Business Financial Information Secrets

CHAPTER 4The Importance of Completeness

ESSENTIAL TO UNDERSTANDING THE BIG PICTURE

Let us start with a simple analogy. If a doctor completed an annual physical medical examination and only administered a limited number of tests and provided even fewer results, most people would find this unacceptable. What is needed (and expected) is a full examination with all results made available and, ideally, comparisons against key benchmarks for similar demographics (e.g., what should the cholesterol level be for a man my age?). The concept of completeness is no different for a business than a person, as to gain a full understanding of a company's operating results, potential risks, and opportunities, complete financial reporting is essential.

To better understand the concept of completeness, we provide examples of internal and external financial information reporting, starting with relatively weak or poor information through what at a minimum would be considered essential to successfully operate a business in today's challenging climate. For ease of presentation, our examples are focused on the big three financial statements (which we learned in previous chapters have a limited internal audience), but the concept holds for any internal financial information distributed.

The concept of completeness should always include presenting financial information against some type of benchmark ...