The recent rapid surge in globalization and the massive flow of cross border capital has created an unprecedented rise in the number, types and expectations of stakeholders in any business. One of the immediate fallouts of this phenomenon is the increase in the scope of financial reporting as compared to yesteryears. The requirements of today are more demanding than before as different types of stakeholders require different types of information from the same source, i.e. the financial report. The financial statements prepared today do not cater to all such different requirements. This article introspects the limitations of the existing financial reporting pattern and provides details of various reporting models used elsewhere across the globe.

The theory and practice of Financial Accounting has come under severe criticism in the recent years. Financial scandals like the ones in Enron, World Com, Xerox, etc., have put a question mark on the credibility of the existing accounting framework and the various regulations governing the field of accountancy. Financial reporting as exists today is thought to be inadequate. Critics believe that accounting has neither been able to adapt itself to the changing nature of the business nor has it been able to successfully address the changing needs of the investors. The argument is that traditional financial reporting is based on the assumption that profitability depends on physical assets, like plant and machinery; on raw materials, like coal, iron ore, sheet metal, and plastic. In other words, it is expected that the tangible assets need to manufacture tangible products. It is also felt that traditional financial accounting is more suited to a static business environment with lengthy product life cycles, defined and longterm ownership of businesses and a stable money and financial market. In such a scenario, the collection and assimilation of historic information for providing financial results is appropriate but falls woefully short when it needs to be used strategically for decisionmaking purposes in a globally competitive scenario.

With the rapid change in the business environment and the emergence of Information Technology, the financial reporting requirements have undergone a sea change. It was during the early 1970s when book values of companies in the West started diverging from their market values. Today, this gap has widened. The world has become smaller with companies having operations in different countries. Companies of today attempt to build Information Assets popularly referred to in the accounting literature as Intangible Assets. These assets are by and large excluded from the company's Balance Sheet resulting in an overstatement of expenses, which are related to intangibles in the Income Statement.

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