Companies’ financial reports are used in setting industry standards and providing benchmarks. For this reason, it’s necessary that regulators ensure that these reports retain high levels of impartiality, accountability and integrity. And so far, things are looking good.
GAAPweb news recently showed that the current state of UK financial reporting is indeed “good”, according to the Financial Reporting Review Panel (FRRP).
However, there are still certain areas that need to be improved. The FRRP suggests that companies’ financial reports should provide more information on risk assessment, projections and policies. In addition the chairman of the FRRP, Bill Knight, encouraged reports to detail how the recession is directly affecting company performance rather than just providing “generic descriptions of the economy” (I think we’ve all had enough of those).
The Financial Crisis Advisory Group (FCAG) recently explained that standard-setting and accurate reporting will be a major factor in helping the finance sector through the recession. I couldn’t agree with this more; the last thing we need is more inaccuracy and uncertainty.
Furthermore, if companies use financial reporting to set clear targets, then they’ll be better prepared for the upturn as and when it happens. From a business perspective, surely it’s much easier to manage the impact of the recession at a ‘local’ level, rather than getting swamped by broad economic forecasts?
By making sure that standards are up to par, accurate financial reporting is sure to instil a sense of confidence and improved stability…which is what we all need in times like these.
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