Preparing financial statements can be a painful, yet necessary, compliance exercise for most organisations, big and small. It can take up valuable time and resources, yet financial statements not only tick the box for compliance, they also serve as a very important communication tool to your key stakeholders.
Here are our key tips for reducing your compliance burden:
1. Engage your auditors early
Most large audit firms produce updated model financial statements at least every 6 months taking into consideration the required disclosure changes from new accounting standards. Obtaining these up-front can provide you with a guide as you prepare your accounts. This can save time by not having to process mark-ups from your auditors at the last minute. Ensure you consult with your advisers and ask them to highlight any changes which may be applicable to your organisation.
2. Check ASIC focus areas
ASIC publish their focus areas for each reporting period and most audit firms include these focus areas in their audit plans. Being aware of the ASIC focus areas that affect your organisation will ensure you prioritise critical judgemental areas and provide adequate disclosure. If in doubt, consult with your auditors on which areas are most likely to be relevant for your organisation.
3. Streamline your disclosures
Often financial statements contain disclosures that may be immaterial or don’t add value for the users. Streamlining your financial statements involves challenging the type of information you disclose and where and how it is presented. The key is to reduce the clutter, avoid repetition and highlight critical judgmental areas. Streamlining projects can also be phased over a couple of reporting cycles, starting with grouping or reordering note disclosures, reducing immaterial disclosures and advancing to adopting graphs or charts to display information. If you plan to streamline your accounts, ensure you consult early to confirm which disclosures are material, this will avoid having to add them back in at the last minute.
4. Plan ahead
Some of the steps required to prepare your financial statements can be done outside of the ‘usual’ financial reporting timeframes (e.g. July to September or January to March). For example, preparing new accounting disclosures or setting up your templates may be activities that can be done ahead of time. It also helps to plan ahead for critical dates, such as audit and risk committee paper deadlines or audit visits and work backwards to see when information will be required. This exercise may highlight bottlenecks or times where additional resources may be required. It will also assist in creating a time line to help you meet your tight reporting timeframes.
5. Consider outsourcing
Take stock of the pain points in your reporting cycle and the time they take. It can sometimes be easier and more cost effective to outsource all or parts of your financial statement preparation to relieve the compliance burden for your organisation. Month-end or adhoc financial reporting that helps management deliver your organisation’s strategy can often be a better focus for your finance team’s resources. Don’t underestimate the benefits of outsourcing some more complex and time consuming areas of your financial statements such as financial instruments, hedging or tax accounting.
Do you spend a lot of time processing audit comments or minor changes? Consider tracking this time and weighing up the cost versus benefit of using an independent proof reader or key advisor during your reporting cycle to review the financial statements and assist with processing changes from the auditors.
Need help?
If you require any assistance in preparing your financial statements or would like to discuss some suggestions for making your reporting cycle a little more bearable, please feel free to contact a member of our team.
