Managerial Accounting Reports & Other Essential Financial Reports (1420/Level 1)

Essential Financial Reports: What Are They & Who Needs Them? (1420/Level 1)

Diane Gilson: Good day!  This is Diane Gilson with Info Plus Accounting and I’d like to welcome you to today’s session ‘Reporting Essentials’. Believe it or not it doesn’t sound like a heavy-duty topic but boy there’s a lot I’ve found out that we are going to be covering as I put the final touches together for this session.

First of all, we’ll talk about coordinating information and reporting needs, between the people who are preparing them, and the end users. Then we’re going to walk through some sample financial report formats, so you can kind of get an idea of where you’re heading in terms of having ‘the end in mind’ with reporting.

Okay, so let’s get started.  This has to do with coordinating information and reporting between preparers and users. So this is something that lots of times doesn’t happen!  We get focused on getting our entries in, on understanding the structure and so on but why are we doing all this?

We’re doing it so that people on the other end of the spectrum can have the information that they need for whatever reason they need it. So this is a really good thing to do – is spend a little bit of time on this following area and figure this out. I’m going to jump ahead at the end of this because one of the final things I say is you need to get this all figured out, organized, scheduled, authorized and so on.

So, first of all, who needs the information?

• Well, obviously the owner or owners of the company need this information on a regular basis.
• Which managers or supervisors are authorized to see and use the information?
• Maybe the sales team needs to see certain information. In many cases you’ve got bankers or other creditors who are hovering in the background and saying, “You know, we need to see regular financial statements and they need to look like this.”
• Other third parties, unions for instance, or the government.  You know, obviously we have to report to the government on a regular basis about certain things – and it depends on your entity what that is.
• Or insurance.  You know that  workers comp wants to be able to come in and see certain information out of your system.
• So there are all sorts of other people who may need to look at your information as well as of course the tax preparer needs to see it, and auditors need to see it.
• And back to that ‘third parties’ concept, if you’re a member of one of the national networking groups – where you actually submit your financial information – they can have certain requirements as to how they want to see information.

Now, I’m going to take a little side trip here as we look at this.  I would like to say that, because of all of these different people who need to see information, you can’t possibly set up your accounting system so that it will just automatically spit this information out for absolutely everybody in the format exactly the way they want to see it. But we can try to set up our systems so that we can meet the most needs and doing the least amount of additional work.  On the other hand, you know if we get our systems set up logically and somebody needs the information in a slightly different format than we have, it’s still going to be pretty easy to extract that information.  If it’s logical, and laid out in a clear manner, it’s pretty easy to extract that information and give it to them in the format that they need to see it.

Another thing that’s really important, if you’re the one working in the books, is to find out who’s actually authorized to see certain information – and how does that work in your company?  Some companies are very close to the vest about what information they allow certain people to see, other companies are much more ‘open-book’ so you need to get a good feel as to what company management wants – in terms of confidentiality, and who can see which information.  AND it’s a good idea for you to get some documentation on that – so that you don’t get called on the carpet for giving the wrong information to the wrong person! So, if it was me I would have a tendency to try to get some of the things we’re talking about documented, and then get sign-off from somebody right up close to the top of the company that you’re authorized to release these kinds of information to these particular people.

Okay, another thing to consider is what format do they need?  Exactly what information is appropriate to deliver to them?  That partly encompasses confidentiality but also partly includes what is useful to the reader of the information. If you give somebody too much data, then the reports become less than useful for them.  So finding out how much or how little detail they need, which particular information they need so you can limit it to what is useful for them….