Financial Statements & Reporting · United StatesYour books record what happened. Financial statements explain it to the people who need to know.
We turn reconciled books into monthly management reports and year-end statements, prepared on the basis your reader expects: US GAAP for many lenders and investors, tax basis where the return is the main audience.
Accounting
At a glance
- Authorities
- Internal Revenue Service (IRS) · Financial Accounting Standards Board (FASB) · State departments of revenue
- Forms & references
- Form 1120 Schedule LSchedule M-1Form 1120-SForm 1065Form 5472
- Frameworks
- US GAAP or income tax basis, chosen for the reader
- Statements
- Balance sheet, income statement, cash flows and notes where needed
- Frequency
- Monthly or quarterly management reports; annual statements
- Links to
- Schedules L and M-1 on Forms 1120, 1120-S and 1065
Overview
What it is, and why it matters.
Financial statements sit one step after bookkeeping. They take a closed set of books and present them as a balance sheet, income statement, statement of cash flows and, where needed, notes, after period-end adjustments such as accruals, prepaid expenses, depreciation and deferred revenue.
US private companies have no general legal requirement to prepare GAAP statements, so the right framework depends on the reader. Banks, investors and buyers often ask for accrual statements under US GAAP, while many owner-managed businesses are well served by tax-basis statements that tie directly to Form 1120, 1120-S or 1065.
The year-end balance sheet also feeds the return itself. Where required, Schedule L reports the balance sheet per books and Schedule M-1 reconciles book income to taxable income. When the statements are right, those schedules become a transcription rather than a project.
Who needs it
Who typically needs it.
- 01
Businesses applying for credit
Companies seeking a bank line, SBA-backed loan or equipment finance that need year-end and interim statements in a standard format.
- 02
Investor-funded startups
Delaware C corporations that send quarterly updates to investors and need accrual revenue, deferred revenue and a clear view of cash runway.
- 03
US subsidiaries of foreign parents
US companies owned by a UK or Pakistani group that must feed their results into the parent’s own accounts and reporting framework.
- 04
Owners planning a sale or new partner
Businesses heading into due diligence, where a buyer will test revenue recognition, working capital and owner add-backs.
- 05
Partnerships and multi-member LLCs
Businesses filing Form 1065 that need statements supporting partners’ capital accounts and the return’s balance sheet.
When you need it
The moments that usually trigger it.
- Your bank has asked for year-end financial statements and a year-to-date interim set.
- An investor wants monthly or quarterly reporting with accrual revenue, not bank balances.
- Your parent company abroad needs the US subsidiary’s figures for its group accounts.
- You carry deferred revenue, inventory or fixed assets, and your statements don’t reflect them.
- A buyer or incoming partner has started due diligence.
- A state license, surety bond or government contract requires financial statements.
Scope
Exactly what we handle.
Our engagement letter lists these specifically, so you know what is included before any work begins.
- 01
Period-end adjustments: accruals, prepayments, depreciation, amortization, deferred revenue and inventory based on counts you provide.
- 02
Monthly or quarterly management reports with commentary on margin, cash and the balance sheet.
- 03
Annual balance sheet, income statement and statement of cash flows, with notes where the reader expects them.
- 04
A reconciliation of book income to taxable income supporting Schedule M-1 and the return’s balance sheet.
- 05
Budget-to-actual reports and simple cash-flow forecasts, where agreed.
- 06
Reporting packs for a foreign parent, mapped to its chart of accounts and year-end.
- 07
Supporting schedules for an external CPA’s audit or review, if one is required.
The process
How it runs, step by step.
Timings depend on the authority and on how quickly documents come together. We tell you what’s typical for your case at the start.
Start with a conversationAgree the reader and framework
We confirm who will use the statements (you, a bank, investors or a parent company) and whether US GAAP, tax basis or a lender’s own format applies.
Confirm the books are closed
We check that every account is reconciled for the period. If the books need work first, we scope it as bookkeeping or bank reconciliation.
Post period-end adjustments
Accruals, depreciation, deferred revenue, inventory and reclassifications are posted, each with support you can see.
Draft and review with you
You receive draft statements and a short list of judgment calls, such as how revenue on multi-month contracts is recognized.
Finalize and hand off
We issue final statements and the trial balance to your tax preparer, lender or CPA, and roll the adjustments forward to the next period.
What we’ll need
The information to have ready.
A typical checklist. After the first conversation we send a version specific to your situation, so you don’t gather anything you don’t need.
Books and records
- Access to your accounting file, or a trial balance
- Bank, card and loan statements to the period end
- Prior year statements and tax return
Period-end information
- Customer contracts where revenue spans more than one period
- Inventory count or valuation at period end, if relevant
- Fixed asset purchases and disposals
- Bills received after period end that relate to it
What the reader needs
- Lender covenants or reporting requirements
- Investor reporting template or the parent company’s chart of accounts
- Any required framework or deadline
Please don’t email passports or bank statements. Once we’ve spoken, you’ll get access to a secure upload.
Common mistakes
Where this usually goes wrong.
The problems we are most often asked to fix, and what they tend to cost.
- Mistake 01
Sending cash-basis figures where accrual is expected
A lender reading cash-basis statements may see a strong quarter that is really a timing difference. Mismatched expectations cause delays or tougher loan terms.
- Mistake 02
Booking annual contracts as revenue on day one
For subscription and retainer businesses, recognizing a full year’s invoice when it is issued overstates revenue and understates what you still owe customers in service.
- Mistake 03
A balance sheet that doesn’t match the return
If Schedule L on your Form 1120 or 1065 doesn’t agree with the statements you gave your bank, expect questions from both.
- Mistake 04
Describing prepared statements as reviewed or audited
Only a licensed CPA firm can issue a review or audit report. Calling internal statements “reviewed” can mislead a lender and may breach loan terms.
Worth knowing
The limits, stated upfront.
We prepare financial statements; we do not issue audit, review or compilation reports. Where one is required, an independent licensed CPA firm must perform that engagement.
Statements are only as reliable as the underlying records and the information you give us, including inventory counts and contract terms.
Complex areas such as stock-based compensation, business combinations or lease accounting under ASC 842 may need specialist input, and we will flag them.
We follow the format a lender or investor specifies, but their credit or investment decision is theirs.
Questions
Financial Statements & Reporting: frequently asked.
If yours isn’t here, ask us directly. We’ll answer in plain terms.
Ask a questionDo US private companies have to prepare GAAP financial statements?
Generally no; there is no blanket federal requirement for private companies to follow US GAAP. The requirement usually comes from a lender, investor, franchisor or licensing body, so we start by asking who will read the statements.
What is a tax-basis financial statement?
It is a set of statements prepared using the rules of your federal income tax return rather than US GAAP. It is simpler and ties directly to the return, but some lenders and investors won’t accept it.
Can you prepare audited or reviewed financial statements?
We prepare the statements and supporting schedules, but the audit or review report itself must come from an independent licensed CPA firm. We can work alongside the CPA you choose and answer their requests.
How do monthly management reports differ from year-end statements?
Management reports are for you: quicker, with commentary, and sometimes based on estimates. Year-end statements are more complete, and they are what lenders, investors and your tax preparer rely on.
Our US company is owned by a UK or Pakistani parent. Can you report in the parent’s format?
Yes. We prepare the US statements plus a reporting pack mapped to the parent’s chart of accounts and year-end. Converting figures to IFRS, FRS 102 or a Pakistani framework for consolidation may need input from the group’s own accountants or auditors.
What is Schedule L, and why does it matter?
Schedule L is the balance sheet section of Forms 1120, 1120-S and 1065, reporting your balance sheet per books. Smaller entities can be exempt from completing it, but where it is required it should agree with your year-end statements.
Related
Often needed alongside this.
The equivalent in our other countries
Speak with a consultant
Talk to us about financial Statements & Reporting.
Pick the closest match and we’ll take it from there. You’ll get a written scope and fee before any work begins.
Or use our three-step guide, or email hello@fiscorra.com
