Public companies indicate profit indicators in financial reports.
Businesses devote substantial resources to monitor their clients' purchasing habits, focusing on factors that impact sales growth in the short and long terms. Wouldn't it be nice for investors and the public to have the same view of corporate activities? Public company reporting requirements ensure that businesses lift the veil on their operations.
Identification
Public company reporting requirements concern firms that are listed on securities exchanges, such as the New York Stock Exchange. Given their legal status, these companies must reveal their operating information to investors and the public at the end of a period, say a year or quarter. Reporting guidelines cover many facets of corporate activities, including financial statements, regulatory compliance, risk management and top leadership's ideas about future economic conditions.
Time Frame
By law, public companies must file accounting statements at the end of each quarter and year. Complying with financial-reporting policies requires well-trained personnel, state-of-the-art technology and adequate accounting procedures. To perform duties adeptly, financial-reporting employees rely on their accounting acumen, information technology knowledge and regulatory expertise. U.S.-based companies file with the Securities and Exchange Commission forms 10-K and 10-Q at the end of each year and quarter, respectively.
Significance
Reporting procedures are on the top of the list with respect to public companies' priorities. In a modern-day economy in which technology permeates every aspect of business activities, companies must adapt their technological infrastructure. Publicly listed firms invest substantial resources to improve their computer systems and publish their financial reports electronically. Tools that companies rely on to meet their reporting mandates include enterprise resource planning software and financial analysis applications.
Expert Insight
Companies seek the expertise of accounting and audit professionals when preparing corporate financial reports. These professionals include certified public accountants, certified internal auditors and certified management auditors. External auditors, who generally hold a CPA license, review corporate controls and sign off on them before companies issue final accounting statements.
Financial Reporting
Financial-reporting requirements ensure that publicly listed companies file accounting statements that conform with regulatory guidelines. These standards include generally accepted accounting principles, international financial reporting standards and U.S. Securities and Exchange Commission directives. To be compliant, a firm must issue four financial statements. These include a balance sheet, a statement of profit and loss, a statement of cash flows and a statement of shareholders' equity.
Disclosure Notes
Disclosure notes shed light on material items that investors should consider when reading a company's financial statements. In accounting terminology, "material" means significant or substantial. Material information is data that, if known publicly, may change investors' decisions. For example, significant items may be the deteriorating health of a company's chief executive officer or a pending class-action lawsuit against the company.
