INTRODUCTION
Remarkable progress has been made in the areas of financial reporting and corporate accountability over the past few decades. However, continuous improvements have proven to be insufficient to face some of the challenges of the current reality, which continuously unsheathes vulnerabilities of financial reporting practices. It is a “catch-up” process for standard-setters and other regulators, who try to keep up with the rapid change of the business scenery. In many cases, inadequate and belated accounting response resulted in information being inaccurately represented, which, in turn, was followed by the introduction of more developments in order to address imperfections of the financial reporting.
This essay reviews major developments in financial reporting of the recent years. It also discusses the problems associated with financial reporting because they illustrate future challenges for standard-setters, who aim to improve transparency and accuracy of information provided by the companies to the global markets. Moreover, corporate accountability and its sources are reviewed as they represent the force, which also contributes to the accuracy of information supplied to the markets.
DEVELOPMENTS IN CORPORATE ACCOUNTABILITY
Those, who manage business entities, are held more accountable today than they were held in the past. More specifically, financial information prepared by the companies and presented in the form of financial reports is now a subject to more strict requirements and regulations, which are derived from the sources such as legislation and financial reporting standards. Each of these sources of regulation are discussed in this section with the United Kingdom and the United States of America used as illustrative examples.
Company legislation is an important source of corporate accountability and it has been developing with the evolution in the external economic environment. Some examples of relatively recent pieces of...