Financial Reporting //FREE\\

For many businesses, the growth and expansion phase is an exciting time. It creates new opportunities, brings in new customers, and generates more revenue and higher profits. However, if your team lacks crucial financial reporting and analysis capabilities, it can be difficult to make informed decisions on how to best manage and grow your business.

Also, these financial statements are typically the starting point from which to begin assessing how finance teams can communicate with their business partners. Finance communication and alignment and the ability to turn complexity into clear statements is key to improving the role of Finance as a business partner. Financial statements can translate into business understanding, connection, and action. The goal of a finance team is uniting the business, not just reporting the numbers.

Financial Reporting

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The visibility and analysis provided by financial statements makes it easier to maintain short-term liquidity, manage debt more effectively, and plan resources and budget allocation more efficiently. It also helps organizations identify trends, mitigate potential risks, avoid obstacles, stay ahead of the competition, and take advantage of any opportunities for growth and investment that might arise.

Ensure Compliance and Completeness

Compliance and completeness is not only vital to accounting teams, it should also be a core pillar for finance teams, the business, and executives. Compliance with all core accounting, investor, and industry guidelines and rules is vital for trust of those financial statements.

Each document you use to evaluate financial performance must comply with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS). This is reviewed by several financial regulatory institutions such as The Financial Accounting Standards Board (FASB). This also reinforces the importance of finance and accounting teams to be deeply familiar with any new changes, updates, or rules and regulations which are vital to ensuring compliance and completeness.

In addition to the above rules and regulations, financial reports must also comply with tax regulations and financial reporting criteria established by the Internal Revenue Service (IRS). In the case of publicly traded companies, quarterly and annual results must also be filed and published with the Securities and Exchange Commission (SEC), which regulates and monitors the securities market for the government.

Financial reporting allows finance teams and the business to track and analyze cash inflows and outflows to help identify current and future cash flow risks. This ensures that the organization has sufficient cash flow to grow the business and take advantage of opportunities when they arise.

Successfully growing a business requires looking ahead, being agile, and proactively making adjustments with better decisions. Leveraging technology that makes financial reporting a team sport, where Finance partners with the business, is what helps drive financial and business transformation.

This article will cover financial reporting from the ground up including its definition, the financial information it usually includes, the benefits, and the importance behind a standard financial reporting system.

The four key types of financial statements found within a financial report include income statements, balance sheets, a statement of retained earnings, and cash flow statements. Learn more about the significance of each statement and the value they provide to financial statement users below.

A balance sheet for small business is a financial statement that shows the assets, liabilities, and equity of a business at a specific point in time. It provides a snapshot of the financial position of the business and helps to assess its ability to meet its financial obligations.

The financial reporting regulations for small businesses can vary depending on the business entity type, size, and location. However, here are some common financial reporting regulations that small businesses may need to comply with:

Analyzing and understanding financial statements is key when a business needs to make an important decision. Financial reports allow management to identify trends, potential roadblocks, and actively track their financial performance in real-time. Staying on top of your financial statements will give you the foundation you need to make quick and sound economic decisions when the time comes.

Effective August 1, 2022: NCAA constitution, Article 2(D)(1)(c) states that all members of the NCAA must submit annually its financial data as determined by the division detailing operating revenues, expenses and capital relating to the intercollegiate athletics program. The financial data is subject to the Agreed-Upon Procedures performed by a qualified independent accountant annually for DI members and at least once every three years for DII members.

Division III members are provided with two methods in which to meet the constitutional requirement; submit financial data annually to the NCAA via the Membership Financial Reporting System or submit the EADA Certificate of Completion to the NCAA via the Membership Financial Reporting System.

FY2023 NCAA Agreed-Upon Procedures and related revenue and expense category definitions effective for the 2022-23 reporting year (for submission by January 15, 2024) are available. To access the details of these changes, select the link below:

For example, public companies file quarterly 10-Q and annual 10-K statements with theSecurities and Exchange Commission (SEC) containing extensive notes to the financialstatements, supplementary schedules and the management's discussion and analysis(MD&A). For internal stakeholders, financial reporting can comprise any financialreportsthat management wishes to generate, such as detailed sales reports, trends and keyperformance indicators (KPIs).

Companies of all sizes engage in some form of financial reporting, whether for compliancewith outside regulatory agencies or industry custom, or for internal managementdecision-making. Large public companies must comply with stringent financial reportingobligations issued by the SEC; private firms might have financial reporting obligations tolenders or owners; and even small firms must do some degree of financial reporting when theyprepare their tax filings.

Financial reporting is a continual process, with periodic deliverables throughout the fiscalyear. Annual financial reporting happens at the end of a company's fiscal year, whileinterim financial reporting covers periods less than one year, typically months or quarters.

A company's financial story is especially important when the company is looking toraise capital, whether through public markets, private investments or loans.Outside parties use financial reports to assess creditworthiness and the strength ofthe company's operations.

While most financial reporting is retrospective, investors, partners and evencustomers/suppliers can also use it to form predictive opinions regarding futureperformance and viability. For example, suppliers might use a company's financialreporting to determine whether to start doing business together, based on thetrajectory of the company's sales.

Financial reporting is also indispensable to internal management, serving as afoundation for analyzing operations, measuring KPIsor even calculating compensation for employees. For example, analyzing a dashboardof accounts receivable KPIs, such as day's sales outstanding, can help seniormanagement gauge the effectiveness of the billing and collection staff, as well aspredict cash flow.

Financial reporting provides insight and transparency into a company's financialposition and its operations. It's meant to give stakeholders in the company the rightinformation, in the right amount of detail, to make better-informed decisions. This is true,whether for an external investor, a taxing agency or internal management. Good financialreporting gets different parties on the same page with a single version of the truth, andgives credibility to the company and its management. On the other hand, fraudulent orinaccurate financial reporting can torpedo a company's reputation and value.

A lot of effort goes into financial reporting, derived from several different areas in acompany. Financial controllers and their accounting staff are responsible for the financialreporting process in most midsize companies. In larger, public companies, the CFO and CEOare required to certify the reported information, as are external auditors, while theinvestor relations department handles distribution of financial reports to the public viapress releases, websites, earnings calls and other external communication channels. Insmaller companies, the lead staff accountant, or even the business owner, controls most ofthe financial reporting function, sometimes with the help of external accountants.Fortunately, requirements for small businesses are usually proportionately scaled down.

The incomestatement reports revenue, expenses and net income/(loss) for a fiscalperiod. It's often considered the most important of the three basic financialstatements because it focuses on operating results. It's commonly presented incomparison to prior fiscal periods.

A balance sheetshows a company's financial position as of a certain point in time. It lists acompany's assets, liabilities and equity in accordance with the accountingequation: Assets = Liabilities + Equity. The balance sheet is used to gauge acompany's net worth, its overall financial strength and its ability to fundfuture growth.

Used for internal reporting, a financial dashboard is an automated, graphicalrepresentation of a company's underlying accounting and operational data.Different dashboards can be configured to show any KPI or analysis that isappropriate for a particular manager. Real-time dashboards provide the most usefulinternal financial reporting.

This is an important example of a role-based financial dashboard and is one thatsummarizes the key data required by the most senior financial officer. Typicalreporting on a CFO dashboardmight be working capital KPIs, accounts receivable and accounts payable turnover,credit utilization, payroll data and budget trending, as well as summary financialstatements. e24fc04721