Page 239 - Accounting Best Practices

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Financial Statements Best Practices
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An easy way to avoid these problems is to separate all operating information
from the financial statements so the statements can be issued in a timely manner,
with the operating information sent out later in a separate document. By using
this approach, there are fewer steps to complete when issuing financial state-
ments, leaving fewer steps to delay the overall process. Also, if there are prob-
lems with the operating data, the controller can review the information at his or
her leisure and verify that the information is correct before releasing it. Not only
is this an easy best practice to implement, but it is also one that has no associated
expense.
Cost: Installation time:

12–2 POST FINANCIAL STATEMENTS IN AN EXCEL
PIVOTTABLE ON THE INTERNET

A number of companies have found that an effective way to increase investor
knowledge of their activities is to post their financial statements on their Web
sites. These tend to be a summary-level duplication of the most recent quarterly
or annual results, as well as any accompanying financial notes. Though this is
certainly a good way to communicate with investors, the concept can be taken a
step further by loading the financial information into an Excel PivotTable, which
is essentially a three-dimensional spreadsheet that reveals different layers of
information to the user. By using a PivotTable, a reader of a financial statement
can access the results for multiple years, or even different lines of business,
within a summary-level financial statement. A good example of this layout can be
found in the Investor Relations section of the Microsoft Web site. This is a rela-
tively easy best practice to implement. The only downside is that investors must
download the file, which creates the highly unlikely, yet possible, risk of import-
ing a computer virus through the spreadsheet file.

Cost: Installation time:

12–3 RESTRICT THE LEVEL OF REPORTING

Over time, many older companies have gradually gotten into the habit of demand-
ing (and receiving) immensely detailed financial statements from the accounting
department. Besides the usual balance sheet and income statement, as well as
departmental reports, there can be a plethora of additional schedules, such as
sales by customer or region, inventory levels by type of inventory, and a complete
activity-based costing analysis of every customer. Though some of these reports
may be set up to run automatically as part of the regular package of financial
statements (and thereby requiring no additional work), other reports may require