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Why It’s Important to Get Your Organization’s Year-End Financials Done On Time

Have you finished your organization’s financial statements for the end of the year yet? Organizations that follow the calendar year release these statements by March of the next year. If an organization doesn’t submit its financial reports on time, lenders and investors may develop a negative image. Here are three assumptions your stakeholders could make when your year-end financials are late.

  1. Negative Financial Results 

No one wants to be the bearer of bad news. Deferred financial reporting can lead investors and lenders to presume that the organization’s performance has fallen below historical levels or what was forecast at the beginning of the year. Some organizations also may procrastinate issuing financial statements if they’re at risk for violating their lending covenants.

  1. Weak Management

Alternatively, stakeholders may assume that management is incompetent or disorganized and can’t pull together the requisite data to finish the financials. For example, late financials may be common when a controller is inexperienced, the accounting department is understaffed, or a major accounting rule change has gone into effect. Delays also may happen when external auditors and managers are at odds over adjusting journal entries — or when auditors are unwilling to issue an unqualified (clean) opinion or have going concern issues.

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.

  1. Occupational Fraud Risks

If financial statements aren’t timely or prioritized by the organization’s owners, unscrupulous employees may see it as a golden opportunity to steal from the company. Fraud is more difficult to hide if you insist on timely financial statements and take the time to review them.

Don’t Procrastinate On Year-End Financials

Late financial statements cost more than time; they can impair relations with lenders and investors. Timely financial statements foster goodwill with outside stakeholders. We can help you stay focused, work through complex reporting issues, and communicate weaker-than-expected year-end financials in a positive, professional manner. For more information, contact us.

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