AN ASSESSMENT OF FINANCIAL STATEMENT AND ITS USEFULNESS IN ASSESSING THE PERFORMANCE OF AN ORGANIZATION

Background Of Study: A farmer who planted corps expects results, just as a student who waits for an exam does. The same may be said for an investor. The farmer may be informed of the outcome in the form of a bountiful crop. A pupil would normally be satisfied with a result sheet or a report card. In the case of an investor, however, the outcome is disclosed through financial reports.

Every limited liability business is required by law to prepare financial reports; these limited liability corporations may be found in almost every area of the economy. Accounting records must be kept by every organization. Accounting records must be sufficient to demonstrate and explain the company's transactions and must be kept in such a way that the company's financial situation may be disclosed with reasonable accuracy at any time.

Financial reports in the banking business are of tremendous interest to the general public since banks deal with individuals directly or indirectly.

This public interest has led to companies (including banks) accepting social as well as economic, financial, and legal responsibilities, and as a result, there is a growing need for information communication to account for the outcomes that are of significant interest to a diverse range of individuals and organizations.

As a result, it is critical that credible information be disseminated to interested parties in order for them to have an understanding of how corporations, notably banks, are operating in respect to the public interest. This reality is reinforced by the proposal of the working team established in Britain by the Accounting Standards Committee in October 1974, chaired by Derek Boothman, to investigate the scope and objectives of publisher financial statements.

The committee suggested that:

"The primary goals of a corporate report are to disclose economic measurements of the reporting organization that are valuable to those who have a legitimate right to such information."

It is hardly an exaggeration to say that the banking industry is the flume around which the national economy revolves. This massive influence on a country's economy makes it a public matter since everyone in the country has a right to know what such organizations are doing, and all information necessary to properly explain the organization's actions should be published in yearly reports.

One of the most important components of a commercial enterprise's information system in an economy is that which deals with the communication of financial data, particularly in explaining firm profitability and financial condition. This information is significant because it aims to segment the enterprise's economic resources and the financial results generated by its management when those resources are put to use. It tries to indicate how efficient management has been in utilizing resources, as well as the financial reward offered to compensate for the risk incurred by diverse capital suppliers.