The ABC's of Financial Reporting in the US

Posted by Cedric Joshua Martinez

Oct 21, 2015 6:30:00 AM

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The favorable prospects of your business funding is an important facet to making your business flourish. For 2015, the funding prospects of most business owners in the US are considerably more positive as compared to the past year.

This is further supported by a recent survey conducted by Wells Fargo. According to the said survey, 34% of small business respondents claimed that it was easier to obtain credit in the past 12 months than last year. While there are many factors that contribute to this, most finance and accounting services providers agree that the primary reason behind this accomplishment is the improved accuracy and transparency of business owners’ financial reports.


The Financial Report

A financial report, as we know it, is a collective set of financial statements which disclose a company’s overall financial position. It provides a historical and in--depth look at a company’s revenues, investments, assets and cashflow. Both American business owners and financial management services providers are mindful of their financial reports as these documents reflect the actual financial status of their company. Hence, it is through these compiled reports that business owners can prove their ability to pay off debts once their funding requests are approved.

 

The GAAP

As expected, norms and standards in business financial reporting could be very complex, especially if companies follow a diverse set of accounting formulations. This is where the GAAP comes in handy. The GAAP or the Generally Accepted Accounting Principles is the most authoritative set of business accounting rules used across different business industries.

For American businesses, the GAAP is the most commonly-used accounting standard. Unless a company clearly states that it has adopted a different set of accounting rules, it is safe to assume that the foundation of its financial reports are based on the GAAP. In the event that a company decides to deviate from the rules set in the GAAP, it is the company’s responsibility to cite which accounting rules and standards it has adhered to.

 

The FASB and the SEC

Aside from the GAAP, there are other standards used to create business financial order and uniformity among different business industries. These include the FASB or the Financial Accounting Standards Board and the SEC or the Federal Securities and Exchange Commission. The FASB is a strong point of authority in updating and implementing GAAP standards among private companies. Meanwhile, the SEC controls accounting and federal accounting standards for companies with publicly-traded securities.

The US is a good place to do financial reporting as it has an array of sturdy business accounting rules and regulations that ease the process of generating and interpreting financial documents. But even so, a clear understanding of GAAP, FASB and SEC standards are necessary to keep your financial reports accurate and up--to-date.

 

Need help in keeping your financial reports at par with modern business standards? Touch base with our qualified experts at D&V Philippines today!

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