Obstacles to Good Financial Reporting

Read these remarks from a former SEC Commissioner, which goes behind the scenes to discuss issues of reporting financial information for public companies. GAAP is integral in reporting transactions.

III. Obstacles to Good Financial Reporting

The task of getting useful information from companies to investors is not an easy one.

First, standard-setters promulgate accounting literature to govern reporting; then, company must interpret the literature and report its financials accordingly. The market then has to analyze and interpret the reported information. And, ultimately, investors have to make judgments based on the reports. It is a road that has many obstacles. It is worth looking at some of these obstacles before we try to come up with solutions.