International Corporate Reporting Issues Essay Example | Topics and Well Written Essays - 3000 words - 1

International Corporate Reporting Issues - Essay Example As the financial statements contain information about different aspects of the business that include revenue, assets, liabilities, equity, expenses, along with details and in a complete standardize format, further these statements are also audited which further add reliability to these financial statements, but the basis upon which these financial statement s are prepared involve some factors that may hinder the effective decision making process these factors include, Accounting estimates that are uses by preparers of financial statements while preparing these financial statements are subjective decisions, which is one of the big limitation of the financial statement as due to this factor the users of financial statements may be misled. Professional judgment uses by preparer of financial statement is also one of the reason which undermine theuses of financial statements, as it involve judgment in preparation of financial statements that may be wrong and can ultimately hit financial decision taken by users of financial statements on the basis of these financial statements. Verifiability of these financial statements through audit is not an absolute verifiable factor so one cannot take decisions like take over just on the basis of these financial statements while assuming that these are audited accounts, Historical costing is also one of the reason that may cause users of financial statements to be misled as in historical costing asset are carried in the books as cost of asset less accumulated depreciation that may not be the market value hence it may miss lead the users. Measurability is also one of the reason that undermine the uses of financial statements because it involve only those areas that can financially be measured and areas that cannot be valued or out of financial statements hence like good will and employees performance cannot be seen while reviewing financial