The One Report Every Organization Needs
When you ask a question, a CFO tries to answer the question he thinks you asked. A controller tells you what he does for a living.
—An anonymous wise, but blunt, person, when asked to explain the difference between a chief financial officer and a controller
The balance sheet”—this is the response you'll get if you ask a group of accountants and auditors to choose the most important financial statement of any organization. And they have a point. The balance sheet is certainly an important report. It tells you the financial condition of an enterprise right now, as well as the state of its assets and liabilities, and who actually owns it. The balance sheet tells you whether the organization is solvent, and it affirms the financial condition of the enterprise as of a specific date.
The balance sheet is certainly important, but to most people involved with managing an enterprise, the main use of financial statements is to help them understand how the organization is performing, not just to provide a snapshot of how it is or was at a single moment. After all, management is about doing, not about being. Reports that describe this flow of revenues and expenses over a period of time are called income statements,1. and because these reports are so widely important, we'll devote a whole chapter to designing a specific type of income statement. But before we dive into the design of this report, please understand that there are many flavors ...