Syllabus E. Interpret Financial Statements For Different Stakeholders E1. Interpretation Of Financial Information

E1b. Demand For Transparency 4 / 11

Syllabus E1b)

Discuss the increased demand for transparency in corporate reports, and the emergence of non-financial reporting standards.

Transparency in Corporate Reports

Stakeholders are demanding more from entities.

Investors in particular need to know what they are investing in ethically, hence the demand for transparency in corporate reports. Stakeholders need to understand how an entity does business.

For example,

EU law requires large companies to disclose certain information on the way they operate and manage social and environmental challenges.

This helps investors, consumers, policy makers and other stakeholders to evaluate the non-financial performance of large companies and encourages these companies to develop a responsible approach to business.

Companies are required to include non-financial statements in their annual reports from 2018 onwards.