What is one characteristic of financial reporting?

Financial reporting is characterized by its inclusion of both historical and predictive data about a company's financial performance. This comprehensive view allows stakeholders to assess not only past performance but also future expectations. By analyzing historical data, users can identify trends and understand how past actions have influenced the current financial status. Predictive data, on the other hand, helps in forecasting future performance and supports informed decision-making by providing insights into potential outcomes based on current and past performance metrics.

In contrast, financial reporting is not limited to preparation at the end of a fiscal year, as it can also encompass quarterly reports and interim statements, reflecting the ongoing financial health of a business. Additionally, financial reports are created not only for internal decision-making but also for external audiences, such as investors, regulators, and creditors. Lastly, financial reporting must adhere to established accounting standards, such as GAAP or IFRS, and is not merely governed by internal company policies. This adherence ensures consistency, reliability, and comparability of financial information across different organizations and reporting periods.