Creating your own financial disclosure checklist

It’s time to create a financial statement disclosure checklist and you’ve been tasked with disclosure management. But what exactly is a disclosure checklist and is this tool the best way to handle the disclosure process? Let’s explore these answers together, but first, let’s take a moment to define financial disclosure in general. 

What are financial disclosures?

Financial disclosures are when companies share information about their monetary standing internally or externally. This financial information is often a part of the larger corporate disclosure process which includes non-financial aspects as well. 

While corporate disclosures are voluntarily compiled and disseminated, others are mandatory and regulated closely by entities like the Securities and Exchange Commission in the United States or the European Securities and Markets Authority in the European Union. For financial disclosures, the information that needs to be collected and shared depends on the specific reporting requirements for mandatory disclosures or the internal needs for non-mandatory disclosures. 

What is the purpose of financial disclosures?

There are many reasons to provide financial disclosure statements both internally and externally. These include: 

To stay in compliance with regulations 

It’s vital that your company follows the law, particularly if your business is multinational and falls under the jurisdiction of several regulatory bodies. Providing mandatory financial disclosures will protect you from fines, losing your ability to do business, and the loss of corporate protection.

To be fair and trustworthy

By withholding financial information, companies can easily mislead investors and other stakeholders. Voluntary financial disclosures give a strong signal that your company is trustworthy and ethical. While it’s obviously the right thing to do, these sentiments also translate directly into brand loyalty and customer retention — positive impacts for your bottom line.

To promote alignment

Particularly with internal financial disclosures, sharing this information helps your colleagues align with each other. By sharing the broader financial picture as well as goals and objectives, everyone will be on the same page and be able to contribute to the team effort. 

What is the disclosure checklist?

A disclosure checklist is a tool that you can use while creating your financial disclosures. These checklists will need to be specific to the report that your company is making and you may need different ones for different disclosure documents. 

Disclosure checklist example: GAAP

What is a GAAP checklist? In the United States, regulated and publicly traded companies must follow the Generally Accepted Accounting Principles (GAAP) when creating financial disclosures. This is a set of accounting standards, conventions, and rules. While following GAAP is a requirement for these companies in the U.S., private companies as well as many worldwide choose to follow GAAP (or similar practices) to ensure their financial disclosures are professional and trustworthy. For each type of disclosure, you will use a GAAP checklist that is specific for that particular one. 

For example, when creating financial statements for a local government, your GAAP checklist might look like this: 

• Conduct a risk assessment over financial reporting and related internal controls to identify potential problem areas that might require additional planning to address.

• Review accounting policies and evaluate whether any policy updates are needed.

• Have the appropriate staff involved in the preparation of financial statements. Review the BARS Manual’s titled Overview of Significant Changes to ensure changes have been implemented.

• Create implementation plans for accounting or reporting changes.

• Create a task timeline, milestones, and final reporting deadline for the financial reporting process.

• Evaluate the resources available for financial reporting and whether additional resources are needed to meet preferred timeframes or deadlines.

• Ensure that financial staff has taken sufficient training to maintain or build their knowledge base in technical financial accounting and reporting. If not, schedule additional training.

• Check to see if the local government is using any accounting practices that do not conform to GAAP.

• Check to make sure that all activity is being captured in the general ledger.

• Send reminders to all departments about recording year-end activity.

• Evaluate the reporting entity and assess any potential changes that might affect reporting.

What is the purpose of a disclosure checklist?

A disclosure checklist helps you ensure that the entire financial disclosure process flows smoothly and includes every piece of information it needs to. When creating your checklist, it is important to check what regulations your company falls under and include those requirements as a part of your tool. 

What other tools can help with the financial disclosure process?

Here at Anaplan, we understand how important and stressful the financial disclosure process can be. Collecting, compiling, auditing, and distributing detailed financial reports is not a simple thing, but it can be with the Anaplan Disclosure Management application.

Our collaborative data collection allows each party to input data into a Microsoft Word document, saving directly to the database. Once that information is shared, it triggers a fully auditable and automated distribution to everyone involved. This intuitive and streamlined process is just one small sample of how Anaplan makes your financial disclosure efficient and easy. It’s time to step into the future of financial disclosure.