Contributor:
Mollie Carroll | Senior Manager, Accounting Advisory
Financial reporting is an essential process for companies of all sizes, whether you’re a Large-Accelerated Filer or an Emerging Growth Company (EGC). External financial reporting helps investors and leaders within the company make educated decisions that are supported by financial data and business operations. Financial reporting also has compliance aspects across industry regulations and accounting frameworks.
Timeliness is central to any successful financial reporting process — but it’s not the only piece of the puzzle. In order to boost the financial health of your business and deliver true value for your stakeholders, all financial reporting must be accurate and error-free.
Balancing the need to be both punctual and precise can be challenging, especially for busy business leaders and lean accounting departments. However, the good news is that there are simple steps that you and your organization can take to ensure that the financial reporting function is set up for success.
Outlined below are 10 tips for maintaining timely and accurate financial reporting processes.
- Maintain a centralized repository: By creating a dedicated location or data room for all documentation for significant transactions or events, the right information is quickly and easily accessible for your accounting team at the right time. This includes everything from leases and purchase agreements to sales and equity transaction agreements to supporting schedules for journal entries and footnote calculations.
- Reconcile accounts consistently: Many accounting departments reconcile accounts on an ad-hoc basis or with long gaps in between due to lags in the close calendar. Having a consistent workflow and regular cadence of performing account reconciliations ensure that all accounts have an accurate balance and help expedite additional tasks such as footnote preparation and review.
- Communicate openly: The accounting team should take the lead in preparing the financial statements, but every department of the company has a role to play for a seamless process. From legal to HR, the various functions of your business are valued and integral to the process, and need to be in constant communication with accounting to gather and share up-to-date information.
- Set clear roles and responsibilities: A cornerstone of successful financial reporting is having a clear segregation of duties.Determine the team or individual(s) accountable for preparation and/or review throughout every stage of the process and communicate this clearly to all stakeholders.
- Build in time for a final review: Multiple layers of review are key to reliable financial reports. Yet even then, it’s possible for the latest information to be missed or missteps to be made. Agree on a ‘final reviewer’ (normally a senior person in the business) who is up to date on significant transactions and new accounting guidance so that the final product is scrutinized before any financial report is submitted.
- Be proactive: Rather than waiting until the end of the reporting period, prepare the appropriate documentation for transactions and events as they occur, including drafting the appropriate footnotes and other disclosures, recording the appropriate journal entries, and engaging third parties for various services such as valuations and taxes. By being proactive, the company will be able to plan for the future more effectively and will be more prepared to work against applicable deadlines, such as filing deadlines for a 10-K/10-Q.
- Implement robust controls: Implementing a robust system of internal controls helps boost the reliability of your company’s financial statements while also helping safeguard assets, prevent errors, and detect fraud. Having an internal control framework includes having accurate policies and procedures that are shared with everyone that touches the reporting process. Conducting regular assessments of the internal control framework will help to confirm how effectively these policies are being followed and if additional policies or controls need to be created or implemented.
- Keep improving: Companies are always evolving and so are the financial reporting requirements. Rather than continue to rely on the same systems and procedures, encourage your team to constantly look for ways to improve workflows within each business process. Improvements could include deploying advanced technologies like AI to automate certain tasks or by creating new roles and responsibilities as the business matures.
- Know your calendar: Everyone who contributes to creating your firm’s financial statements and the financial reporting function should be aware of all key dates and milestones — including the close calendar, submission to the auditors, and internal management reviews before ultimately submitting the report. Public companies must adhere to more stringent audit requirements and filing deadlines set by the SEC, but private firms should still aim to report financial information in a consistent and timely manner.
- Get the right expertise in place: T. To mitigate the risk of errors, consider working with an experienced advisor like Cherry Bekaert. Our co-sourcing model means you can work with us however suits you best — whether that’s on a project-by-project basis during busy reporting periods or by providing ongoing support to your in-house team throughout the year.
How We Can Guide You Forward
Cherry Bekaert’s team of Accounting Advisory professionals can help you streamline and improve your financial reporting process. We can assist corporate accounting with the adoption of new accounting pronouncements, advises on event-driven transactions such as IPOs/audit readiness, and serves as an on-call resource for financial reporting and other general technical accounting support.
