Corporate Reporting in India

Topics: Balance sheet, Financial statements, Annual report Pages: 31 (9437 words) Published: January 15, 2011

Sham Lal & Sonia
Lecturer in Commerce, Guest Faculty, Govt. Bikram College of Commerce, Patiala . Research Scholar, Dravidian University, Kuppum, AP. MA Economics Part II, Punjabi University, Patiala

Disclosure is the communication of various details regarding the activities of the business which are to be disclosed either statutorily or otherwise, and it is to convey a true and fair view of the operating results and financial position to the users of financial reports. The study points out that the effective corporate reporting can only be achieved by a voluntary change in the corporate reporting philosophy. In order to achieve high standards of corporate reporting practices, internal pressures such as peers and market competition should be more effective than enforcement by regulating agencies. It is also imperative that the regulators should expand their role and take effective measures to propagate the concepts of best practices in ushering an era of good corporate reporting. In this study an attempt has been made to analyze corporate reporting practices of Indian companies. The study indicates that the disclosure in corporate reporting is the highest in the public sector followed by private sector.

Accountancy is a social force, the primary function of which is to facilitate the administration of the economic activity of an enterprise. It has two fold phases: (i) Measuring and arraying the economic data.

(ii) Communicating the result of this process to the interested parties.
The second phase is performed by means of Finance report, portraying the financial aspects of the activities over a certain period of time. Such information may be statutory or non-statutory. Disclosure can be defined as a process through which a business enterprise communicates with the external parties.

According to the committee on accounting concepts and standards, American Accounting Association (AAA), the primary function of accounting is to accumulate and communicate information essential to an understanding of the activities of an enterprise, whether large or small, corporate or non-corporate, profit or non-profit, public or private. Similarly Welsch and Anthony states: “Accounting is an information system and financial statement constitutes an important communication media.”

Disclosure is the communication of various details regarding the activities of the business which are to be disclosed either statutorily or otherwise, and it is to convey a true and fair view of the operating results and financial position to the users of financial reports. It is nothing but the communication of financial information of the activities of the undertaking to the interested parties for facilitating their economic decisions. It is the reporting of accounting information of an entity (individual, firm, company, government enterprise etc.) to a user or a group of users.

Many studies have been conducted in India and abroad about corporate disclosure practices prevalent indifferent countries by different researchers. Their findings have paved the way for further studies and research. A number of books, research papers, recommendations by various committees and legal journey of corporate disclosure have been studied and the same have been reviewed briefly in this chapter.

N. Dass Gupta (1977) in his published Ph.D. thesis entitled “Financial Reporting in India” has critically examined the financial reporting practices prevalent in India. In his study, he has suggested that the statements of highlights, summarized balance sheets and profit and loss accounts, narrating statements, statistical records, diagrams and charts should be included in the annual reports to make them more informative and to serve the increasing needs of their users. D.R. Singh & B. N. Gupta (1977) in their study “ Corporate...

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