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Financial Statements Best Practices
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The best way to avoid this problem is to conduct a daily review of the financial
statements. Yes, this means prior to the end of the month. By doing so, a controller
can review revenues as soon as they are billed, and expenses as soon as they are
incurred so that any obvious discrepancies can be resolved right away. In addition,
if there is a real problem with the financial results, the controller will know about it
immediately, rather than being taken by surprise at month-end, which carries the
additional benefit of being able to warn the management team immediately, setting
their expectations for the period-end financial results. Also, by finding and correct-
ing problems well in advance, there are hardly any issues left to deal with by the
end of the month, so the financial statements can be issued much more quickly.
Thus, a daily review enhances the controller’s knowledge of how the financial
statements are likely to appear and gives advance warning of problems.
Many controllers would say that a daily review of the financial statements is
an excessive use of their time, since a review on each business day of the month
piles up into a formidable block of time. This is true, so the time must be used
wisely. For example, if there are repeated accounting problems with just the rev-
enue-recording part of the financial statements, it may be sufficient to review
only the sales each day. Similarly, if transactions are only posted into the general
ledger once a week, then the financial statements will only be updated once a
week, reducing the number of times when it is necessary to review the state-
ments. Also, if there are lots of minor problems throughout the financial state-
ments, the daily review chore can be assigned to a financial analyst, with instruc-
tions to only notify the controller of major issues. By selecting a review interval
that meets the needs of the specific situation, a controller can reduce the amount
of labor assigned to this task.
Cost: Installation time:

TOTAL IMPACT OF BEST PRACTICES ON THE FINANCIAL
STATEMENTS FUNCTION

This section gives an overview of how and when the best practices described in
this chapter should be implemented, and the total impact of these changes on the
financial statement reporting function.
The ‘‘how” of implementing best practices in this area is answered by: ‘‘Do
them in big blocks.” The reason is that, in general, these best practices are very
easy to implement and can be installed in clusters. Given their minimal impact on
department operations, they rarely have much of an impact on employee morale,
so there is no restriction on multiple implementation projects at the same time. A
key issue to consider is that a number of these implementations do not have a
clear beginning and end. For example, training the staff in closing procedures, or
reviewing wait times, will always require continuing review, because the state of