- CFA Exams
- 2021 Level I
- Study Session 6. Financial Reporting and Analysis (1)
- Reading 20. Financial Reporting Standards
- Subject 1. The Objective of Financial Reporting
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Subject 1. The Objective of Financial Reporting PDF Download
An awareness of the reporting framework underlying financial reports can assist in security valuation and other financial analysis. This framework describes the objectives of financial reporting, desirable characteristics for financial reports, the elements of financial reports, and the underlying assumptions and constraints of financial reporting. An understanding of the framework that is broader than knowledge of a particular set of rules offers an analyst a basis from which to infer the proper financial reporting, and thus security valuation implications, of any financial statement element transaction.
The objective of financial reporting:
- The objective of financial statements is to provide information about a company's financial position, performance, and any changes in financial position; this information should be useful to a wide range of end-users for the purpose of making economic decisions.
- Financial reporting requires policy choices and estimates. These choices and estimates require judgment, which can vary from one preparer to the next. Accordingly, standards are needed to attempt to ensure some type of consistency in these judgments.
Learning Outcome Statementsa. describe the objective of financial reporting and the importance of financial reporting standards in security analysis and valuation;
CFA® 2021 Level I Curriculum, 2021, Volume 3, Reading 20
User Contributed Comments 1
|lordcomas||To provide Information about a company's financial position, performance and its changes.|