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In
an era of stiff competition, it has become inevitable for
everyone to perform to the best of their ability and also
to be transparent. There is a heavy movement of investors
from one sector to another or one company to another depending
upon the quality of financial reporting particularly after
the accounting scandals of Enron. Investment consultants and
s go beyond the financial statements to set forth all
the qualitative and quantitative information affecting the
financial position of an enterprise. The companies as it is
mandatory for them to provide cash flow statements and income
statements along with the balance sheet do publish it in their
annual reports. But for evaluating a company's fiscal position,
it is rational to start from the point of balance sheet that
is a basic portrait of a company's financial position at a
particular point of time. Reliability on the financial statements
augments with transparency in reporting and the autonomy of
the auditors and systematic internal controls.
Out
of many financial strategies, successful teams of management
deem that the timing of mobilizing investments, sales, expenditures,
and financing decisions is a significant strategy for decision
makers who are committed to maximizing shareholder value.
The boards and the managers are continuously managing their
earnings and maintaining the company's stock prices that will
be valued as lower earnings since they are volatile over a
period of time. As every coin has two sides, accounting systems
may be used for presenting fabricated and misleading information.
The accounting system can be gamed to fabricate an inaccurate,
misleading, or even fraudulent portrayal of a organization's
economic and operational well-being. |
