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Neha Tikoo, Lovely Professional University Unit 9: Issues and Recent Trends in Corporate Reporting

Unit 9: Issues and Recent Trends in Corporate Reporting Notes

CONTENTS
Objectives
Introduction
9.1 Segment Reporting
9.2 Social Reporting
9.3 Transfer Pricing
9.4 Corporate Governance

9.5 Human Resource Accounting
9.6 Summary
9.7 Keywords
9.8 Review Questions
9.9 Further Readings

Objectives

After studying this unit, you will be able to:
Explain the concept of segment and social reporting

Define transfer pricing
Describe the emerging concepts like corporate governance and human resource accounting
Introduction

Corporate reporting is now at the centre stage of reforms in view of the shareholders’ education
by the companies. Recent developments in corporate financial reporting indicate a greater
emphasis on better voluntary disclosures by the companies regarding their performance and
state of affairs. This makes their balance sheet more transparent than ever before.

9.1 Segment Reporting

In recent years, many business enterprises have broadened the scope of their activities to
encompass different industries, foreign countries and markets. Due to the growth of diversified
business and expansion of firms into foreign markets, consolidated information becomes non-
homogeneous information. Consolidated statements enable the management to hide information
from external reporting. Some segments may be running at a loss, but the consolidated statements
will merely show the average profit figure (and other information) of all the segments taken
together. It is, therefore, necessary that along with consolidated information segment information
is also provided to the users.
With increasing tempo of globalisation, the trend in Indian corporates is to adopt international
standards in financial reporting. The Institute of Chartered Accountants of India has issued
standard on segmental reporting AS17. Indian corporates, listed or proposed to be listed on the
stock exchanges has to adopt segmental reporting. Companies with multiple products or services
and those with area of operation extending beyond the boundaries of the country would have to
present separate financial report for each of the activities and for each territory. Each segmental

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