Management Reporting

• Seda Bayraktar, CPA
• Partner
• Accounting Compliance & Reporting
• E-mail to Seda

How do you wrap-up the Turkish GAAP financial results required for decision making?

The quality of management information is highly important to deliver the best possible basis for decision-making to the company management. The management report helps the management to see what has gone wrong and how they can improve their business and financial results.

Management reports look ahead - they focus on forecasting and decision-making. They use information to advise on how the business can move forward, for example, should a company buy another, should it invest in new equipment. Management accounting involves using the internal financial information available to managers, as well as that information which companies must publish by law. This contributes to forward planning, reviewing and analysing the performance of the business.

Implementation of management reporting is one of the most important steps a company can take to manage the daily business and create and manage the control environment. 

In Turkey the financial statements of the companies are prepared under rules to comply with Turkish Tax Laws unless the companies meet the criteria mentioned in the Turkish Commercial Code for the preparation of their financial statements in accordance with the Turkish Accounting Standards that are similar to International Financial Reporting Standards. Therefore, the statutory financial statements are obviously inadequate in terms of helping management with meeting the objectives mentioned above. 

Management reporting offers an opportunity to report the financial results and significant issues properly in a professional manner if it is prepared in accordance with "true and fair view” and designed properly to include all necessary information required for the best decision making process. 

The management report may include the followings at minimum:

• Balance sheet and profit and loss statement with comparable figures; 
• Comparison of budgeted, forecasted and actual figures;
• Break-downs of significant balance sheet and profit and loss statement items;
• Information for unusual items;
• Fluctuation analysis including financial ratios:
• Foreign currency position.;
• Trade debtors and aged trade debtor analysis;
• Trade creditors and aged trade creditor analysis;
• Stock details and aging;
• Details of fixed assets;
• Details of statutory and/or deferred taxes;
• Any other financial and non-financial data required for decision making of the management;
• Significant issues section that will summarize the financial or operational risks of the company.

The major characteristic of the management reports would be to meet all of the goals set out by the management. Furthermore, below are the other keycharacteristics of the management reports:

• Management reports need to be accurate. They need to represent the results accurately at that point in time, and thus be convincing to the management; 
• Information must be timely, otherwise it is useless; 
• Management reports should be simple and clear so that the report could be understood even by the non-finance managers.

We as the Cerebra team have a wealth of knowledge and experience to help your firm take advantage of management reporting. We have a professional staff with a proven track record of improving and developing management reporting that is effective and timely for management. We would love the opportunity to speak with you about how we can help your firm — please contact us.