Financial records like purchases and sales are important to any business. Proper records of these transactions offer crucial information used in making decisions. Other benefits include the ability to forecast and anticipate future changes in the economy. Most retailers approach the topic with disdain, but accurate records lead to better decisions.
If you’re looking for ways to maintain better records, here are a few tips to keep in mind.
1. Concentrate on materiality
Materiality is a concept that is important in the preparation of financial records. Whether data or information is material or not depends on whether entities can use the information disclosed to make economic decisions. The international accounting standard board provides a framework for how to deal with materiality.
Firstly, never hide important information with generalizations or by giving irrelevant information.
Secondly, remember to apply materiality in all parts of the financial records.
Lastly, materiality applies even in the case of specific disclosures and in some instances it renders such information unnecessary.
2. Work on the content and presentation
Another way to make the records simple and understandable is the use of plain language. Using technical words in presentations can bring confusion, ambiguity and limits the number of people who access your information. You can make disclosure clearer and more concise by avoiding repetitions, avoiding acronyms, using the passive voice, and lastly, by using good grammar.
It is also important to use the right formats of presentations for easier access. Lastly, if you do the research on stakeholders’ needs right, it may provide a chance to incorporate cross-referencing. Doing this allows the users to access any needed additional information that makes it easier for them to understand.
3. Use a more condensed approach
This is where during financial reporting only a set of selected financial statements, explainer’s literature, and support notes are used. Interim reporting allows you to provide less information on a report as it is assumed that it is an update.
Based on that fact, you can expect that the report will have detailed information on the new financial changes.
Ultimately there is no need for repetition of recent financial statement information. Though it is not a must to use the condensed approach disclosing more information than needed may cloud the significant changes. All in all, information disclosed depends on you and what goals you want to achieve through financial reporting.
The above points are instrumental in making your financial records simple and understandable. It is advisable that you continue to look for more optimal ways to approach information disclosure.
Author Bio: Gerald Hunt
In 1989, Gerald left KPMG to continue to work with small business clients in his own corporation installing computer accounting systems. While in this role, he was engaged by the DeVry Institute of Technology in Calgary to teach various courses. In time, Gerald moved up through the ranks of DeVry until he attained the position of Director of Finance for the Calgary Campus. He also acquired his Masters of Business Administration from City University of Seattle, Washington in 2001. Gerald’s career has always been focused on small business, accounting, and education.
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