Key Factors Shaping Financial Reporting
The decade ahead
In the U.S. and other major economies, the first decade of the 21st century ended with a global credit crisis and a number of highly stressed or failed financial institutions. A major concern raised by these events is the ability of financial statements to warn users of the risks of failure, even when the statements are prepared according to current financial reporting frameworks.
So what can we expect in the next decade?
In this paper, we explore several financial reporting challenges and trends that have emerged over the past few years, focusing on three key qualitative characteristics of useful financial reporting:
- Relevance: Reported information must be relevant to investors and other users as an aid in making decisions based on an entity’s financial position, performance, risks, and business prospects
- Understandability: Financial reports must be clear and avoid unnecessary complexity or inconsistency that may limit the ability of users to comprehend the information
- Timeliness: In today’s fast-moving markets, information must be communicated quickly if it is to be useful in supporting investors’ decisions
This publication, Key factors shaping financial reporting: The decade ahead, examines the lessons of the recent past and examine what changes may be needed so that future financial reporting might equip preparers and users to better navigate the challenges ahead.
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