8 ways to make your financial statements say what you mean
8 ways to make your financial statements say what you mean
Financial statements tend to be long and difficult to understand. If anything, they have only become longer and more difficult to understand with every new disclosure requirement. Many preparers even wonder whether the lenders and investors who use the statements find them all that useful.
Typically, it's the notes that confuse users the most. Users need to wade through jargon, duplicate content, and an unpleasant user experience to find what they need. The notes feature a treasure trove of valuable details about the company but are sometimes ignored because the barrier to entry is so high.
The opportunity is great. Analysts and lenders prefer financial statements that tell their stories clearly. Whether public or private, businesses benefit from financial statements that are easy to use and compare with other companies.
The threat is also increasing—at least for public companies. With heightened scrutiny by the Australian Securities and Investments Commission (ASIC) and the International Accounting Standards Board poised to make its own changes on reporting performance measurements, the notes in financial statements are set to grow.