Asx200 Annual Financial Report Essay

With a review of the ASX200 annual financial reports, KPMG found out that some organisations have started to use graphical communication to deliver key information to the investors (KPMG, 2015). Graphs has been considered as an effective and efficient vehicle in presenting quantitative data in financial reporting (Hill & Milner, 2003). However, this paper will critically examine the use of graphs in financial reporting as there are more factors that need to be taken into account.
Graphical representation brings many benefits to the companies’ financial disclosures. First of all, learning and cognitive processing are facilitated in the information exchange. This is because graphs such as diagrams usually deliver a more explicit, dynamic and

More specifically, while companies with larger decreases in Key Financial Variables (KFVs) are less likely to use graphical disclosures, some other companies with better financial performance may also be reluctant to disclose these increases using graphs to the regulators as explained by the political cost theory (Dilla & Janvrin, 2010). As a result, the application of graphs in the financial reports can be very limited. One more concern is that graphs sometimes misrepresent the financial data with managers’ selective disclosure and intentional omissions. Consequently, these distorted information can depict a more favourable company performance, which further influence users’ decisions in the capital market (Muiño & Trombetta, 2009). Nevertheless, the conceptual framework sets out the objective of financial reporting being providing users with information that is useful for making and evaluating decisions about the allocation of scarce resources (In Locke & ICAA, 2016). Therefore, it is suggested that a comprehensive set of guidelines can be published by the regulator and standard setter to serve the appropriate and ethical use of graphs in the financial