Financial Reporting Best Practices:The Top 5
Creating a financial report is obviously one of the most important jobs for an accountant or during the course of a fiscal year. Keeping investors and stockholders apprised of a company's financial situation is essential to maintaining good business relationships and fulfilling investor contracts. When it comes time to put together a report, there are a number of practices businesses can use to stand apart from the herd.
Report Planning: The year-end financial report can be a massive undertaking, especially in large U.S. or multinational corporations. By taking a project approach - assigning a project manager to allocate resources and schedule timelines - businesses can effectively strategize and prepare for their report, suggests Robert Marchello, CEO of Marchello Consulting Group.
Audience Consideration: Determine who your financial report serves - who will read it, who will benefit most from the information it contains - and tailor the information to suit their needs, advises Rick Kadet, vice president and senior CFO consultant at the Brenner Group. Banks, for example, may require information regarding performance against loan covenants, he says. Taking time throughout the year to gather specialized information for certain investor groups can add a lot to year-end reports.
Interactive Reporting: Although some investors prefer the traditional "numbers on a page" approach to , the times are changing. New technologies have shifted the paradigm not only in areas like and entertainment, but in financial reporting, as well. In some formats, reports can be dynamic and interactive, according to ReportLeadership.com. Including click-through information and graphic representations of earnings statistics and other line items creates a powerful tool for investors.
Timely Calculations: When assets are sold or revalued, don't put off theuntil the end of the year, recommends Bill Kennedy, CFO at the United Church of Canada. By posting things to suspense accounts and waiting until the last minute, accountants create a serious year-end crunch. Doing the job as they go through the year can help alleviate stresses when it comes time to put together the full report. Kennedy suggests adjusting depreciation calculations regularly over the course of the year and checking and clearing amount accrued during the previous year right away.
Internal Auditing: Marchello recommends that companies take the time after closing a report to conduct an. This, he says, will support data accuracy and make sure the right information is getting to the people who make decisions.