Financial Integrity
Make your company’s financial picture bright and accurate by setting up solid internal controls before a major transaction, like going public or acquisition. Reliable financial reporting becomes second nature.
Financial Integrity—Set Yourself Up for Success
You’re only as good as your word—this is true not only for people but companies too. Whenever your company shares information—whether it’s through audited financial statements, an SEC filing, or a press release about a quarter-to-quarter jump in revenue—you’re implying that anyone processing the information should take the company at its word.
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The assumption is that the information can be relied upon and so can your company, along with anyone involved in the inputting, collecting, processing, analyzing, reviewing, and attesting to that information. When your company operates with financial integrity, you have processes and systems in place that ensure the financial data you share is credible.
Without such credibility, without the ability to trust the information and the people behind it, your company’s reputation and valuation can be severely impacted—and investors could become wary of your company. What erodes a company’s financial integrity of financial statements or integrity in financial reporting? Any shortcuts taken, systems that haven’t kept up with your company’s growth, lack of visibility into the company’ true financial performance, an unethical corporate culture and, ultimately, weak internal controls over financial reporting (ICFR).
With a firm financial foundation and solid internal controls, however, a company is set up to produce reliable financial reporting—an absolute requirement if you ever want to undertake an M&A deal or go public. Before such a major transaction, your company needs the ability and skills capacity to produce timely, reliable financial information that can stand up to the scrutiny of auditors, inquisitive investors and, if going public, securities regulators. You can fill in any of the skills gaps with financial integrity experts who will tailor their guidance and solutions to your company’s current situation and adapt as that situation evolves.
How to Outsource Internal Controls
You are likely to find that your emerging growth or pre-IPO company does not possess the level of in-house skills needed to revamp or develop ICFR to a higher level. You need the expertise and support of financial integrity pros who really understand companies like yours at this growth stage—and who won’t try to make everyone act like they’re at a bigger company than it is. Outsourced finance and accounting experts can help build integrity into your financial reporting systems, tighten up your internal controls, serve as your internal audit function if needed—or set one up for you—and implement systems and processes that are manageable and can be followed, and adjusted, as needed.
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At RoseRyan, whether our involvement with your company is for a short span of time or longer, we become a part of your team. We get to know your company upfront so that we can seamlessly work alongside everyone and develop practical processes that work for your company’s size, culture and complexity. Flexible, tailored outsourced financial reporting and financial integrity solutions from our experts will ensure that your company achieves exactly what it needs and down the road.
The Importance of Reliable Financial Reporting
The ultimate goal of a strong ICFR system is to minimize the likelihood of having to make a restatement. Mistakes do happen, of course, but you want your company to have systems in place to catch mistakes before they have an effect on a finalized financial report. And you want to always reduce the temptation and ability for someone to conduct fraud without anyone noticing in a timely manner.
Timely, reliable financial reporting gives management and the board of directors incredible information—the power to fully understand the business’ story and to make decisions based on it.
Financial Integrity FAQs
How do you maintain financial integrity?
Your processes, systems and the skills of your finance and accounting team need to be in line with your company’s size, complexity and stage of growth. All of these areas have an effect on the company’s risk for a material misstatement of the financial statements.
Why are integrity, honesty and transparency essential in financial reporting?
Even before your company goes public and your financial reports fall under the scrutiny of the U.S. Securities and Exchange Commission and securities analysts, your company has many opportunities to show that the information it shares can be trusted, whether you are seeking a loan, venture funding, or a potential acquisition. Employees, customers, investors, auditors, regulators all want to know they can trust what you are telling them. If you break that trust, if you have to restate your financial statements, for instance, it’s very hard to gain back that sense of credibility. And it can make everything—including securing financing—so much harder.
What does financial reporting include?
Financial reporting entails both internal (i.e., reports gathered for management’s use and decision-making) and external (i.e., income statement, balance sheet, statement of cash flows) sharing of financial information.
What is external financial reporting?
External financial reporting includes any financial information your company shares beyond the employees and the board of directors. In addition to financial statements, your financial reports can include financial press releases, quarterly and annual reports, SEC filings, and so on.
What is ethical financial reporting?
The infamous corporate scandals of the early 2000s put an emphasis on the need for ethical financial reporting and led to the passage of the Sarbanes-Oxley Act. Having tight internal controls helps to ensure that employees do the right thing in addition to companies having a “tone at the top” that encourages transparency and proper behavior.
How We Help Companies Achieve Financial Integrity
What companies need before taking on a major transaction or preparing for a strategic change, (such as sudden interest from a special purpose acquisition company [SPAC]), varies greatly. What the company is capable of doing without outside help depends on the talent on hand, its understanding of the regulatory and financial reporting landscape, and the time those on the team have available. Chances are, there’s barely any time to spare. Shoring up internal controls is usually a steep undertaking that requires outside expertise to do it right.
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As priorities change and the company’s risks evolve, a company’s financial integrity program will need to evolve too. So, you’ll want to look into pairing up with an outsourcing accounting and finance consulting firm that has worked with all sorts of companies, through every stage of the business lifecycle, including pre-IPO companies and more mature publicly traded companies. They can shift the level of expertise they provide you depending on your company’s current needs and skills. These experts are in the field all the time, so they can bring your company best practices and insights that you would not otherwise know.
Processes for Ensuring Financial Integrity
To build the integrity of your financial statements and financial reporting, you need systems and processes that match your company’s current status and complexity. For instance, as a company expands, as it takes on more transactions, branches out into new locations and new product lines, what were once adequate systems become outdated. Your financial integrity experts at RoseRyan can assess your current systems, processes and procedures and elevate your financial operations so that you can achieve more credible financial information, with tight internal controls over financial reporting, right-sized for your company.
When you have reliable financial data at your fingertips, your company will be in a stronger position and so will its valuation.
Let’s Talk
Drop us a note in the form and one of our experts will set up a time to discuss the ways RoseRyan can help guide you to greatness.
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On demand leadership and consulting services out of Silicon Valley specializing in the Finance & Accounting disciplines.