Don’t delay in closing books
Do you procrastinate when it comes to closing your books and delivering year-end financial statements? Lenders and investors may think the worst if an organization’s financial statements aren’t submitted in a timely manner. Here are three assumptions your stakeholders could make when your financial statements are late.
You are hiding negative results
No one wants to be the bearer of bad news. Deferred financial reporting can lead investors and lenders to presume that your organization’s performance has fallen below historical levels or what was forecast at the beginning of the year.
Your management team is not up to the task at hand
A delay in statements may lead to questions regarding your controller’s experience, the depth of your accounting department, or your overall ability to deal with a changing accounting landscape. Fair or not, your stakeholders may assume any or all of the above concerns and that you and your team cannot pull together the requisite data to finish the financials.
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.
You are more likely to be a victim of occupational fraud
If financial statements aren’t timely or prioritized by the organization’s owners, unscrupulous employees may see it as an opportunity to steal from the organization. Fraud is more difficult to hide if you insist on timely financial statements and take the time to review them. Assume your stakeholders are savvy and understand the control provided by strong reporting – and the potential for fraud when that reporting is absent or delayed.
Get back on track
Late financial statements cost more than time; they can impair relations with lenders and investors. And specifically for not-for-profit organizations, they can negatively impact the opinions of donors and board members. 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. Contact Herzl Ginsburg, Ciuni & Panichi, Inc. Audit and Accounting Services Department Manager, at hginsburg@cp-advisors.com or 216-831-7171 to learn more.
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