Accounting is often referred to as "the language of business". It is the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by the users of the information. It is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions and reasoned choices among alternative courses of action. Corporate Reporting or Disclosure, on the other hand, can be defined "as a process through which a business enterprise communicates with the external parties". It is the communication of various details regarding the activities of the business, which are to be disclosed either statutorily or otherwise and it is to convey a true and fair view of the operating results and financial position to the users of financial reports.
Directors' Report is considered as the nucleus of the Annual Report of a Company. It is treated as an index to corporate reporting. All the companies under study have enclosed it along with financial statements in their annual reports. It is perceived by JK Krishnamurthy, Researcher in his study, "Board's Report: Its Scope, Contents and Objectives" as the principal medium of communication. It should not only be clear, factual and authentic but also accurate, unbiased and fair. A researcher in his PhD study on "Corporate Disclosure Practices in India" has concluded that Directors' Report is liked more by the non-technical investors and it is an effective source to help the investors get acquainted with the overall growth and performance of the company in a non-technical and narrative style. |
