Financial Reporting for Best Practices in Accounting


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There is always the need for businesspeople to understand and apply the principles of accounting according to requirements for best practices. There is never enough guidance when it comes to billing and taxes. There are certain sensitive guidelines which are recommended in order to ensure best practices.

In order to have efficient revenue negotiation there is the need to produce reliable and accurate financial reports. This is because users of these reports must be satisfied to be able to trust the financial institution

Follow the Standard Formats for Reporting

Business and financial institutions must have set out accounting principles based on which financial reports must be prepared. These principles and format standards are very crucial because they increase comparability within the various departments in the firm and other business firms as well. Sometimes there is software which is designed to ensure that the reports are produced automatically. These software applications have been produced based on standard accounting principles. Therefore there is increased accuracy and dependability on the reports generated.

Characteristics of a Good Quality Financial Report

A useful and accurate financial statement must comprise the following characteristics:

  • Understandable and Clear: It must not be complicated and must have a clear presentation. The users of the financial statement must be able to spot the necessary information at a glance. There must be transparency because when reports are difficult to understand banks may raise a red flag.
  • Significant Information: The information must be valuable and relevant to the financial or business institution. It is a best practice to make sure the report is prepared within a time period. This increases the accuracy of the report.
  • Trustworthy Information: The management of a firm is responsible for the information in the financial report to be reliable. The transactions must be consistent with what the financial report displays. Being faithful is the key! It must be neutral and free of bias.
  • Comparable: The financial report must be comparable to enable performance review over a specified period of time. The comparison is usually between companies and competitors.

Financial statements have information about assets, liabilities and taxes over the financial year. This is why there are a set of documents which play an important role in providing information for a financial statements. These documents include the following:

  1. Balance Sheet
  2. Income Statement
  3. Statement of retained earnings
  4. Statement of change in cash balance
  5. Notes to the financial statement

These documents must be up to date at all times as they can be used for references at any time of the financial year. This is why they must be accurate and authentic. The information available in these accounting documents is very helpful in best practices for risk management and compliance in banks and business institutions as well. There are other reasons why a good financial report is important, for example when it comes to revenue negotiation and recognition.

Therefore, all financial institutions must have a standard for financial reporting as a best practice to ensure success.

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