What is an Annual Report?

We probably have all seen an employee scram when the boss asks for a ‘report’. While there are many types of reports in a business setting, an annual report can be considered as one of the most important documents for a corporate entity. It is very comprehensive, and while it may not be as detailed that a complete stranger could understand it, annual reports reveal the starting point of the organization during that fiscal year, it’s operations and milestones, and lastly a bright outlook (hopefully) for the future.   

No matter how small or large your company is, management decisions rely heavily on efficient report generation, as they make crucial financial and management decisions on such data. An annual report is a comprehensive report about the status of a company. Here is other information as to why annual reports are given so much importance.

1. An Annual Report is a thorough accounting of a company's transactions and activities for the past year.
2. An Annual Report is shown to stakeholders and other persons and entities related to the company to provide information about its status and financial standing. Companies are normally required to disclose annual reports on a yearly basis to concerned members of the firm. For some companies that are publicly-listed in their national stock exchange, they may be required to provide similar reports on a semi-annual or quarterly basis.
3. An Annual Report normally includes: the Chairman's report, an auditing report, report on compliance with corporate policies and governance, and a description of the responsibilities and accountabilities of top management.
4. Financial standing should also be disclosed, such as the company's balance sheet, annual sales, cash flow statement, and their corresponding auditor’s report.
5. This type of report would allow investors to see the standing (and stability) of the business and its future direction. In compliance with government regulations as well, Annual Reports are submitted to government agencies such as the Securities and Exchange Commission.
6. Even non-profit organizations, despite the nature of such groups, usually prepare Annual Reports -- not to reflect profits, obviously, but to highlight significant aspects in the past year’s performance.
7. An Annual Report, apart from reflecting financial data, also showcases management and administrative achievements. Accomplishments with regards to achieving corporate goals, corporate social responsibility, or human resource management are also indicated.

An Annual Report can be called the 'fitness report' of a company. This report is usually available on the corporate website (in the investors section, and is usually in Adobe Acrobat format for easy download and viewing, while discouraging copying and editing). Printed versions usually look like a manual – hard copies of reports printed on colorful and glossy paper. Copies are distributed to employees or are available in lobby offices for guests to get a glimpse. Annual reports can make or break investor relations and the company’s standing in the industry. As comprehensive as they are, Annual Reports are essential reports to guide companies and the economy towards a more stable, productive, and efficient future for everyone.