Effective financial reporting as a knowledge for boosting the economic growth

Abstract: The purpose of this paper is to analyze the importance of effective financial reporting for the sustainable economic development of countries. Financial reporting has very important role in economic development of each country. High quality corporate reporting plays vital role in improving transparency, facilitating the mobilization of domestic and international investment, creating a sound investment environment and fostering investor confidence, thus promoting financial stability. A sound and internationally comparable reporting system facilitates international flows of capital, while at the same time helping to reduce corruption and mismanagement of resources. Qualitative financial reporting also strengthens international competitiveness of companies in attracting external financing and taking advantage of international market opportunities. During the various financial crises, that the world faced with and is stiil facing, continued efforts are being made towards improving the quality of corporate reporting as an important part of measures towards strengthening the international financial structure. In this regard the implementation and application of internationally recognized standards (IFRS-International financial reporting strandards), codes and good practices in the area of corporate reporting has been strongly encouraged as a reflection of the increasing pace of globalization and international economic integration. However, the effective adoption and implementation of such standards and comparable financial reporting methods and policies, remains a challenge for many developing countries and economies in transition, because they lack some of the critical elements of corporate reporting infrastructure – from weaknesses in their legal and regulatory frameworks, to lack of human capacity and relevant support institutions. In the face of these challenges there is a need for a coherent approach to building capacity in this area, as well as for tools to measure and benchmark progress and identify priorities for further actions. The aim of the paper is to show that high quality accounting and auditing, as a knowledge of financial reporting, can have significant role in improving economic performance. Key words: financial reporting, transparency, links, economic, developmen