Posted in The Bottom Line, Featured Post, Accounting & Auditing

Benchmarking financial performance

You already may have reviewed a preliminary draft of your company’s 2019 financial statements. But without a frame of reference, they don’t mean much. That’s why it’s important to compare your company’s performance over time and against competitors. Conduct a well-rounded evaluation A comprehensive benchmarking study requires calculating ratios that gauge the following five elements:…

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Posted in The Bottom Line, Featured Post, Accounting & Auditing

Reporting discontinued operations

Financial reporting generally focuses on the results of continuing operations. But sometimes businesses sell (or retire) a product line, asset group or another component. In certain situations, such a disposal should be reported as a discontinued operation under U.S. Generally Accepted Accounting Principles (GAAP). Starting in 2015, the rules changed, limiting the scope of transactions…

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Posted in The Bottom Line, Featured Post, Accounting & Auditing

Attention: Accounting rule delays in the works

On July 17, the Financial Accounting Standards Board (FASB) voted to issue a proposal that would delay several landmark accounting rules for certain companies. If finalized, the deferral would apply to new guidance for reporting leases, hedging transactions, credit losses and long-term insurance contracts. Summary of the changes The following table summarizes key implementation date…

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Posted in The Bottom Line, Featured Post, Accounting & Auditing

How auditors assess risk when preparing financial statements

Every year, your audit firm will conduct a fresh risk assessment before the start of fieldwork. Why? Because your auditor wants to mitigate the risk of expressing an incorrect opinion regarding the accuracy and integrity of the company’s financial statements. Inadvertently signing off on financial statements that contain material misstatements can open a Pandora’s box…

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Posted in The Bottom Line, Featured Post, Accounting & Auditing

Got multiple locations? Expect auditors to keep a close eye on inventory

Do you remember the high-profile fraud that happened at drugstore chain Phar-Mor in the 1990s? Executives manipulated the company’s financial statements to hide approximately $500 million in losses. A key ploy that perpetrators used in the Phar-Mor case was to overstate inventory balances at individual stores. Management became adept at hiding the scam from their…

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Posted in Accounting & Auditing

How to shape up your working capital

Working capital — current assets minus current liabilities — is a common measure of liquidity. High liquidity generally equates with low risk, but excessive amounts of cash tied up in working capital may detract from growth opportunities and other spending options, such as expanding to new markets, buying equipment and paying down debt. Here are…

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Posted in Accounting & Auditing

Is annual financial reporting enough?

Businesses generally issue year-end financial statements to let investors and lenders evaluate their financial health. But proactive stakeholders — including the company’s CEO and board of directors — may want more than one “snapshot” per year of financial results. Interim statements let stakeholders know how a company is doing each quarter or month, but they…

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