What are the defects in Financial Reporting system?

Interesting question but difficult to answer without specific details. please mention software developer, indutry and what kind of defects?

If this is a general ledger system then the most common issues could arise at crtical stages such as end of day processes, Year end and quarter end processes. The system should be able to calculate interest correctly which is the most common issue. if this is a multi currrency ledger then revaluation of account balances and postings in local currency ledger becomes major hurdles to proper financial reporting.

If you are talking of a product processor such as a loans module, trade finance or fx dealers front end that feeds in the GL then there could be several issues arising resulting in defective and incorrect financial reporting.

Get your facts and then we can explore further.

it depends on the accounting system that is being used, the internal control system being implemented and the competency of individuals in the accounting department. financial reports must also be in conformity with generally accepted accounting principles. to make it more credible, an unqualified opinion from an external auditor will be helpful.. the defects will now arise if there are loopholes in the accounting and internal control system or if the personnel are not that knowledgeable in accounting arena.. this will render an adverse or a qualified opinion if you had your financial reports examined by external auditors.

The defects in financial reporting system in general is that, many items written on the financial statements are ESTIMATED. meaning could happen or not. example of estimates are, allowance for doubtful accounts -> which is estimated based on the company's history or as a percentage of sales.

Of course estimates are made by professional but it does not eliminated the fact that it is estimates only.

Honesty of Bankers. Smoke and mirrors. When pushed before the select committee in the House this week it was discovered the banks were loaning more as agreed and getting more investment. HSBC loaned (it's parent company) RBS £92.4bn last year. So on paper they are loaning money (bonus earned) and they are attracting money (bonus earned). Tax paying public still have to take this.

PS For his travel the Govenor of the Bank of England claimed £26 expenses for his senior citizens rail card, ethics no longer exist.