Question

Along with GAAP compliant financial reporting, some companies have also provided certain financial reports that are not in accordance with GAAP. These businesses would assert that they are providing useful and relevant information. Should such reporting be banned as being, at the very least, misleading?

Answer 1

As we know that GAAPs are the basic guidelines for accounting process and for preparation of financial statements. So importance of GAAPs can not be ignored in accounting reporting system. We know that without GAAPs we cannot completely rely on the provided financial information by any business entity because GAAPs generate a solid base for true & genuine financial information, apart from this GAAPs also helps in bringing uniformity in the financial reporting system thus if a firm is not following these GAAPs then we can not assure ourself about the accuracy and completeness of the provided accounting information thus such reporting should be banned due to several negative impact on the business environment. If some firms are permitted to do so then stakeholders will not get true, fair and uniform information and some more firms will also go to such accouting reporting system, that will ultimately hammer on the main motive of GAAPs.

Hence, finally we can say that such reporting, which is not following GAAPs should be banned for making more transparent & fair accounting reporting system in the whole industry.