Financial statements provide relevant and reliable accurate information about the financial performance and position of a company or business enterprise (Berry, 2011). It is therefore important to provide accurate and honest information. The issue of such provision may be cultural relative influenced by cultural, governmental and religious teachings. Religious teachings about honesty are an important virtue that its application results to sure, reliable accurate and ethical financial reports.
Accurate and reliable financial statements are important to various parties in the business. They provide information in financial terms that are fair, accurate, reliable and ethical. These describe certain attributes of the business that is important for decision making particularly to the owner/ investors and creditors. Investors use the information to judge the profitability of their investments and lenders assess the credit worthiness of potential clients (Fridson, & Alvarez, 2011).
Proper financial statements also aid the manager in running the business in the desired direction projected by the shareholders. They help the management to check the business’ position and its path towards meeting its objectives. Honest report therefore provides for a checklist in business operation.
Government requires financial statements to assess the accuracy of tax returns. It is a government requirement and regulation for all business enterprise to submit accurate statements for check on their tax payment. Dubious statements are against biblical teachings and the business ethics of accuracy and reliability (Berry, 2011).
Reliable, accurate and honest financial statements will help the public evaluate/ asses the value of the company. It is therefore calls for the audit committee to provide such statement that are meaningful and helpful to all parties including management, shareholders, lenders and the government as it requires such information for tax accuracy analysis (Fridson, & Alvarez, 2011).
Berry, L. E. (2011). Financial accounting demystified. New York, NY: McGraw-Hill.
Fridson, M. S., & Alvarez, F. (2011). Financial statement analysis: A practitioner's guide. Hoboken, N.J: Wiley.