Financial reporting means reporting to stakeholders, i.e., investors, creditors, public, debt providers, governments and government agencies take care of all regulatory requirements. It’s all about disclosing financial position and financial performance of the organization. When our reporting involves outside parties as well, stakes are high, i.e., there could be reputational risk if disclosed inaccurate data. Of course, all with it carries other risks including operational risk as well.
It’s important to take preventive measures rather than corrective measures especially when financial reporting is so critical for the organization. Question is how can we prevent such errors?
One of the best action plan is to prepare and fill checklist at the time of performing the task that will not only aid in organizing things in a better way, however, properly prepared and filled checklist also helps in bringing efficiency and driving excellence. Higher efficiency results as properly filled checklist reduces the chance of errors and driving excellence results as when we achieve efficiency in existing task, we can go ahead one further step and focus on creativity, analysis and automation. Some additional benefits of properly filled checklist are easier delegation could be possible when things are summarised and organized; more business is attracted when you satisfy your stakeholder and/or client requirements.
Well prepared checklist contains preparer and review name and signature. It breaks down all relevant review points as separate headers in order to enable the preparer and reviewer to have proper control on the same and it also ensures transparency when mentioning the applicability in the relevant case. Points should be comprehensive and concise.
One should never review or sign checklist based on assumptions.
One should always prefer e-checklist instead of manual checklist as it aid for record retention as well. Checklist also helps during conduct of audit as well.
Checklists not only make our life easier, however, it is also imperative for operational control. Operational control is derived from management control. Operational controls are basically control designed to ensure that day to day actions are consistent with established plans and objectives. Indeed, checklist is one of the key tools designed to promote consistent execution and completion of control.
(This article is intended for academic purpose only. Author can be reached at [email protected] for academic discussion.)