Reporting entity

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Reporting entity
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Reporting entity is a type of entity where it is justified to await, that the users like shareholders, employees, investors or creditors must submit a general financial report (GPRF:General Purpose Financial Reports). The goal is to understand the financial situation and analyze the results. This is necessary when making further decisions. "Reporting entity means an entity in respect of which it is reasonable to expect the existence of users who rely on the entity’s general purpose financial statements for information that will be useful to them for making and evaluating decisions about the allocation of resources. A reporting entity can be a single entity or a group comprising a parent and all of its subsidiaries" (K. Reilly, 2015, p.3). Often instead of term reporting entity is used interchangeably accounting entity.

Reporting and Non-Reporting Entity

What is reporting entity has been described above. A non-reporting entity is this type of entity when the persons in charge of management have established that there are no users who are dependent on a GPFR. In such a special situation, a non-rapporteur is allowed to prepare a special, other purpose financial report, not GPFR. It is very important that the managers prove that the unit has users dependent on GPRF. Then they will allow them to identify the subject as not - reporting or reporting. "“Non-reporting entities” are not required to report financial information this way and can report Special Purpose Financial Reports (SPFRs) which have significantly lower reporting requirements than GPFRs" (Ch. Saccon, 2017, p.2).

  • Samples of reporting entities: public brands, big private firms with external shareholders who have access only to the annual financial statements and educational organizations.
  • Samples of non-reporting entities: private firms with a low number of shareholders (where everyone is employees) and non-profit organizations.

It is also worth to notice one important thing. Some of companies use the GPFR document for marketing activities. In this way, they promote positions in society and on the market. Another important thing is access to GPFR. People who have access to it must be reliable and responsible so as to minimize data leakage. Especially outside, to competitive companies. The distinction between a reporting entity and an entity that is not a reporting entity and a correct familiarization with these terms is important due to the correct preparation of the financial report. Except that, we are aware of the benefits and risks.

References

Author: Edyta Krzyczman