Critically analyse the economic and institutional setting for financial reporting.
Financial reporting is important for anyone who wants to know more about an organisation, its business, historical performance and current health. Moreover, the financial reports can also be used to carefully, not always accurately, forecast future earnings, sales etc.
Variety of individuals will use financial reports: investors, lenders, government, customers, business partners, suppliers. Therefore, understanding of financial statements is paramount. However, even more important is that the financial regulations are relatively similar amongst countries an jurisdictions.
In the end financial statements are computed by humans and for that reason these numbers can be sewed in many directions, for instance contracting and bonuses. Financial analysts need to be aware of such possibilities.
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