Current issues in financial reporting - Essay Example

549-586). This paper explains the importance of financial reporting in organization, and gives the reasons for and against capitalising human resources in the financial statements of a company. Discussion Financial reporting entails communication of useful financial information for making credit, investment and other decisions in business. Reports to the stockholders on quarterly and annual basis, financial statement notes, prospectuses on issuance of security and common stock, and the external financial statements, like the income statements, stockholder’s equity statement, cash flow statements and the statements on stock equity.

Financial reporting enhances delivery of information to the shareowners and lenders in business; it is usually component of the essential contract between them since they have the right to know the spending of their money and the returning profits (Ballweiser, 2004). In UK, big changes in financial reporting are under the Financial Services sector. The Accounting Standards Board, ASB issued exposure drafts that detail the proposals for financial reporting in UK. . The demand for more transparency ensures growth to the interests of an organization in order to meet such demand constructively.

The organization will, therefore, have a strategic value in clarifying for the critical performance as well as internal management of the organization communication. This leads to effective allocation of capital in the organization, and critical in achieving a special attention within the accounting research. Reason for Capitalizing Human Resource in UK Human capital forms the main asset in service companies. The success of an organization can be rated depending on the employees and customers they retain (Francis, Lafond, Olsson, & Schipper 2005, p. 295-327). Several studies on human resource measurement aim at providing the management of any organization with the traditional financial statements, as well as additional information.

The intangible asset from many organizations is more critical than the tangible assets. Intangible assets comprise of the success factors needed for maximization of profits and continual survival of the organization. Like human resource, while the intangible assets comprise of the fixed assets like property. The financial information from the financial statements is considered incomplete when they fail to cover and account the human resources. Financial measuring and reporting by businesses in UK enhance the management and evaluation of people’s performance.

This ensures greater transparency on value creation through effective policies and practices that benefit stakeholders and the organization at large. The management of people by an organization impacts their performance. The feature of good managerial practices