Accounting Best Practices, Fifth Edition

12–1. Move Operating Data to Other Reports

A major factor in the delay in completing financial statements is the inclusion of operating data in the statements. The reason is that this information, such as scrap rates or employee turnover, is not contained in the financial information that the accounting staff normally deals with, nor is it readily obtained by creating ratios or comparisons of the financial data. In short, this information can be hard to obtain. The situation is worsened by the lack of control of the accounting staff over who tracks the information, as well as its accuracy once it is obtained. For example, a subsidiary may forward information about its customer backlog that seems suspiciously high; the controller has the options of including the provided data in the financial statements or of holding off on the financial statement distribution while requesting and waiting for a review of the numbers by the subsidiary—which is under no obligation to do the review. Thus, including operating data in the financial statements not only can delay the issuance of the statements, but also does nothing to ensure the accuracy of the operating information.

An easy way to avoid these problems is to separate all operating information from the financial statements so the statements can be issued in a timely manner, with the operating information sent out later in a separate document. ...