Importance of Financial Information to Stakeholders

Financial information contain in annual reports that the companies are published in periodically. That period is identified as reporting period. Company obligates to provide financial information to their various stakeholders during the past reporting period.

Annual report is a report the company report their comprehensive transactions and events to publish and provide for required parties. There are few reasons to publish annual reports by companies generally as follows.

Because companies have legal obligation between companies and the government act implemented for companies is known as company act 2007 No 7. The company act’s section 150, 151, 152 and 153 has mention the obligation to prepare financial statements, content and form of financial statements, obligation to prepare group financial statements and content and form of group financial statements accordingly.

Stakeholders of the company require the financial information for following reasons.

• To know how well the company is doing.
• To find company has earned more money than they spent.
• To get an idea about strategic and tactical plans of the management.
• To provide information to make decisions who make decisions about organisatoin.
• Avoid dissimulations and corruptions of the organisation.

Through the audit process, organisations will be able to identify weaknesses of their control of procedures and corruptions occurred due to them.

To obtain and fulfill the financial requirements from monitory markets via financial equipments such as shares, debentures, bank loans and etc.

Importance of Financial Information to Stakeholders

However the financial information require by stakeholders of the organisation. Stakeholder of the organisation can divide into two. The bellow chart represents the stakeholders of the organisation according to the environment they belongs to.

External stakeholders

a). Suppliers and Trade creditors

b). Government

c). Consumers

d). Public

e). Medias

Internal Stakeholders

a).Directors & Managers

b). Shareholders

c). Employees

Above chart shows the deviation of stakeholders of the organisation and they require financial information due to various purposes.

Directors and Managers

To make decisions about the organisation in different time and in different level. Directors and managers of the organisation are taking different types of decisions as follows.