What is Financial Reporting Services?

Ashish M. Shaji

15 Jan, 2021

Today financial reporting services are needed by all organizations. Every organization is needed to know its performance during the time of a financial year. Financial reports allow to assess the financial performance of company therefore the need financial reporting and analysis arises. Let’s know more about it in the passage below.

An Overview on Financial Reporting

Financial reporting basically involves disclosing the financial information to different stakeholders about the financial performance and also the financial position of the organization. The stakeholders with respect to financial reporting involves the investors, debt providers, public, and government agencies^[1].

Financial reporting is done by organization or a business to evaluate and know the financial performance of a company in the previous financial year and on quarterly basis. In other words, financial reports provide an organization with an appropriate analysis about how the company has worked in the past and it also helps in knowing the present performance.

What is the main objective of Financial Reporting Services?

The main objective of availing of financial reporting service is as follows:

• To provide detailed information to the management that is used to analyse, plan, and take decision.
• To provide data to investors, debt provider, creditors and promoters that is used to allow them to make prudent decisions with respect to investment, credit etc.
• To provide a detailed information to the shareholders as well as to the public with regard to listed companies regarding different aspects of the organization.
• To provide data about the economic resources of an organization and how these resources have gone through change over a period of time.
• To provide information about how an organization is utilizing its resources.
• To provide data to various stakeholders with regard to execution of their fiduciary duties and responsibilities.
• To provide information to the statutory auditors to facilitate audit.
• To enhance social welfare.

What is the need for Financial Reporting Services?

Every organization is well known to the fact that such services are very important. We have discussed the points that mark the significance of these services below.

• With financial reporting, statutory audit is eased. The statutory auditors are required to audit financial statements of an organization.
• With these services, organizations can comply with different statutes and regulatory requirements. The organizations shall file financial statements to the ROC and government agencies.
• Financial reports are the backbone of financial planning, analysis and decision making. They are used for these purposes by shareholders.
• It helps in raising the capital in overseas and domestic level for organizations.
• Public can analyse the performance of the organization on the basis of financials.

What are the common types of Financial Reporting?

The common types of financial reporting are mentioned below:

• Income statement

This tells you how much money a company has made in a specified time period. It does so by displaying the revenues earned and expenses paid with an ultimate goal to show the profit numbers of the company.

The detailed breakdown of a company’s profit and loss is displayed in the income statement. The second sub-section in the income statement is the net profit or loss of company. The amount of net profit/loss is generated by subtracting the gross profit or loss with operational costs.

• Balance sheet

Balance sheet is the part of financial reporting that showcases the ability of the company to honor debt and obligations. The non-current assets can be recorded in the balance sheet with the current assets. Non-current liabilities like trade payables and bank overdrafts shall also be recorded.

• Cash flow

The cash flow report shows how much money has flowed in and out of your business over a period of time. It is an essential component of financial reporting. The inflow and outflow of money may be from investment, operations and financing activities. Cash flows that is generated from operations focuses on day to day activities.

Benefits of Financial Reporting Services

Let’s now look at the benefits of these kind of service.

• Improved debt management

Debts are something that can have adverse impact on the progress of a company irrespective of the sector. With financial reporting services, you can track your current assets divided by the current liabilities on your balance. It helps in managing your debts.

• Identification of trend

Irrespective of what financial activity you are seeking to track, all types of financial reporting services will help you to identify trends. It thereby helps you to tackle potential weaknesses while also helping you to make the improvements that shall benefit the overall health of the business.

• Real time tracking

By having access to centralized and real time insights, one can make accurate and informed decisions thereby preventing any roadblocks, maintaining financial fluidity at all times.

• Progress and Compliance

With accurate and robust information by financial reporting, it helps in improving financial efficiency over time and also ensures that you stay 100% compliant at all times. This is one of the critical benefits of financial reporting.

How to establish great financial reporting?

Availing of Positive financial services reporting is highly beneficial for the health of your business and profit potential. Now we take a look at the ways to take control of your finance function.

• Ensure to have a clear and long term goals; articulate your goals;
• Identify the financial insights or key performance indicators that you require to make informed decisions;
• Select the right tools, with software packages, it can keep your information secure and accessible;
• Ensure that internal controls are in place;
• Produce timely, consumable information;
• Use financial insights to take informed decisions and stay ahead of competition.

Why financial reporting services should be outsourced?

Outsourcing these services to an expert provides your organization with the following:

• Save money;
• Save time;
• Focus on core business operations;
• Fast and accurate services;
• Cost effective with quality services.

Conclusion

Read our article:Impact of Covid-19 on Financial Reporting