WHY INTERIM FINANCIAL STATEMENTS ARE IMPORTANT?
The results of the accounting process are summarized in a consolidated reports, or financial statements. They present the financial position of a company, changes of financial position and business performance results. Financial reports are used by both internal and external stakeholders. Typically, users of financial statements are the investors, creditors, critical suppliers and business owners. For most companies, a full set of financial statements comprises a statement of financial position (“balance sheet”), a statement of profit or loss and other comprehensive income (“income statement”), a statement of changes in owners’ equity or a statement of retained earnings, and a statement of cash flows, and the supplementary notes.
The main objective of the financial reporting is to provide reliable, decision-relevant financial information to users. Thus, they can make well-informed investment, credit and capital allocation decisions including accessing management stewardship. General purpose financial statements are the basic financial statements. They are intended to provide the most useful information possible in the manner whereby benefits exceed costs to the different kind of users.
Notice to reader financial statements or compilation engagement is a simply compilation of financial information provided by a client.
These statements do not require a review or audit opinion. Thus, they do not have the level of reliability associated with audits or review engagements. A compilation engagement is limited in scope as it involves compiling data from management into a set of financial statements. They may or may not conform to generally accepted accounting principles (GAAP). The information undergoes no tests and the accountant preparing them offers no opinion or assurance. Accordingly, they simply put the readers “on notice” and do not guaranty any numbers on the financial statements. Many businesses only need their financial statement presentation to conform to the Income Tax Act.
The notice to reader (NTR) financial statements states:
interim financial and managerial reporting
Interim financial information it’s not a basic and necessarily element of financial statements. However, business owners can appreciate the affect that a timely interim financial statements might have on making business decisions. Specifically customized, simple-to-read interim financials provide you with the insight to the financial health of your company and keep tabs on your business numbers. Timely reports will help you to achieve operational effectiveness. As well as safeguard against financial mismanagement and misappropriation of funds (or fraud). Interim financial reports make it a lot easier for all stakeholders to understand exactly what the numbers really mean. Detailed and consistent reporting will help management and business owners to review operating expenses and create discipline in periodic (month or quarter-end) closing processes. These statements do not replace the annual NTR Reports for year-end purposes. They are for the internal interim use only.
Our goal is to help you to proactively identify, communicate and resolve any financial or operational issues that might lead to or may be causing business risks and failures.
Benefits of periodic financial reporting:
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