Financial reporting does not provide predictions of the future. It does, however, aim to provide recent historical financial information in a way that is most helpful to allow others to make their own predictions. In this paper ACCA’s Global Forum for Corporate Reporting examines the past and future perspectives of financial reporting.
Financial reporting does not provide predictions of the future. It does, however, aim to provide recent historical financial information in a way that is most helpful to allow others to make their own predictions.
In providing that historical information there are sometimes difficulties in determining the accounting period in which a transaction should be recognised. Having recognised those transactions, to value and measure them the accounts inevitably need to look forward and that is where much of the judgement inherent in accounting has to be applied.
Outside the financial statements, businesses are encouraged to provide information in management reports to help users in estimates of future performance and cash flows, particularly information about strategies, risks or more specific forecasts.