Financial Reporting by Limited Companies

Abstract

Financial reporting is the communication of the financial statements of an organisation to interested parties. All forms of organisations produce some form of annual report on their financial progress and position. For sole traders and partnerships the circulation of these reports is usually restricted to the owners of the business and those with a direct interest, such as the bank and the Inland Revenue. However, the financial reports of limited companies are public documents and because of the importance of such companies in the economy, in this chapter we will focus on financial reporting by limited companies. This does not mean that you need to know how to draw up a full set of company accounts which comply with every aspect of the regulations as accountants do, but you do need to be able to read, analyse and interpret company accounts. To do this, you must be familiar with the main features of limited liability companies and understand the regulations that control their accounting activities.