Accounting Best Practices, Fifth Edition

12–3. Restrict the Level of Reporting

Over time, many older companies have gradually gotten into the habit of demanding (and receiving) immensely detailed financial statements from the accounting department. Besides the usual balance sheet and income statement, as well as departmental reports, there can be a plethora of additional schedules, such as sales by customer or region, inventory levels by type of inventory, and a complete activity-based costing analysis of every customer. Though some of these reports may be set up to run automatically as part of the regular package of financial statements (and thereby requiring no additional work), other reports may require the transfer of information to a different format, such as an electronic spreadsheet, for further analysis and regrouping into a customized report. In this case, the amount of time required to assemble and independently prepare the reports may exceed the time needed to create the primary financial statements. Thus, the more reports included in the financial statements, the more time it takes to issue the statements.

The solution is to make a list of all the reports included in the financial statements, ignore those that are automatically created by the accounting software, and focus on eliminating or delaying those that are created separately. It may be possible to strip these reports out of the basic financial reporting package, allowing the accounting staff to issue the basic underlying statements much more quickly. ...