Financial Reporting Software powered by AI

Financial reporting is an umbrella term for internal and external reports in which a company discloses its financial activities. Financial reports are submitted to the government, regulators, investors, executives, management and, in the case of public companies, the public at large. Financial reports include balance sheets, cash flow statements, income/P&L statements, and equity/earnings statements.  

External financial reports are subject to regulations and requirements depending on which authority the company is reporting to. In accordance with US GAAP, SEC reporting entities must tag their financial statements in eXtensible Business Reporting Language (XBRL) and submit those filings to regulators along with the annual and quarterly reports.

Management reports are created by departments and teams, and they’re typically submitted monthly to internal managers. Often, they capture the overall performance results of individuals, specific processes, or a set of performance metrics. An example would be waste production, average time of order processing, or tech assistance calls.

Often, management reports will include information like:

• Profit and loss by department/team/job function
• Realization rate 
• Utilization rate

Management reports are not mandatory as far as regulatory authority goes, so there’s no compliance measures or set standards. That said, management reports are critical documents for managers and executives who use them to make decisions, strategy, and business changes and thus, often require customization.

Like a year in review, the annual report is a comprehensive disclosure filing that provides shareholders, stakeholders, and the public with a thorough run down of the company’s yearly activities and financial results. A combination of narrative and financial information, the annual report includes:

• Letter to shareholders
• An executive summary, corporate governance, and general corporate information
• MD&A
• Financial statements
• Notes to financial statements
• The auditor’s report

The annual report is different from the 10K because its less formally written. As much as it is an informational document for shareholders, it’s also a marketing document for prospective shareholders. With the annual report, shareholders are the target audience, whereas with the 10K, the regulators are the target audience.

According to IASplus.com, “IAS 14 Segment Reporting requires the reporting of financial information by business or geographical area. It requires disclosures for 'primary' and 'secondary' segment reporting formats, with the primary format based on whether the entity's risks and returns are affected predominantly by the products and services it produces or by the fact that it operates in different geographical areas. IAS 14 was issued in August 1997 and was applicable to annual periods beginning on or after July 1st, 1998. It has since been superseded by IFRS 8 Operating Segments with effect from annual periods beginning on or after 1 January 2009.”

The objective of segment reporting is to establish principles for reporting financial information by 1. line of business and by 2. geographical area. It applies to organizations whose equity or debt securities are publicly traded and those in the process of issuing securities to the public.