Why you need Financial and Statistical Reporting
BECAUSE THE ACCOUNTING SYSTEM YOU USE WAS DESIGNED BY THE GOVERNMENT, FOR THE PURPOSE OF COLLECTING, MAINTAINING AND REPORTING YOUR TAX OBLIGATION. THE GOVERNMENT TAX SYSTEM DOES NOT PROVIDE YOU WITH:the timely and accurate financial and statistical reports (data) YOU NEED to make the decisions needed to effectively manage YOUR companyreport on the results of the managers’ efforts managing YOUR company
In addition, the government will soon require GAAP format and you will need to prepare for it. You must be able to report in GAAP format to attract foreign investors.
What is financial and statistical reporting
The reporting of the many activities of the company. Some of these are sales, income, production, expenses, assets, liabilities and worth of the company. These reports are in rubles and units. These reports are prepared in different formats, for different periods, for different reasons, for different users. There are:
- internal reports for company managers
- external reports for lenders to the company, stockholders of the company, government tax agency, etc.
- cash basis reports for government agency (Taxes), company managers (Cash Flow, etc.)
- accrual basis reports for company managers (Analyzing Results, Budgeting, etc.), lenders to the company, stockholders of the company.
What are the most common types of financial reports
There are many types. The most common types which are used by all companies are:
- Balance Sheet
- Income & Expense Report (Profit & Loss Statement)
- Balance Sheet - is a statement of the financial position of the company as of a point in time (month or year).
This report presents:
- Current Assets
- Fixed Assets
- Current Liabilities
- Long Term Liabilities
- Capital or Net Worth
- Profit & Loss Statement - is a statement showing the results of the company’s efforts for a period (month and year):
- Product sold for the period (Income)
- Direct cost of the product sold
- Expenses of the company
- Net profit
- These reports are prepared in what is referred to as GAAP format (Generally Accepted Accounting Principals)
Other types of financial reporting
- Tax Reports (external)
- Reports prepared by the company to support the tax obligation. These reports are done in formats required by the government.
- These reports are not designed to provide management with information in a useful analytical form.
- Report of sales are based upon when payments are received for product shipped
- Reports do not reflect the true sales of the product for the period (month - year)
- Financial reports for management (internal)
- Reports used by managers to analyze and manage the activities of their department, branch, shop, etc.
- These reports can be in rubles, units or both.
- They can be for any period - day, week, month, year.
- They are prepared in the format that is most useful to the manager.
- Managers should participate in the design of their reports.
Examples of financial management reports are Sale Activity Reports by Region, Cash Flow Reports, Product Reports, Budget Reports etc.