It’s time to create a financial statement disclosure checklist and you’ve been tasked with disclosure management. But what exactly is a disclosure checklist and is this tool the best way to handle the disclosure process? Let’s explore these answers together, but first, let’s take a moment to define financial disclosure in general.
Financial disclosures are when companies share information about their monetary standing internally or externally. This financial information is often a part of the larger corporate disclosure process which includes non-financial aspects as well. While corporate disclosures are voluntarily compiled and disseminated, others are mandatory and regulated closely by entities like the the Securities and Exchange Commission in the United States or the European Securities and Markets Authority in the European Union. For financial disclosures, the information that needs to be collected and shared depends on the specific reporting requirements for mandatory disclosures or the internal needs for non-mandatory disclosures.
There are many reasons to provide financial disclosure statements, both internally and externally. These include:
It’s vital that your company follows the law, particularly if your business is multinational and falls under the jurisdiction of several regulatory bodies. Providing mandatory financial disclosures will protect you from fines, losing your ability to do business, and the loss of corporate protection.
By withholding financial information, companies can easily mislead investors and other stakeholders. Voluntary financial disclosures give a strong signal that your company is trustworthy and ethical. While it’s obviously the right thing to do, these sentiments also translate directly into brand loyalty and customer retention—positive impacts for your bottom line.
Particularly with internal financial disclosures, sharing this information helps your colleagues align with each other. By sharing the broader financial picture as well as goals and objectives, everyone will be on the same page and be able to contribute to the team effort.
A disclosure checklist is a tool that you can use while creating your financial disclosures. These checklists will need to be specific to the report that your company is making and you may need different ones for different disclosure documents.
What is a GAAP checklist? In the United States, regulated and publicly traded companies must follow the Generally Accepted Accounting Principles (GAAP) when creating financial disclosures. This is a set of accounting standards, conventions, and rules. While following GAAP is a requirement for these companies in the U.S., private companies as well as many worldwide choose to follow GAAP (or similar practices) to ensure their financial disclosures are professional and trustworthy. For each type of disclosure, you will use a GAAP checklist that is specific for that particular one. For example, when creating financial statements for a local government, your GAAP checklist might look like this:
Source: this checklist was been adapted from information provided by the Office of the Washington State Auditor, February 2020
A disclosure checklist helps you ensure that the entire financial disclosure process flows smoothly and includes every piece of information it needs to. When creating your checklist, it is important to check what regulations your company falls under and include those requirements as a part of your tool.
Here at Fluence, we understand how important and stressful the financial disclosure process can be. Collecting, compiling, auditing, and distributing detailed financial reports is not a simple thing, but Fluence Disclosure Management is intuitive and streamlined. Our collaborative data collection allows each party to input data into a Microsoft Word document, saving directly to the database. Once that information is shared, it triggers a fully auditable and automated distribution to everyone involved. This is just one small sample of how Fluence can help make your financial disclosure efficient and easy. Explore our platform now or contact us with any questions. It’s time to step into the future of financial disclosure.
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