The main goal of financial reporting and analysis is to provide a clear picture of the financial condition of the business in both short term and long term. Given today´s volatile economy, having a complete and consolidated view of the financial performance of the company is key to success.
However, reports nowadays are becoming longer and more cluttered. Reporting and Analysis has become more complex than ever due to rapid mergers and global acquisitions. Further, financial regulatory bodies are also exerting more pressure in an attempt to guarantee the accuracy of information provided to the public and the investing community.
To help you improve your financial reporting, we have listed down the 4 most important questions to ask.
Are the accounting principles adopted specific to the circumstances of your company?
There are several accounting standards to choose from.For example, for-profit businesses, they can choose from International Financial Reporting Standards (IFRS), Accounting Standards for Private Enterprises (ASPE), or Non-GAAP reporting (for tax purposes). Many people think that adopting IFRS is the easiest way to increase the credibility of their reporting. This is wrong.When choosing from several accounting standards to adopt, your specific business goals and the special circumstances of your company must always be the key considerations. Just as important is the consideration of who will use your financial statements both internally and externally.
Is there unnecessary duplication of information within the annual report?
Duplication of information is not a bad thing but unnecessary duplication of information is.For example, do you repeat messages in different places without a good justification? If this duplication does not add value to the report but instead only makes it longer, more complex, and cluttered, it is best to do away with repetitive information. When assessing whether or not the information should be there, ask yourself “what happens if I delete this information?”
Do your specific disclosures lead to material information?
It is important to remember that specific disclosures generally do not need to be provided if the resulting information is not relevant. It is important to assess yourself if the materiality of your disclosure is appropriate or you are just being overly cautious. The latter only adds to clutter in the report.
Are you convinced that the language used and the manner in which your report is communicated is clear enough for users to understand?
It is important to look into the structure of your annual reports and accounts such that you need to ensure that all the necessary information is easily obtainable. It is also just as important that the language that you use is simple, understandable, and clear.
One of the solution to the growing report complexity problem introduced by several CFOs, controllers, or analysts is the adoption of a system that can help simplify and automate reporting.
Performance Canvas Financials allows you to access and analyze real-time information regardless of the sources of your data. It is ERP system agnostic and can therefore integrate with any and all systems available in the market. With Performance Canvas Financials, you can access information anytime and anywhere as well as make these available to regulatory bodies, investors, creditors, or the executive team.
DSPanel offers cutting edge technology platform for business analytics, planning, and visualization. DSPanel designs, builds, and operates with the end users in mind. Performance Canvas was created by DSPanel to answer the unarticulated needs of the market not addressed by previous available solutions. With Performance Canvas, information is transformed into valuable business insights for the business executives to utilize in their decision-making process. DSPanel currently has over 2500 organizations deploying their solutions.