Timeliness counts in financial reportingJune 9, 2017
Do you procrastinate when it comes to closing your books and delivering year-end financial statements? Lenders and investors may think the worst if a company’s financial statements aren’t submitted in a timely manner. Here are three assumptions your stakeholders could make when your financial statements are late.
1. You’re hiding negative results
No one wants to be the bearer of bad news. Deferred financial reporting can lead investors and lenders to presume that the company’s performance has fallen below historical levels or what was forecast at the beginning of the year.
2. Your management team is inept, uninformed or both
Alternatively, stakeholders may assume that management is hopelessly disorganized and can’t pull together the requisite data to finish the financials. For example, late financials are common when a controller is inexperienced, the accounting department is understaffed or a major accounting rule change has gone into effect.
Delayed statements may also signal that management doesn’t consider financial reporting a priority. This lackadaisical mindset implies that no one is monitoring financial performance throughout the year.
3. You’re more likely to be a victim of occupational fraud
If financial statements aren’t timely or prioritized by the company’s owners, unscrupulous employees may see it as a golden opportunity to steal from the company. Fraud is more difficult to hide if you insist on timely financial statements and take the time to review them.
Get back on track
Late financial statements cost more than time; they can impair relations with lenders and investors. Regardless of your reasons for holding out, timely financial statements are a must for fostering goodwill with outside stakeholders. We can help you stay focused, work through complex reporting issues and communicate weaker-than-expected financial results in a positive, professional manner.
Upcoming EventsApril 13, 2020
Mark Baran, Principal in the Tax Services Group at Marks Paneth, will be a panelist on “Financial Resilience in a Time of Crisis,” a webinar presented by the British American Business Group.
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