Assignment: Audience and Purpose
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There are several principles for preparing good reports, including annual reports:
◆ Audience and purpose: Management should prepare reports with the audience and purpose as the central focus. Preparing reports that readers will not understand is always dangerous. For instance, executive management should use a different level of detail in preparing a report for department managers than in preparing a report for the governing body. In addition to audience, management should always keep in mind the primary reason for the report. For instance, annual reports for for-profit organizations that have selling stock as a primary purpose will attract attention by using lots of color. Not-for- profit organizations, which must be more concerned about costs incurred, should provide an austere, yet functional, annual report.
◆ Timeliness: Reports designed to provide control within the organization, such as budget reports, must be prepared and distributed in a timely manner to maximize the effects of any necessary corrective action.
◆ Accuracy: Accuracy in reporting information is more important than timeliness. Reports with mistakes are detrimental to the organization because they create credibility problems.
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◆ Clarity: Reports should be clear and concise to the audience and should leave little room for misinterpretation.
◆ Comparability: Reports should maintain formats to accommodate easy comparisons from statement period to statement period and among different organizations.
◆ Commentary: Reports should provide explanations when necessary. Even financial statements should provide explanations in the form of notes to the financial statements.
◆ Meaningfulness: Reports should be used for better decision making, which can only happen if the information is needed by the decision maker.
Annual reports provide accountability of the organization to the stockholders and act as a vehicle to sell more stock.
ntroductIon As discussed in chapter 2, healthcare corporations are granted legal status as corporations by the state. Although the state can allow a variety of tax designations for corporations, only two general designations are discussed in this chapter: for-profit corporations and not-for-profit corporations.
rAtIonAle for tAx-exemPt stAtus As a general rule, for-profit corporations pay taxes: federal and state income taxes on income; state and local sales taxes on purchased goods and, in some states, services; and local real estate and personal property taxes on land, buildings, and major equipment. Not-for-profit corporations pay no taxes; they are therefore tax-exempt. To be tax-exempt, corporations must meet certain criteria established by the federal government through the Internal Revenue Service (IRS) and state and local governments. Most state and local governments use either the same or similar criteria to those established by the IRS.
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