WHERE IS THE MUSIC?
Accountants are well trained in the assembly of financial statements, compliance with GAAP and internal controls to assure data is captured and reported properly. The concept of double entry accounting, proper presentation of activity and the imperative of compliance are ground rules for financial statement presentation.
The result is if you have an accounting background the reporting is well understood. Yet many financial statement users don’t have an understanding of accounting, including operating management and company owners.
I learned early in my career as the newly hired Vice President of an Australian owned company my financial reporting had to “sing”. The directive from our Managing Director was not to send the financial statements until they “sang”. As an experienced accountant and Controller of a subsidiary of a publicly traded company, this was puzzling. I thought I knew how to report financial results.
I couldn’t have received better advice, though it took time to be understood.
My job wasn’t to just send accurate financial reports, but to send information that conveyed meaning, drove actions and wasn’t just the summation of debits and credits, thereby singing.
Since then my view of financial reporting changed. I don’t consider financial reporting meaningful unless the reader is called to action by the information they receive.
Finally, financial reporting should “sing” a tune known to the user. The same “song” they have been hearing throughout the month. No month-end surprise. Let’s keep the drama out of waiting for the books to close and track financial performance throughout the month.