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Financial Services is plagued by inaccurate financial reporting. How can you help?

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Inaccurate financial reporting can have serious consequences for financial services firms and their clients. It can damage reputation, trust, compliance, and profitability. As a financial professional, you need to have the skills and tools to prevent, detect, and correct errors in financial data and reports. In this article, you will learn some practical tips on how to improve your financial reporting accuracy and quality.

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1 Understand the reporting standards

The first step to ensure accurate financial reporting is to understand the relevant reporting standards and frameworks that apply to your firm and industry. These may include GAAP, IFRS, SEC, FINRA, or other regulatory bodies. You should familiarize yourself with the rules, definitions, formats, and disclosures that are required for each type of financial report, such as income statements, balance sheets, cash flow statements, or audit reports. You should also keep up to date with any changes or updates in the standards and how they affect your reporting processes and procedures.

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Emma K.

Defining the future of governance with ACTIVE GOVERNANCE for identities, processes, and technology. Helping organizations solve complex control challenges with advanced automated control solutions.
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Financial reporting typically includes: ? The balance sheet - provides a snapshot of the business’s overall health—or what it owns, what it owes, and shareholder equity. ? The income statement (also called the profit and loss statement) - breaks down the company’s revenue, its cost of revenue, operating and non-operating expenses, and non-operating income. ? The cash flow statement - indicates how much cash came into a company during a reporting period and how much money was spent.

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2 Implement internal controls

The second step to ensure accurate financial reporting is to implement effective internal controls that safeguard the integrity and reliability of your financial data and reports. Internal controls are policies, procedures, systems, and checks that prevent or detect errors, fraud, or misstatements in your financial activities and records. Some examples of internal controls are segregation of duties, authorization, verification, reconciliation, documentation, and review. You should design and document your internal controls according to the risks and objectives of your firm and industry. You should also monitor and evaluate your internal controls regularly and make improvements as needed.

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Emma K.

Defining the future of governance with ACTIVE GOVERNANCE for identities, processes, and technology. Helping organizations solve complex control challenges with advanced automated control solutions.
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The most effective way to avoid financial reporting errors is to prevent them with robust controls. Controls are policies, procedures, and technical precautions that safeguard an organization’s resources by avoiding mistakes and inappropriate actions. Controls, such as segregation of duties, access controls, automated process controls, and internal audits, can help prevent errors and increase the ability to detect mistakes and fraud.

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3 Use reliable software and tools

The third step to ensure accurate financial reporting is to use reliable software and tools that facilitate and automate your reporting tasks and functions. Software and tools can help you collect, store, process, analyze, and present your financial data and reports in a consistent, accurate, and timely manner. They can also help you reduce manual errors, streamline workflows, enhance collaboration, and comply with reporting standards and regulations. Some examples of software and tools are accounting software, spreadsheet software, data visualization software, reporting software, and audit software. You should choose and use software and tools that suit your firm's needs and capabilities. You should also ensure that your software and tools are updated, secured, and backed up regularly.

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4 Train and educate your staff

The fourth step to ensure accurate financial reporting is to train and educate your staff on the skills and knowledge they need to perform their reporting roles and responsibilities effectively and accurately. Your staff should have a clear understanding of the reporting standards, internal controls, software and tools, and best practices that apply to their work. They should also have the ability to identify, report, and resolve any issues or errors that may arise in their reporting processes and procedures. You should provide your staff with regular training and education on the latest developments and trends in financial reporting. You should also encourage your staff to ask questions, seek feedback, and share ideas on how to improve your reporting accuracy and quality.

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5 Review and verify your reports

The fifth step to ensure accurate financial reporting is to review and verify your reports before you submit or publish them. You should check your reports for any errors, inconsistencies, or discrepancies in your financial data, calculations, or presentation. You should also compare your reports with your source documents, records, or systems to ensure that they match and reconcile. You should also ensure that your reports comply with the reporting standards and regulations that apply to your firm and industry. You should also seek a second opinion or an independent review from a colleague, supervisor, or auditor to confirm the accuracy and quality of your reports.

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6 Learn from your mistakes

The sixth step to ensure accurate financial reporting is to learn from your mistakes and take corrective actions to prevent them from recurring. You should monitor and measure your reporting performance and results regularly and identify any areas or aspects that need improvement. You should also analyze the root causes and impacts of any errors or issues that occur in your reporting processes and procedures. You should also implement corrective actions and solutions that address the causes and impacts of your errors or issues. You should also document and communicate your errors, issues, actions, and solutions to your stakeholders and regulators as appropriate.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Emma K.

Defining the future of governance with ACTIVE GOVERNANCE for identities, processes, and technology. Helping organizations solve complex control challenges with advanced automated control solutions.
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The impact of financial reporting inaccuracies can be wide-ranging and even devastating to the company, its stakeholders, and investors. Among those consequences are: Fines and penalties Reputational damage Lost time and resources Difficulty planning and Bad decisions

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