Nitschke Nancarrow managing partner Kym Nitschke explains the essentials that company directors need to keep in mind when tackling financial reporting.
As the title implies, a company director’s role is to direct the course of a company. Through experience, knowledge and skills, it is their duty and responsibility to oversee company operations.
One of these key responsibilities is ensuring the company complies with proper financial reporting.
Typically, even the most financially savvy company director will engage the support of an experienced accountant to help navigate these key processes.
If you’re a company director working through these issues, here are some of the essential things to focus on when tackling your financial reporting.
Keep your financial records in order
Directors are essential in upholding good corporate governance, as outlined under general law and the Corporations Act 2001 (Corporations Act).
Part of this role is ensuring the company has strict accounting standards and an accurate financial report.
Regardless of whether your financial report is prepared in house or by an external party, you need to understand it entirely and review it against your understanding of the company’s position.
As a director, it’s your responsibility to ensure the company has a fair, accurate and high-quality report by considering:
How has the report been prepared?
Is it supported by written and audited records?
Who has prepared the report? Do they have the necessary qualifications?
Is the report unbiased, accurate and objective?
Has anything been left out?
Audits ensure quality reports
An internal audit committee is essential in checking your report for accuracy and reliability. To save time and stress during the auditing process, ensure proper procedures and controls capture financial information.
An external auditor needs to be independent of the company to provide an unbias opinion of the financial report. During the external audit, directors must ensure all information is provided to the auditors.
This process can be facilitated by your experienced accountant.
Accounting standards and industry requirements
As a director, you may find yourself responsible for areas you aren’t primarily skilled in. In addition, you need to understand the accounting process and know the reasoning behind your company’s financial decisions. This knowledge also extends to understanding how Australia’s accounting standards and the Corporations Act impacts your business.
Directors must also consider the impact of COVID on their business and what information they now need to highlight in the report. In post-COVID reporting, disclosure concerning the company is a key focus.
Steer your company to success
As a company director, working closely with an experienced accountant will ensure that you meet all of your responsibilities and requirements, providing extra support and protection both personally and for your company.
Avoid liabilities and risks and get set up for success. Contact us.
The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.Tags: company directors, financial reporting, financial reports