Introduction
Businesses of all sizes face many challenges at present. Key challenges in relation to corporate reporting are to ensure that the annual report and accounts provide relevant and reliable information to stakeholders, comply with relevant law and accounting standards and tell a consistent story. All directors, both executive and non-executive, have a legal responsibility for preparing accounts and must not approve accounts unless they are satisfied that they give a true and fair view of the assets, liabilities, financial position and profit or loss. It is important not to underestimate your legal responsibility as a non-executive director to prepare accounts that give a true and fair view and that comply with the law and accounting standards. Following are the three issues in Financial Reporting which I consider are significant:

1. Going Concern - the continuing challenge
The going concern assumption is a fundamental principle that underlies the preparation of the vast majority of financial reports. A company is a going concern when it is considered to be able to pay its debts as and when they are due, and continue in operation without any intention or necessity to liquidate or otherwise wind up its operations for at least the next 12 months.

The continuing difficult economic conditions mean that the assumption that the business is a going concern may not be clear-cut in some cases and directors may need to make careful judgements relating to going concern. Directors need to ensure that it is reasonable for them to prepare the financial statements on a going concern basis. Where directors are aware, in making their going concern assessment, of material uncertainties relating to events or conditions that may cast significant doubt upon the company’s ability to continue as a going concern.
To minimise the risk involved with going concern, when planning & performing audit procedures and in evaluating the results thereof, the auditor should consider the appropriateness of management’s use of the going concern assumption in the preparation of the financial statement. The auditors should remain alert for audit evidence of events or conditions and related business risks which may cast significant doubt on the entity’s ability to continue as a going concern in performing audit procedures throughout the audit.

2. The narrative reporting challenge
Telling a consistent story throughout the annual report and accounts is essential to producing a good set of reports and accounts. Narrative reporting, including the directors’ report, business review, chairman’s statement and other narrative reports, needs to communicate clearly the company’s business model, give a clear and balanced account, including information about the company’s performance in the year, both good and bad, and explain the principal risks and uncertainties the business faces and the key performance indicators which the Board uses to measure success.

It is an important issue in financial reporting as it helps stakeholders to know about the company’s goals, performance and business model, which makes it easy for stakeholders to make the decisions.
To make a good narrative reporting the company should consider following points:
- Does the annual report provide a fair, balanced and comprehensive review of the company's business and its performance, including an explanation of the business model?
- Is the analysis supported by relevant key performance indicators used by the Board in monitoring the business?
- Does the business review describe the principal risks and uncertainties to which the business is exposed, rather than set out all possible risks, and state the mitigating actions taken?
- Are the key messages given consistent across narrative reports and with the financial statements?

3. Financial reporting complexity
Annual reports have been growing longer and longer each year amidst increasing concerns about the complexity of financial reporting. Repetition and inclusion of immaterial detail in annual reports add unnecessary clutter and may obscure key messages. A key challenge is to make the communication in your annual report and accounts focused, open and honest, clear, understandable, interesting and engaging.

Some standards result in accounting that is difficult to understand, or increasingly detailed disclosures that are not often used by investors. Certain overly complex standards may actually misrepresent the economics of transactions and confuse investors.

Initially, the management should conduct a survey of investors, preparers, auditors, and regulators to identify existing areas of complexity in financial reporting. It likely won't be difficult to find these. Identified areas would be prioritized, possible solutions discussed, and proposals to reduce complexity sent to the board. A process to obtain and address ongoing input also should be established. The board also would use the committee as a resource to identify ways to simplify standards under development. Doing so would likely result in less complex exposure drafts, which may speed the standard development process.

There are two types of organisational complexity: the kind that creates value to give your firm a competitive advantage or helps solve knotty problems, or there’s bad complexity.

“Most organisations start with simple path dependencies,” explains Simon Collinson, professor of international business and innovation at Warwick Business School. “Then you develop internal processes to support those. Then you get layers of management – or you roll out new IT systems, or regulations change. Complexity is then embedded and self-replicating.”

Prof Collinson’s research among the largest 200 global companies showed they’re losing an estimated 10.2 per cent of their profit (EBITBA) as a result of harmful complexity in their business. So it’s well worth looking at your own finance function and across your organisation to see whether reducing complexity can help.

Conclusion
Among the most important general issues concerning the harmonization of accounting rules across national borders are disclosure and enforcement. Simply put, some countries require better and more disclosure of business activities and effects than others. Similarly, the degree of enforcement varies widely from country to country as well. There are good historical reasons for some of these differences in financial reporting. Financial reporting is a reflection of the culture, language, economic system, and legal system of its country of origin. For example, Germany and Japan have historically demanded much less financial disclosure than the United Kingdom and the United States because the first two countries relied on a limited number of banks for their capital needs. As the economic systems of continental Europe and Japan have evolved and many businesses now obtain capital from many more sources, so too has the financial reporting system improved. In both Europe and Japan governments have recognized the need for transparent organizations and have adopted more stringent accounting disclosure requirements.