Companies try to increase their value by using effectively all the resources provided to them by regulators, debtors, and shareholders. Mangers have fiduciary responsibilities and duties, which affects how they operate and manage their business activities. Therefore, they are required to avail accounting information to the various company outsiders to help them make informed financial decisions. This essay discusses a manager's responsibility in financial reporting and the challenges he or she faces in maintaining ethical accounting and financial analysis practices.
The financial statements of a particular company provide important information to stakeholders necessary for their decision-making. Additionally, the non-financial information, management discussion, and analysis, and firm's annual report are important to outsiders (Im & Nam, 2019). Thus, a business organization's quality of reporting and financial performance reports shows that the managers are fulfilling their reporting obligation and fiduciary responsibilities. Therefore, if a company's performance is assessed through the manager’s abilities the quality of reporting would portray the manager’s ethics level.
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Financial reporting quality is defined in various aspects. For example, it can be explained through earning's quality, accounting information reliability, accounting transparency, and appropriate audit activity. Therefore, the financial reporting quality influences the interested parties’ decision-making and firms' capital cost (Im & Nam, 2019). Additionally, a company’s financial positioning can be strengthened by marketing reports and sustainability.
Ethical responsibilities are becoming significant issues in society, in which firms need to act towards meeting them. According to Nuseir and Ghandour (2019), managers are facing great challenges in financial analysis practices and ethical accounting because of deregulation, advancement in information technology, strengthened customer's rights, increased level of consciousness, and increased demands for high services. Nuseir and Ghandour (2019) assert that digitization and globalization of businesses are altering ethical issues and their intensity, which are evidenced by the many complaints and problems in the area. Therefore, globalization and digitization are both advantageous and disadvantageous to business organization’s financial analysis practices and ethical accounting.
References
Im, C., & Nam, G. (2019). Does Ethical Behavior of Management Influence Financial Reporting Quality? Sustainability , 11 , 1-16. https://doi.org/;10.3390/su11205765
Nuseir, M., & Ghandour, A. (2019). Ethical issues in modern business management. International Journal of Procurement Management , 12 (5), 592-602. https://doi.org/10.1504/IJPM.2019.102153
