Five Common Financial Report Errors that a Southwest Florida Accountant Can Prevent
Financial reports offer insight into the health and financial status of a company for a certain period. They are designed to give data to the shareholders of an organization. Therefore, they should give accurate and related data to let business owners make informed decisions. Related financial reports must contain sufficient data to help investors make important financial decisions for businesses. Therefore, it is important to ensure your reporting process has no mistakes. Mistakes can impact your perception of your company’s financial health and decision-making. You can avoid this by hiring Southwest Florida accounting services. Accounts are trained to create reliable financial reports that reflect the true state of your company. Working with them helps you avoid the following mistakes:
Not Including Comparative Data
Single-column financial reports are not as informative as multi-column reports because of a lack of comparative data. Including previous-year amounts, budgeted amounts, and previous-month amounts allows you to easily ensure whether your current amounts exceed or are not enough as expected. Thus, comparative data must be included in your informational reports and financial statements. Instead of squeezing all comparative figures into one report, issue several reports instead.
Not Calculating and Analyzing Financial Ratios
By analyzing your balance sheet, you can determine troubling trends that may go unnoticed. Depending on your industry, a lot of calculations and balance sheet ratios might suggest issues you need to pay attention to. Ensure your financial statements and report are attached with charts that plot related income statements and balance sheet ratio calculations. This way, readers can fully understand the outcomes of operations.
Making Inappropriate Debt Disclosure
It is a common financial report error to disclose long-term debt appropriately. Although long-term debts or borrowings should generally be disclosed, errors might include omissions of debt details or incomplete disclosures. Whether disclosures are not made sufficiently or not made at all, financial reporting errors occur.
Sometimes, cost reporting may not be complete. For instance, you may account for expenses; however, you may omit the costs involved in getting funds and revenues in reporting. Also, this applies to events where the overhead costs may not be properly documented.
Not Preparing Perpetual Cash Flow Projections
Cash flow is an important part of your business operations, so cash flow projections must be prepared and updated regularly. It is important to prepare monthly income statements, expected cash flow projections, and projected balance sheets. Then, the cash flow forecast must be updated every month, as necessary.