financialreporting

Financial reporting is the process by which an organization communicates its financial performance, position, and cash flows to external and internal stakeholders. It involves the preparation of financial statements and accompanying disclosures that summarize historical financial information and explain the basis of preparation and significant accounting policies.

Core financial statements typically include the balance sheet (statement of financial position), the income statement (profit or loss), the statement of changes in equity, and the cash flow statement. In many jurisdictions a statement of comprehensive income is also provided. In addition, notes to the financial statements and management discussion and analysis offer context, accounting policies, assumptions, and risk factors. Some standards require interim reporting and segment reporting.

Financial reporting is governed by accounting standards such as IFRS internationally and US GAAP in the United States, with national variations. Standards emphasize faithful representation, relevance, reliability, comparability, and timeliness. External financial reporting is often subject to independent audit or assurance. Regulators and stock exchanges may require regular, transparent reporting; many jurisdictions mandate annual and interim reports for listed entities. Digital reporting formats and XBRL tagging are increasingly used to facilitate analysis.

Users include investors, lenders, employees, regulators, customers, and management. They rely on financial reporting to assess profitability, liquidity, solvency, efficiency, and risk, informing investment, credit, and governance decisions. Developments include ongoing convergence of standards, treatment of fair value and revenue recognition, and the inclusion of non-financial information in broader or integrated reporting.