Analyze the need for unbiased financial reporting. Based on your analysis, determine at least two (2) drivers that may cause financial reporting to be biased. Provide a rationale to support your response.
The organization need for unbiased financial reporting because, financial reports are the documents and reports the organizations place together to follow and evaluation how much money their businesses are making or how much money they loss. The essential purpose of the financial reporting is to transport these information and details to the stakeholders, owners, investors , lenders and anyone else who support part of the organization's businesses. The organization's investors, shareholders and lenders should to have acknowledge if their money is making a profit or not. The wealth markets depend on correct, reliable, and objective data and information that represent the economic nature of an item of business and in revolve make available a base to evaluator and judge present development on the way to long-term objectives. If the marketplace does not get reliable data and information, investors and shareholders lose confidence and assurance in the organization, build weak decision, and might lose a huge deal of capital, in the end, the organization might fail. Audit's organization needs specialized and professional who build reliable decisions and judgments. The market will be further and more strong if the data and information are clear and unbiased, and the data do not favor one party over another. Each user is considered important (Knapp, 2012).
The first driver that may cause financial reporting to be biased is the managements, managements have a special interest to provide data and information that will make their businesses look good. Managements have within their organizations data and information that it might or might not want to share these information with users. For instance, management’s return may be joined to business profitability or...