Answer to Question #84772 in Management for manish

Question

Why must directors provide adequate disclosure in financial reporting

Answer 1

Financial reporting is one of the key aspects that enable an organization to find out if it’s working towards the attainment of the set goals and objectives. In addition, financial reporting enables the management team to find out if it’s getting the expected returns on investment at any particular time. Furthermore, directors are expected to disclose and properly explain transactions as well as company's financial position and its performance. In addition, financial reporting information helps in decision making process in an organization as it ascertains whether a particular project is making profit or loss. Also, financial reporting provides adequate information that can be relied on by investors.