How to prepare detailed financial reports for businesses

Financial statements are an important tool that helps businesses evaluate their budget situation, business operations and cash flows. To prepare accurate and complete financial reports , businesses need to understand accounting principles and regulations. In the following article, 1C Vietnam will introduce in detail how to set up this important report.

1. Instructions on how to prepare detailed annual financial statements

Financial reports are economic information systems that reflect the financial situation and business results of an enterprise at a certain time. Therefore, detailed and specific instructions for preparing standard financial reports are always something that many businesses are interested in. Below are the steps to prepare detailed annual financial reports:

1.1. Step 1: Summarize and arrange accounting documents

Business activities of the enterprise take place every day, expressed through arising economic and financial operations. Accounting documents are documents that reflect those operations, including output and input invoices, bank supplementary books, cash books, timesheets, payroll, warehouse receipts, warehouse delivery notes, financial records. products,...

To accurately reflect the business situation, accountants need to collect all types of documents and arrange them scientifically. During the arrangement process, accountants need to check the validity of that document.

The arrangement of documents needs to be consistent throughout the entire financial year, in chronological order or by tax list category. For original documents, accountants need to attach them together with accounting documents.

Specifically, the types of accounting documents are arranged as follows:

• Purchase documents: input invoices, warehouse receipts, accounting slips.
• Sales documents: output invoices, warehouse delivery notes, accounting notes.
• Cash documents: receipts, payment slips, cash books.
• Bank documents: bank supplementary books, payment orders, credit notes.
• Other documents: time sheets, payroll, asset records,...

Organizing documents scientifically helps accountants easily search, check, compare, and serve the purpose of recording, accounting, and preparing financial reports.

In addition to mandatory documents as prescribed by law, documents accompanying the enterprise's accounting documents may also include:

• Internal documents: Purchase request table, warehouse release request table, salary payment table,...
• Other documents: Economic contract, delivery record, acceptance record,...

1.2. Step 2: Accounting for economic operations

At the stage of completing the collection and arrangement of documents, the accountant is responsible for recording and reflecting the economic transactions arising in the books.

1.3. Step 3: Allocate monthly expenses

For fixed assets and prepaid expenses, accountants need to allocate monthly costs incurred according to reasonable and prescribed time. To do this with accounting software, employees need to take the following steps:

• Update general information, value, allocation time of fixed assets and prepaid expenses.
• Use Excel tables to track depreciation and prepaid expense allocation.
• Make monthly prepaid expense allocations
• Compare the software allocation data with the Excel table.

Note for expenses incurred in the middle of the month:

• Expenses must be allocated by day to ensure accuracy.
• Compare allocation results on software and Excel tables.

In addition, some businesses with specialized accounting may need to add a cost allocation table in Excel. Specifically:

• Costs related to production and business are specifically allocated to each user.
• Expenses related to management and sales activities are allocated in detail to each department and division.
• Expenses such as salary, social insurance, health insurance and other outside costs.

1.4. Step 4: Accounting for estimates and adjustments

At the end of the year, accountants need to review and adjust the following entries:

• The journal entry evaluates the exchange rate difference at the end of the period to ensure it accurately reflects the value of the enterprise's assets and capital.
• Provisions for setting up provisions for bad debts, provisions for devaluation of inventory, provisions for devaluation of trading securities,...
• Expenses of the year need to be deducted in advance such as 13th month salary, lunar new year bonus, audit costs, regular expenses,...
• Unearned revenue is transferred to customer appreciation and promotional programs to record revenue on time.
• Entries to reclassify investments, overdraft deposits, short-term and long-term debts, short-term and long-term loans, etc. should be made to ensure compliance with legal regulations.
• Accounting entries adjust errors (if any) to accurately reflect the financial situation of the enterprise.

1.5. Step 5: Compare book data

Checking data is the most important step in the steps of preparing financial reports. If the data is wrong or the financial reports are inaccurate, the business will have to spend a lot of time and effort to review, find the cause, adjust and redo. In this step, accountants need to compare the following data:

• Accounting data of each account, between accounts, between accounts and actual documents arising.
• The balances of the accounts from the end of the previous period are accumulated at the beginning of this period.
• Accounting documents and accounting of arising economic transactions must be consistent with each other.
• Information about quantity and value of each type of goods.
• Reconciliation between detailed books and general account books.

1.6. Step 6: Make the transfer entry

After reviewing and supplementing missing entries, accountants need to proceed with profit/loss transfer for the year.

For businesses that have not yet incurred corporate income tax payable, accountants need to carry forward last year's profit/loss before carrying forward this year's profit/loss. After the transfer, the first accounts 5, 6, 7, 8, and 9 will have no balance.

For businesses that incur corporate income tax payable, accountants need to carry out 2 transfer steps:

• The first transfer is made to determine the enterprise's profit, loss and tax payable. At this time, the entries arising in the period have been fully and accurately accounted for.
• Carryback is done to get the final profit figure of the business, after deducting the amount of tax payable.

1.7. Step 7: Complete financial reporting

The final task in the financial reporting instructions is to synthesize data from accounting books.

Based on the provisions of Circular 133/2016/TT-BTC or Circular 200/2014/TT-BTC, accountants can prepare reports for small and medium-sized enterprises or enterprises in all fields. , type, all economic sectors.

For accountants using Excel, preparing financial reports needs to be done manually, extracting each indicator on each report from the balance sheet of the accounts.

Currently, businesses can use accounting software to help prepare financial reports more easily. After completing the final profit/loss transfer step, accountants can immediately view the financial reports on the software.

2. Regulations related to financial reporting in enterprises

In Vietnam, regulations related to financial reporting are specifically expressed in the Accounting Law and guiding documents. Below are some key contents that companies need to pay attention to:

2.1. Types of financial reports needed in businesses

According to the law, a business's financial statements include 4 main types:

• Balance sheet: Is a comprehensive table, showing the value of all assets, liabilities and equity of a business at a certain time. This table shows the balance between assets and capital, indicating where the business's investment budget is being used.
• Business results report: Shows the financial results of the business over a specified period of time. This report includes revenue, gross profit, operating profit, profit before and after tax and other related indicators.
• Cash flow statement: Shows the origin and method of using a business's money in business, investment and financial activities. This report helps readers understand how businesses manage their cash, ability to repay debt, and invest in the future.
• Financial statement notes: Provide detailed and supplementary information to the data in the report, helping to better understand the business's budget situation. Explanations contribute to ensuring transparency and better understanding of the data in the 3 reports above.

2.2. What regulations do financial reports need to comply with?

Depending on the size of the business, regulations for preparing financial reports will be different, specifically as follows:

• Micro enterprises: Accounting regime can be implemented according to Circular 132/2018/TT-BTC or Circular 133/2016/TT-BTC.
• Small and medium enterprises (including micro enterprises): The accounting and financial reporting regime for these enterprises will apply according to Circular 133/2016/TT-BTC.
• Large-scale enterprises: For large enterprises, annual financial reporting will have to comply with the provisions of Circular 200/2014/TT-BTC.

2.3. What is the deadline for submitting financial reports?

Both domestic and foreign enterprises must submit annual financial reports to competent state agencies. The deadline for submitting annual financial reports is specifically specified as follows:

For non-state enterprises:

• The deadline for submission is the 90th day from the end of the annual accounting period.
• For example, if the 2023 accounting period of a non-state enterprise is January 1, 2023 to December 31, 2023, the deadline for submitting 2023 financial statements is 90 days from the end of the fiscal year, i.e. is March 30, 2024.

For state-owned enterprises:

• Quarterly financial reports: deadline is the 30th day from the end of the quarter.
• Annual financial report: deadline is the 90th day from the end of the fiscal year.

3. Some notes when making financial reports

To ensure that financial reports are prepared and presented properly, accountants need to pay attention to the following issues:

3.1. Prepare an accounting balance sheet according to Circular 200

Business accountants need to note the following points when preparing a balance sheet:

• Compliance with general principles of financial reporting preparation and presentation is a prerequisite to ensure the accuracy, honesty and transparency of the accounting balance sheet.
• Classifying assets and liabilities into short-term and long-term helps users of financial reports evaluate the solvency of a business in the short and long term.
• Enterprises need to rely on documents such as general accounting books, books, detailed accounting cards or detailed summary tables, and previous year's balance sheets to ensure the accuracy and completeness of the above information. Accounting balance sheet.

3.2. Prepare business performance reports according to Circular 200

Business results reports generally reflect the situation and operating results of the enterprise in a period (quarter, year).

The content of this type of report includes:

• Main business activities: Revenue, cost of goods sold, production costs, general business, gross profit.
• Results from financial activities: Financial income, financial expenses, financial profit/loss.
• Results from other activities: Income, expenses or other profit/loss.

According to Circular 200, when preparing a business performance report, the following two basic points should be noted:

• When preparing a business results report, businesses need to exclude revenues, income, and expenses arising from internal transactions.
• Enterprises rely on the following documents to prepare business results reports:
• Report on business results of the previous year: Is the basis for comparing and evaluating business results of the current period with the previous period.
• General accounting books and detailed accounting books for the period used for accounts from types 5 to 9: Are the basis for calculating indicators on the business results report.

3.3. Prepare cash flow reports according to Circular 200

The preparation and presentation of annual cash flow reports and interim accounting periods must comply with the provisions of Accounting Standard No. 24 and Accounting Standard No. 27.

For indicators without data, businesses do not need to present data. In this case, it is allowed to renumber the criteria but the codes must remain the same.

The cash flow statement can be prepared using two methods: direct or indirect. Enterprises can choose the method appropriate to the actual situation.

3.4. Prepare financial statement notes according to Circular 200

Financial statement notes are an indispensable aspect to provide detailed information about the data presented in the balance sheet, income statement and cash flow statement.

The financial statement notes include the following contents:

• The basis for preparing and presenting financial statements is the specific accounting policies applied to important transactions and events.
• Provide information required by accounting standards that is not presented in other financial reports.
• Supplement information not presented in other financial reports.
• Automatically synthesize data to help businesses submit tax reports, financial reports and books promptly and accurately
• Providing full management reports, meeting the needs of diverse types of businesses with many different industries.
• Supports reporting reports on any device, including phones, computers, and tablets.
• Automatically warn when errors are detected.

Above are some basic instructions on how to prepare detailed financial reports for businesses. Creating standard, scientific reports will help businesses properly assess their financial and business situation, thereby making effective decisions. To better understand the process of developing financial reports or useful information about corporate governance, don't forget to follow other articles on the 1C Vietnam website.