Improve the Quality of Your Financial Reporting With These 5 Tips

It would be an understatement to suggest that financial reporting standards have altered in the last 20 years.

The Securities and Exchange Commission (SEC) has made recommendations on financial reporting. There’s also the adoption of the International Financial Reporting Standard (IFRS) and major standard modifications affecting non-profit corporations, revenue recognition, and credit loss.

There are several elements that influence the quality of financial reporting. Outdated systems, a lack of communication across business divisions, and inadequate security can all have an impact on the quality of your reports.

With this in mind, we've compiled a list of five tips for enhancing the quality of financial reporting for your business.

1. Big Data Analytics

This is one of the most significant recommendations for better financial reporting. Analytics is making big data manageable in sectors all around the world.

In a numbers-based industry like finance, dealing with enormous volumes of data from many sources, can make a significant impact on the quality of your data. This will lead to more informative reports. When it comes to financial reporting, it's critical to understand what the numbers represent and how they affect your organization.

Similarly, descriptive analytics allows you to conduct analyses on past reports and have the machine detect patterns and causes that you may never have seen without this technology.

2. Reduce your reliance on Excel

Excel will always be a vital tool in the toolkit of any accountant. It's quick, efficient, and dependable for a wide range of jobs. Overconfidence in Excel, on the other hand, causes danger.

Excel has several restrictions. This includes the fact that only one person can make changes at a time. There is no method to monitor changes, and creating spreadsheets takes time.

Furthermore, there are other functions that Excel does not perform, such as keeping files connected to your financials, which you must handle through your own processes.

Excel is just insufficient for the majority of your crucial assignments. Invest in solutions that ease cooperation, are designed to satisfy regulatory standards, and assure organizational uniformity.

3. Use financial closing management software to increase speed and accuracy

Close management software can help firms create financial reports more quickly and correctly by speeding up the financial close process. Accounting and finance teams must meet on a regular basis to determine each team member's current position. This is frequently hampered by a lack of communication and inefficient sets of processes.

Implementing a software solution to assist with the monthly closing process allows controllers to know where their accountants stand from a single dashboard, while also guaranteeing that all accounts are linked out and reconciliations match the trial balance numbers.

Financial close management software provides a single source of truth for each team member's status. This reduces miscommunications and frees up time formerly spent on status updates.

4. Enhance interdepartmental communication

When we speak with our clients, we frequently hear that the accounting development has enhanced communication with their colleagues in different departments. Accounting standards revisions do not have to be the catalyst for improved collaboration.

We usually accept inadequate interdepartmental collaboration as the norm without realizing that we can attempt to improve it proactively. Consider your financial statements to be the end output of a manufacturing line.

Each worker on an assembly line contributes significantly to the final product. Despite the fact that everyone in the assembly line is focused on one part of the end product, the quality of their contribution is critical.

Everyone should have a clear awareness of what is expected of them. They should have access to the resources they require to carry out their responsibilities.

5. Protect your data

Information security is critical for ensuring the accuracy of financial data. As we proceed along the tech-enabled path, cyber security becomes more of a concern. When even some of the world's largest (and most secure) IT corporations are victims of data theft and corruption, businesses of all sizes must implement security practices.

Ensure that confidential materials are not available to all employees and that direct access is only granted to those who require it. Speak with your software suppliers about the security features available with your program. If they don't suit your demands, find out what may be added or consider a replacement.

Related: A Business Owner’s Guide to Consolidated Financial Statements

Final Thoughts

You can significantly improve the quality of your financial reporting by focusing on your systems, people, and, most importantly, the authenticity of your data. Utilize the resources at your disposal to provide the best financial reporting possible. This includes new programs and technology. That may sound frightening at first, but they will save you time and money in the long term.

Do you need expert assistance in preparing and managing your financial reports? The Certified Public Accountants of Today CFO can assist you in all your business accounting needs! Contact us for a free consultation.