As we continue to face financially uncertain times, it is increasingly important that businesses can generate timely and accurate financial information.

Businesses need to make timely, informed financial decisions safe in the knowledge that good internal housekeeping policies underpin the qualitative accuracy and relevance of their financial information.

There are a number of common strands affecting the quality and accuracy of internal financial reporting. Using our business review checklist, we have helped clients apply a best practice approach to their specific financial reporting needs.

Consistently applied to each financial reporting period, the checklist will help improve management information - providing decision-makers with a greater degree of confidence to consider the future rather than worry about the past.

Here are the key areas that should be considered:

1. Fixed Assets
   A fixed asset register should be maintained and regularly monitored so that you can identify both additions and disposals and make “real time” provisions for depreciation which will add to both the quality and accuracy of your financial information.
2. Trade Debtors
   Aged debtor reports should be regularly agreed to the trial balance and any variances immediately resolved. Credit balances on the sales ledger should be identified and resolved and the agreed aged debtors report can then be used as the platform for credit control and cash flow management.
3. Bank and Cash
   Reconcile all bank and cash accounts on a regular basis and print off the unreconciled items at the reconciliation date for your files. Pursue any and all outstanding items that are still not cleared with a view to rectifying the underlying problem.
4. Trade Creditors
   As with trade debtors, aged creditor report totals should be regularly agreed to the businesses trial balance and any variances immediately resolved. Debit balances on the purchase ledger should be identified and their resolution pursued.
5. Prepayments and Accruals
   Prepayments and accruals should be consistently calculated and accounted for on a monthly basis and you should ensure that the previous periods prepayments and accruals are reversed in full. It is possible to set up auto reversing prepayments and accruals journals within most accounting software.
6. Payroll and PAYE
   Payroll journals should be posted on a weekly or monthly basis and care should be taken to ensure that the businesses net wages and PAYE control accounts are nil at the end of each month and, if not, a reconciliation undertaken.
7. VAT
   Always reconcile the VAT period immediately after you have despatched the figures for that period and post the VAT liability journal (most accounting software programmes will have a VAT “Wizard” to assist). Always undertake a full VAT reconciliation ensuring turnover disclosed through your VAT returns agrees, or can be reconciled to, the turnover disclosed through your financial reporting.
8. Profit and Loss Account
   Ensure all postings to profit and loss account nominal codes are consistent and that allocations are correct. Consider the composition of the business’ chart of accounts and its integration with the business’ year end statutory financial statements. Review any negative profit and loss nominal codes for errors in posting.

This list is by no means exhaustive, but due consideration and care in each area will assist in creating a consistent and sustainable financial information platform for more considered reporting.

Menzies’ Outsourcing will be delighted to assist you and your business in creating a bespoke, best practice reporting checklist to enhance your current reporting. We will also be pleased to support you, and your wider team, with any necessary coaching and ongoing advice.

For further information, please contact:
David Parfitt, Associate Director
T: +44 (0) 1784 497100
F: +44 (0) 871 6660640
E: dparfitt@menzies.co.uk