Most countries treat private, for-profit organizations as "citizens" subject to taxation and other regulations. An MNC must comply with both its own government's requirements and the requirements of the governments of every one of its subsidiaries. In addition, the company's other stakeholders, such as investors (shareholders), bankers, and employees, are entitled to information about management's handling of their stake in the firm.
Requirements with respect to the information that must be provided to the government and other stakeholders vary considerably from country to country, but there are( enough similarities that it is possible to build a system to handle all reporting requirements globally. All stakeholders want to know what resources a firm has, who owns these resources, how the resources are used in the process of wealth creation, and, finally, what share of this wealth is due to them. A firm satisfies these needs of its stakeholders by creating and making available four documents:
(1) Income statement (P&L statement)
(2) Balance sheet
(3) Statement of changes in financial position
(4) Notes on consolidated financial statements
All four of these documents are contained in the annual report that a company makes available to its stakeholders and to the public.
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