Deloitte's Practical Guide to Better Financial Reporting

After the corporate scandals of 2002, there has been no shortage of suggested accounting reforms. Many ideas, including principles-based standards, seem too abstract to offer any fast results. But the latest paper in Deloitte's Integrity and Quality series provides a refreshingly practical perspective. It is packed with helpful tools to improve the financial reporting process.

Basically, Deloitte is advocating better explanations of the values, risks and ratios needed for a solid understanding of a company's financial position. The goal is to provide explanations that better reflect the risks in a company's business and the subjectivity in its accounting principles.

Examples of useful disclosures involving values, risks and ratios include:

  • Explanations of the proximity of book values to economic values, along with the estimates and assumptions used in financial reporting and the possibility of impairment.
  • Information about risks of off-balance-sheet arrangements and assessments of internal controls, as well as the risks and rewards related to the countries in which a company does business.
  • Comparisons of key balance sheet ratios with the norms for the industry in which a company competes.

To help companies communicate with auditors and prepare better disclosures, Deloitte has provided a list of questions to consider in assessing a company's financial position, along with a summary of key balance sheet ratios and corresponding industry averages.

Admittedly, the data needed for better reporting goes beyond that found on the face of a balance sheet. But Deloitte emphasizes that although the balance sheet is a logical starting point for assessing a company's financial reporting – it is only a starting point. The additional information needed for a full understanding can be presented in the notes to the financial statements and the MD&A (management's discussion and analysis) portions of annual reports.

Download Deloitte's paper on "Quality of Financial Position – The Balance Sheet and Beyond."

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.