Financial Reporting Basics - Three Standard Reports
Updated: Feb 13, 2020
January is complete and all financial records have been processed and data sent to your tax preparer or auditor, correct? Well, we hope this is the case. For calendar year end businesses, healthy accounting teams prioritize completing previous year tasks so that records are ready for tax preparers, auditors, investors, and owners no later than January 31st (for fiscal year end, 30 or 31 days after year end close). If your team hasn’t completed this yet, your business accounting records are already behind.
In order to meet annual deadlines, your business must maintain timely and accurate processing and reporting of financial records. Deadlines are critical. Accounting teams should reconcile, process and report on the previous month data in the first five to ten days of the new month. If this is not happening, your business accounting has room for improvement, and it may be a red flag notifying you of possible concerns. Closing the previous month financial records timely is key to keeping current as you move into the next reporting period.
Why is timely record keeping so important? It is important because to manage revenue, expenses and make strategic business decisions you must have timely and relevant data on your business operations. These records are your financial road map and are key to running your business effectively today and planning for tomorrow. A basic financial reporting period package includes the following:
Balance Sheet: Snapshot of Assets, Liabilities and Equity
Income Statement: Current month and year to date Revenue, Cost of Goods Sold, Expenses, and Net Operating Income
Cash Flow Statement: Detail of changes in cash balance to include activity from Balance Sheet and Income Statement
If you aren’t familiar with these reports, learning to read and understand them are important. These financial reports should be reviewed no less than monthly. Periodically you should also request a Detailed General Ledger from your accounting team to validate by spot checking transactions posted in the period for both Balance Sheet and Income Statement accounts. As a business owner and manager, it is your responsibility to review and ask questions. If you have a CFO or Controller, they provide management; however, you should remain active in oversight.
Merigold Partners offer solutions that will guide you in trouble shooting and learning more about your business financial reporting process. Our service offering is customized for your business needs, contact us today to set up a free consultation. You may email us at email@example.com or call us at 281.747.3017.