Do you know when to create your annual financial statements?
43984, 19 Sep. 2014
If you want to make sure your year-end financial reports are 100% correct, you need to comply with accounting standards that are in place. These are known as a financial reporting framework.
Now one of the things you must do to comply is to create your financial statements each year.
Keep reading to find out when you must create them so you can comply with the Companies Act and avoid losing the trust of investors, banks and creditors who are looking to invest or extend credit.
Before we get to when to create your annual financial statements, let’s look at what they are and why they’re important
Your annual financial statements are a compilation of the hundreds of documents (receipts, invoices and vouchers) representing the transactions of the business.
It all depends on your business, but these transactions can include (but aren’t limited to):
- Payroll distribution; and
- Material purchases for inventory.
You’ll summarise and classify these into a proper trial balance for your business. After this, you can compile financial statements that make up your annual financial statements.
Annual financial statements are important because they show a summary of the financial position, performance and changes in the financial position of your company.
Now let’s look at when you must create your annual financial statements…
Here’s when to create your annual financial statements
The Companies Act states that you must compile or create your financial statements six months after your financial year end.
As you probably know, you can choose your financial year-end, but let’s assume it’s 28 February every year. This means you have to draw up your financial statements for the year ended 28 February 2014 before 31 August 2014.
Now that you know when to create annual financial statements, make sure you comply with the Companies Act.
- » Here are the four elements you must include in your annual financial statements
- » Why you should compare your financial statements to those of other companies
- » Hereâ€™s why you should analyse your financial statements regularly
- » 3 Financial statements you must monitor!
- » Follow these seven steps to complete your cash flow forecast
- » Three points you need to know about the Companies Act to avoid a R1 million government fine
- » Implement these seven internal controls to prevent inventory fraud
- » If your cashflow budget is no longer applicable, rework your strategy using these five tips
- » Use these six tips to effectively manage your financial budget