Financial Reporting basically refers to the disclosure of all the company's relevant and important information in the form of Financial Statements. Although the presentation of data and information can be done in any format, but generally there is a specific format prescribed by the government in every country, which is mandatorily needed to be followed by the companies in order to report their financial information.
Financial Reporting becomes very important from the perspective of both company and the government. On one side, the company wants to present all of their data in the financial statements so that the investors can have a look at at the company's financial stability and invest more and more in their company, leading to ultimate growth. On the other hand, the government also wants the companies to disclose all of their financial information so that the chances of errors and frauds can be minimized, which can ultimately lead to a depression in the economy. This depressions have occurred several times in the past due to popular frauds. Thus it is important for the government to be updated and strict on the norms on Financial Reporting.
There are mainly four types of Financial Reports, which depict almost all relevant information about an organization:
Cash Flow Statement
Statement of Changes in Equity