Financial transactions and reporting is the process of recording and analyzing the flow of money within an entity. It is a vital procedure that must be performed with precision and integrity to ensure reliable financial reports and to ensure compliance with external requirements. This article will provide the general requirements and best practices for transaction substantiation, and the documentation required to support all financial transactions.
A financial transaction is an alteration in the total of the assets and liabilities recorded by an institution, or in its component components, as a consequence of interactions between institutions which are conducted in the interest of commercial gain. This does not include the cancellation or reduction of bad debts or unilateral cancellation by a creditor of a liability. These are recorded as different changes to the volume of assets.
Substantiation is the detailed original source documents or work papers that support the financial transaction. The documentation should be concise enough to answer the questions who whom, what, when and why. The proof must be linked to the general ledger transactions details.
A strong financial report will prove your company’s financial stability to creditors and investors and establish confidence. It can also help you keep in compliance with tax laws. A web-based reporting tool like datapine will enable you to prepare financial statements in no time. This will let you concentrate on more important tasks like creating a strategic plan.