1. The Importance of Reliable Financial Reporting in the Serbian context
October 11, 2005
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2. Contents
Objectives
Users of financial reports
The Role of Auditing profession
Barriers to reliable financial reporting in SCG
Barriers and some practical ideas to overcome them

3. Objectives – Reliable financial reporting
To provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions.
Financial statements also may be used to asses the accountability of management.
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4. Objectives – Reliable financial reporting
The main qualitative characteristics of reliable financial reports are that they ensure:
Comparability
Reliability
Understandability
Relevance
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5. Users of financial reports
Reliable financial report assists the following in making sound decisions:
Banks and financial institutions – deciding whom to lend, more favourable lending terms
Creditors – more favourable terms of trade
Investors – making sound investment decisions, important for FDI
Shareholders and capital owners – whether to in or di - vest
Governments and their bodies – to ensure appropriate taxes are paid
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6. Users of financial reports
Employees – appropriate employment decisions are made
Public – for listed companies and others, social responsibilty is important
Customers – monopoly protection
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7. The role of the auditing profession
Increases reliability
Ensures objectivity
Increases comparability
Adds to credibility
auditing
accounting
Financial reporting
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8. IFRS is non-prescriptive, judgement is needed IFRS is complex
Barriers to reliable reporting in SCG and other countries in transition
Accounting barriers:
IFRS is non-prescriptive, judgement is needed
IFRS is complex
IFRS may conflict with tax or other regulations
IFRS is changing all the time
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9. Conflict of interest may arise
Barriers to reliable reporting in SCG and other countries in transition
Auditing barriers:
A complex accounting framework requires increased knowledge on the part of auditing
Conflict of interest may arise
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10. Barriers – some practical ideas and how to overcome them
The solution that is workable, one size fits all might not be the best solution,
Must provide practical and theoretical training for all, preparers and auditors and,
Multi-purpose reporting (tax, statistics, financial) should be avoided/resolved as conflicting and contradicting may exist.
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