Financial reports are the periodic reports of information on financial statements of a company, including its financial position and performance, for the use of management or an external party. The four primary financial reports in business are the balance sheet, income statement, cash flow statement, and statement of shareholders’ equity.
The Purpose of Financial Reports
Financial reports have two primary purposes:
They assist management in effective decision making regarding the objectives of the company and its overall strategies. The information provided by the reports can help the management to determine the strengths and weakness along with the financial health of the company.
They deliver important information about the financial condition and undertakings of the company to its investors along with its shareholders, consumers, analysts and government regulators.
Limitations of Old Financial Reporting Systems
The greatest limitation of old financial reporting systems is that they are highly vulnerable to both accidental human error and intentional manipulation of stats and figures to distort economic performance.
Also, different methods of accounting are required for different operational business activities in different department across the company. Old reportin
g systems are incapable of consolidating this difference.
Old Reporting system focuses on the financial measure only they do not offer a “triple bottom line” framework which comprises on social and environmental measures.
How are data and technology transforming Financial Reporting?
The lack of transparency in financial reporting, especially when it happens in a financial institution, results in the loss of investor trust. It happens because of an inability of the traditional existing accounting systems to deliver investors with useful information in a new economy. Also, the deficiency of measurement framework is a factor that can update the reports to make the measurements eloquent.
Automating Financial Reporting
As we are moving into the future, technology is taking over everywhere and financial reporting systems are no exception. Technology has an impact on how the information in financial statements can be gathered and combined to be used meaningfully. IT has enhanced how the information is presented and gives the innovative formats for reporting. It enables users to search and process large complex data sets and organize them according to their business requirements.
Software that automates financial reporting allows users to process their function in depth, analyze, and speed up their financial operations. They enhance the regulatory compliance and decrease the amount of labor associated with financial tracking. These latest systems can even easily be used by the non-technical business persons. They can be a major windfall for a business that works to implement them.
ERP Gold comes with a fully featured Financial Reporting solution in our Accounting Module. Make creating super useful and accurate reports easy, try ERP Gold.