Financial standards are guidelines and principles that govern how financial transactions and reporting should be conducted. They ensure consistency, transparency, and accuracy in financial statements, making it easier for stakeholders, such as investors and regulators, to understand a company's financial health. Common financial standards include the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). These standards help maintain trust in the financial system by providing a framework for accountability and comparability. By adhering to these guidelines, organizations can effectively communicate their financial performance and position, which is crucial for decision-making by shareholders, creditors, and other interested parties.