• Notes to financial statements
• Management Discussion & Analysis
• Quarterly financial reports
• Publishing Reports on company website, to Stock Exchanges, and in newspapers
• Annual Financial statements such as balance sheet, statement of profit and loss, cash flow statement and statement of changes in equity.

Some of the above components are not required for private companies, small companies, one person companies, etc.

• It facilitates statutory audit
• It is a backbone of financial planning and analysis.
• Gives all stakeholder a sense the actual financial position of company
• It helps company to raise capital
• It helps management in decision making
• It provides information to investors, creditors, promoters etc.
• It enables shareholders to take important decisions in general meeting
• It helps company to comply with various statutes and regulatory requirements.

• Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).
• Indian Accounting Standards (Ind AS) issued by the ICAI
• Guidance Notes issued by the ICAI
• International Financial Reporting Standards (IFRS)
• Generally Accepted Accounting Principles (GAAP)

In India, the most common standards are Accounting Standards (AS), Indian Accounting Standards (Ind AS). These are mandatory for every Indian Company. Listed Companies and large unlisted companies are required to follow Ind AS. Small companies and private companies usually follow AS. Ind-AS originated through convergence of AS with IFRS. This was done to enable comparability of financial statements of companies registered in other countries.

Guidance Notes issued by the ICAI are not mandatory in nature. They simply provide guidance in making certain accounting treatments.

The object of financial reporting is to provide information regarding the financial positions and performance of company. Any change in the financial position or performance is highlighted to the stakeholders through financial reporting. Major economic decisions of the company are taken based on the reports generated through financial reporting.

Better and improved debt management: Maintaining balance between current assets and current liabilities is important for any business to grow as it helps to manage liquidity and debts.

Identification of the trend: Financial reporting helps to identify the trends, both past and present which can be used to tackle any potential weakness and provide a way to improve the business health. Past trends help take financial decisions for the future.

Real-time tracking: Financial reporting helps to gather accurate and quick information for the user. It also helps to maintain financial fluidity by avoiding potential roadblocks.

Managing liabilities: The critical part of company’s ongoing financial health is managing the liabilities. The liabilities include any business loans, credit loans, credit cards and amount due to creditors.

Compliance and progress: Accurate financial information enhances the opportunity to improve the financial efficiency and also ensures compliance with all statutes. Auditors independently review the company’s financial reports and check all statutory compliances.

Taxes: Taxes are significantly the biggest reason for financial reporting; as the government uses financial reports to ensure if the company is paying fair amount of tax or not. Financial reports are required to be filed to various tax authorities such as Income Tax, Goods and Services Tax, etc.

Internal decision making: The financial reports help to serve the management with important financial information. This lets the management take internal decisions depending on the financial health of the company.

Improved internal vision: This financial analysis and reporting helps to answer all the vital questions on all the aspects of the company. Both internal and external stakeholders can obtain accurate and comprehensive information to take decisions and act accordingly.

Raise capital: Financial Reporting helps to raise capital in domestic and foreign markets. Companies raise funds through issuing IPO (Initial Public Offer) or through private placement. Potential shareholders analyse the company’s financial position and performance to take investing decisions.

Performing audits: It facilitates statutory as well as internal audits. The Audit Report of the statutory auditor is vital to the shareholders and all the external stakeholders of the company. The internal auditor’s report helps the management monitor the financial performance and internal control of the company.

Information for other companies, investors, shareholders, etc: The investor before making any investment in a company, can use the financial report and to review and analyse the company’s performance. The creditors, banks and financial institutions consider these financial reports before advancing loans to the company and can track their ability to meet the future repayment schedule. This kind of financial reporting is also called analytical reporting as decision can be taken through such reports.