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Chapter 12
Financial Statements

Best Practices

This chapter covers the best practices that can be used to issue financial state-
ments more rapidly. This creation process can be one of the most convoluted and
time-consuming of all activities, with a long time needed to complete a quality
set of statements. When a long interval is regularly required to complete financial
statements, it has two significant impacts: not allowing any time for the account-
ing staff to complete other activities, and an irate management team that never
receives its information on time. These are serious problems that can be com-
pletely eliminated by the best practices noted in this chapter.
The primary purpose of the two dozen improvement suggestions in this
chapter is to streamline the entire process of financial statement production. This
is done in a variety of ways, such as completing some tasks before the end of the
month, avoiding the bank reconciliation, and automating the month-end cutoff
process. Most of these steps are simple ones and can be quickly and easily
inserted into the existing process. A few, however, such as automating the period-
end cutoff, require a significant amount of extra work and may carry some risk of
providing imperfect financial information. Consequently, it is necessary to review
each recommended best practice carefully and only use those that will most eas-
ily be inserted into the existing system without causing either a stoppage in finan-
cial statement production or a reduction in their quality.
This chapter begins with a brief analysis of the level of implementation diffi-
culty for each of the best practices, proceeds to a detailed review of each one, and
finishes with an overview of how most of them can be grouped together into a
highly efficient financial statement production process.

IMPLEMENTATION ISSUES FOR FINANCIAL STATEMENTS
BEST PRACTICES

This section notes the relative level of implementation difficulty for all of the best
practices that are discussed later in this chapter. The primary source of information
is contained in Exhibit 12.1, which shows the cost and duration of implementation
for each best practice. For this group of improvements, the table makes it clear
that, in most cases, changes are of little duration, easy to implement, and have little
or no cost. The reason is that most alterations are confined to a small number of

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