Financial reporting: Differentiating from competition
In today’s increasingly global economy, relevant, reliable, clear, consistent and comparable financial reporting with a quick turnaround offers an improved basis for decision-making for businesses and investors and helps corporations differentiate from competition.
External reporting is a critically important process. Annual accounts, consolidated accounts, interim financial statements, quarterly updates, and other statutory and regulatory reports each contribute to the information investors and/or regulators need to assess the performance of an organization.
Judgment may often be required to determine which accounting treatment is the most appropriate. Accordingly, organizations must ensure that skilled resources are dedicated to external reporting.
One of the key issues relates to accounting for fair value. Under IFRS the guidance is often considered theoretical. Another challenge is to have sound narrative reporting to explain actions and give information on complex numbers.
The amount of disclosure required under IFRS is greater than what is required under traditional GAAP. This situation is in part due to the “principles based” approach with the additional disclosure being designed, partially, to compensate for fewer rules.
Organizations typically face a number of challenges in the completion of the external financial reports including:
- Time-consuming, manual processes
- Data inaccuracies
- No audit trail documenting the sources used and the changes made
- Increasingly complex regulations
- Shortened filing deadlines
- Increased cost
- Enhancing the knowledge of the accounting staff
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