-622.
Nobes, C. (2014). International classification of financial reporting. Routledge.
Pelger, C. (2016). Practices of standard-setting–An analysis of the IASB's and FASB's process of
identifying the objective of financial reporting. Accounting, Organizations and Society,
50, 51-73.