Accounting Best Practices, Fifth Edition

12–26. Conduct Daily Review of the Financial Statements

Sometimes the initial review of the period-end financial statements comes as quite a shock—the revenues or expenses may be wildly off from expectations. This results in a great deal of frantic research, while the controller investigates possible causes, rapidly makes changes, and issues bland statements to the rest of the management team that the financial statements might be issued a bit late this month. If the financials are indeed substantially different from what management has been led to expect, the blame may even be pinned on the controller, who may lose his or her job as a result.

The best way to avoid this problem is to conduct a daily or weekly review of the financial statements. Yes, this means prior to the end of the month. By doing so, a controller can review revenues as soon as they are billed, and expenses as soon as they are incurred so that any obvious discrepancies can be resolved right away. In addition, if there is a real problem with the financial results, the controller will know about it immediately, rather than being taken by surprise at month-end, which carries the additional benefit of being able to warn the management team immediately, setting their expectations for the period-end financial results. Also, by finding and correcting problems well in advance, there are hardly any issues left to deal with by the end of the month, so the financial statements can be issued much more quickly. Thus, an ongoing ...