From time immemorial, the success and credibility of any organization has been gauged in terms of its financial position and the respect it commands in the global market. Financial reports or financial statements, as commonly known in the business parlance, are a crucial benchmark, in determining the financial status of an organization, be it a big multinational or a small company. Financial reports hold a lot of significance, especially for finance managers, accounts officers and accountants in an organization to set goals, make sound business decisions and get budget approval for key infrastructure upgrade. The top decision makers, in an organization always have to depend on an accurate and timely financial statement to use it as a roadmap to steer them in the right direction

Anyone heading a business is aware how crucial financial reports are, to track the financial health of a business. It can be said that a financial report is like juxtaposition of a medical report, but of an organization, which actually projects the position of an organization vis-a-vis its profitability, credibility and reliability.

Importance of an efficient financial reporting system
Any financial reporting involves preparation of financial reports profit and loss accounts, balance sheets and schedules thereof. Therefore, it is imperative for a business to have a well structured reporting system in place to highlight all the salient points. For any organization to excel, it has to produce a foolproof financial report that will ensure accuracy and lead to increased confidence among the stakeholders, bankers, government bodies and other decision making authorities. Therefore accuracy and timing form the crux of any efficient financial reporting system.

Companies often face tremendous pressure to prepare accurate financial statements under tight deadlines. Preparing timely and accurate financial reports is critical to the success or failure of an organization. So, it becomes crucial for finance managers to be extra cautious when relying on an accountant to prepare financial statements.

Benefits of a foolproof financial statement
It is very important for a business, to do a proper financial statement analysis to understand the financial performance of the company. It allows the top leadership of an organization to determine the company’s current position with regard to its commercial strengths. It also helps to understand the key drivers of the business in order to grow and prosper.

From an entrepreneurial perspective, having a sound knowledge of financial statement can be crucial to business success. Knowing your own financials, can be the quickest and in many cases the most efficient way to pitch a business to investors.

The following points reiterate as to how long term benefits, can be reaped by an organization and any possible doubts expunged from the minds of stakeholders, all by sticking to a comprehensive but efficiently drafted financial statement:

You are armed with a sound and solid foundation that will boost the value of your business.
If your financial report is strong, it is easier for you to build your case for the value you believe the company is worth.
Prospective buyers will understand and trust your business better if the financial report is timely, accurate and well-organized.
It will give you the control to explain the changes in the business over time, if your controller reviews financial results.
You will spend less money on accounting and consulting fees than before.
It allows you to build a full set of financial statements by company or across companies in a multisite environment.
Uses of a well designed financial statement
A well structured financial statement will be instrumental in preparing the following key elements that are vital to any organization:

Income statements – The income statement is a key financial statement which reports a company’s profitability during a relatively short period of time such as the spanning over a year, month, 10 weeks, etc.
Balance sheets – The balance sheet is a snapshot of your business financials. It includes assets, and liabilities and net worth. Analyzing how the balance sheet changes over time will reveal important financial information about a business.
Cost center – Cost center is a master record and used for internal reporting purpose in departments like administration, human resource, production etc.
Budget comparisons – This is statement of the results of an item-by-item comparison of budgeted funds, and of actual results of operations.
Internal and external reporting – A financial institution may have internal and external reporting requirements regarding the environmental and social risks and impacts associated with its portfolio.
Consolidated balance sheet – A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined.
The financial health of an organization is beamed onto the entire global business platform by a foolproof financial statement. In other words, a strong financial statement plays a crucial role in solidifying the business values that the organization believes in and which also confirms the sole reason for its existence.