While most SME’s (Small to Medium Enterprises) will produce a simple profit and loss and balance sheet, there are specific guidelines to follow in preparing financial reports, whether they are needed for banks, tax or other purposes.

Businesses/Companies have various reporting requirements to meet subject to a range of regulations and necessities. How a set of financial accounts/reports are presented and prepared is usually determined by applying the Australian Accounting Standards, as produced by the Australian Accounting Standards Board (“AASB”). These standards are now amended to accommodate the necessity to be able to produce accounts by applying common standards from around the world and the current AASB’s have an equivalent International Financial Reporting Standard (“IFRS”). Generally there are two type of financial reports that can be produced by a business. These being:

  1. Special Purpose Financial Reports: These reports can be prepare in virtually any format that the business requires or desires them to be in. Generally as a minimum they will be made up of a Profit and Loss Account and a Balance Sheet, however they may contain varying degrees of other reporting requirements as established by the directors/owners/members. These are the type of reports that are prepared by most SME’s.
  2. General Purpose Financial Reports: These reports are prepared by applying the AASB’s and will generally follow a specified format although there still remains some ability to vary this. These reports are prepared by entities as determined under the Corporations Act and the application of the Statement of Accounting Concepts (SAC) 1 and 2. As a general guide any company that has a large number of employees, foreign ownership or a perceived high number of end users that are reliant on the financial accounts to make decisions regarding the application of their resources, then general purpose accounts may need to be prepared – however application and interpretation of these rules can vary.

A good accounting firm will provide a team of experts with a wide range of skills that can assist all businesses to produce the accounts they need to meet their requirements on a timely and cost effective basis. By applying specialist skills they are able to produce accounts ranging from IFRS level to Special Purpose bank financials quickly.