Every organization, private or public, enterprise or local, understands how important financial statements are to their success and reputation. The disclosure of this financial information is a vital subject area that needs to be handled with care. That is why disclosure management is an area of high interest for many organizations. Financial disclosures are not just about the data, but the overall story that the data tells to the public, investors, or regulatory agencies.
We have created this blog not to serve as an end-all-be-all "financial statement disclosure checklist" but to help understand the general aspects of what should be included in various financial disclosures.
When researching financial disclosure to ensure that you have everything you need, you may find it confusing to see the phrase "financial statement" pop up instead. So what is the difference?
The simplest way to describe the relationship between the terms is that a financial disclosure is a document that presents information about the state of a company's finances. A financial statement is just one of a specific kind of disclosure. Then inside the various types of financial statements, you can actually have a disclosure, which serves as a footnote to provide additional context for the financial information.
In general, the basic elements of financial statements are broken into four sections: income statement, cash flow statement, balance sheet, and an equity statement.
Unfortunately, the answer isn't so cut and dry, as there are many aspects to consider. To understand what the components will be, we need to identify if it is going to be an internal or external financial statement.
External financial statements are for investors, tax authorities, or other significant partners who require financial information. In the United States, the most common organization these statements will go to is the Securities and Exchange Commission (SEC). They have the power to enforce the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards Foundation (IFRS) regulations.
If you are not an organization operating inside the United States or function in another nation outside of the US, you will have to report to other financial regulatory bodies. Other major bodies around the world include the Canadian Securities Administrators, Autorité des marchés financiers, and China Securities Regulatory Commission.
Internal financial statements are much more flexible than external statements and typically include a higher analytical component, which means it is more data-focused and less narrative-driven. They may also report by division (as opposed to the company as a whole), have more detail, or be produced more frequently than external statements, which are commonly made yearly.
As we can see, the components of financial statements have various factors dictating what they will look like. Towards the end of a quarter or year, gathering all of this data together can be a lot to handle. By utilizing Fluence Disclosure Management (FDM) powered by Sturnis365, you will be able to produce real-time financial reports on any metric or KPI - on any device.
Outside of the four primary statements that we mentioned above, there are other forms of disclosures that are typically found in the notes or at the bottom of the main financial report. Let's take a look at these other disclosure examples.
Tracking down all of the data and records in order to properly put out a financial disclosure can lead to headaches and organizations asking, "what is the purpose of a disclosure?" That is why Fluence's Disclosure Management system works to make this entire stressful process a thing of the past.
We have been able to reduce the time it takes to complete a close cycle by up to 80%, and easily track where people are in the month-end close process.
To start dominating your financial disclosures, contact us today.
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