Various companies are facing accounting complexities that pose a significant challenge to them. First, there is the need for change, which involves time, cost and implementation that many are unwilling to adopt. Secondly, preparers and auditors find security in following complex disclosure rules, which produces long financial statements that are not useful to users. Here is how simplification in the following areas can help.
Redeployment of financial resources
Traditional procedures such as improving efficiency and reducing on reporting requirements can address complexities to some extent, but the best option is redeployment of resources in the financial sector.
This is through provision of insight into ROI and marketing by junior accountants, who act as analysts, and efforts by finance staff to partner within themselves or with customers to make better decisions that touch on the business.
New education and communication
Stakeholders in the financial sector need to remain in touch with new and different frameworks that are available, for quality control, training, and procedures.
However, small businesses may not invest in this aspect, though necessary.
Therefore, CPA is in a position to communicate this information to such, and explain the difference for an SME, and the way this helps avoid GAAP complexities.
Effective public company disclosures
Public companies adopt new initiatives in a bid to improve disclosure, but investors may require it as per the standards in place.
As much as this is the case, there is a balance between requirements and what users need for them to make better decisions.
That is because their interest is in understanding the nature of the business, and this calls for disclosure.
Contact us to discover more Bookkeeping Tips.