Essential steps to a great financial statement compilation

Financial statement compilations are usually necessary when an enterprise is seeking financing. This oftentimes requires a third-party specialist to analyse the financial statements of the entity. These compilations will provide a deeper insight into the company’s taxes, profits and financial results. Specialists advise to always seek the collaboration of a skilful accountant to help you with your financial statement compilation, as this may determine how successful your attempt to find financing for your business is going to be. Also, below we have some steps to follow in the process.

Get the necessary documentation to support your account balances

Obviously, you must prove that the numbers on your statements are the real ones, and for this you will need all the papers to prove it. In the case of those companies that don’t have balance statements, the accountant that you hire will use invoices and bank statements for this purpose. Necessary documentation:

  • Loan balances;
  • Investment statements;
  • A list of revenues in the name of the company;
  • The expenses made in the name of the company;
  • All financial statement accounts.

The general ledger will also be necessary, in order to prove all the important business transactions of the year.

Inspect all financial data for any potential errors

The laws do not require any data verification from the accountant’s part, so you want to make sure that you do your fair share of work. In fact, it’s the client duty to corroborate the data and look for more info about financial status, the accountant only having to go through documentation in the search for obvious, big errors. You must know that compilations are the most simplistic type of accounting services, and the accountant doesn’t have to inspect your documentation in detail.

Record all your adjustments in an entry journal

Generally, all accountants will record all misstatements in a journal where these are adjusted, in order to provide a more accurate statement. Once again, this only happens for big, obvious errors. This happens for the simple purpose of a legal and accurate backup of the statements. If the statement is not backed up by documentation the compilation will be an unsuccessful one.

Create drafts for financial reports and notes

In all cases, the accountant will fill in a statement in which they remind the management that a review of the financial statement hasn’t been performed. The accountant will also create reports and notes in which they state the policies used to compile the statements.  

Audits and reviews

As previously mentioned, compilations are the most simplistic form of service usually offered by accountants. For more accurate statements and data, specialists usually advise investing in financial audits or reviews. In these, the accountant has the obligation to review the entries and make sure that they are accurate and have the necessary documentation to be backed up.

These are some guidelines that must be followed in the financial statement compilation process. Regardless of how complex your accounting needs are, we advise you to always take into account only the most professional services out there.