Public agencies must inform the public about its activities. This “accounting” includes expenditures and activities. This includes future activities. The information included should not be “washed.” It should include the good and bad about the company. Not only does a report advise the public what the company is doing, but it also forces the company to look at its goals, which means that it could better manage activities and expenditures. While public agencies must file a report, whether quarterly or annual, private companies, unless required by the Securities and Exchange Commission, are not required to file and/or publish a report.
Even if your business structure does not require you to file a report, it may benefit your business for you to take the time to create a report. However, you need to choose between annual or quarterly reporting. If you are using the report to garner support, you might want to choose to report quarterly. If you are just disseminating information, you may want to choose an annual report. However, the detail contained in quarterly reports not only keeps the public’s mind on your business but that detail also shows what you need to change to make your company perform better.
Quarterly Reports vs. Annual Reports
While quarterly reports provide more information, critics of the quarterly report believe that short-term results are overemphasized. They believe that companies may not see the long-term future of the company because they are only looking at short-term reports.
However, quarterly reports do help with more accurate reporting. Businesses are not as apt to remove negative information from their reports.
An annual report looks at the entire year instead of each quarter. It’s easier to leave out negative information. However, businesses get the benefit of planning better long-term goals since they are looking at themselves for a year at a time instead of three months at a time.
As a result of these shortcomings with either type of report, businesses do not get all of the benefits of short-term and long-term planning at once. A company may, instead decide to create quarterly reports and then an annual report as a summary. This way, the business not only sees short-term goals and is able to compare the same previous quarters to see profits and losses, but it could also use an annual report as a summary to plan long-term goals based on overall profit and loss throughout the year.
Additional Cons of Quarterly Reporting
Because quarterly reporting does tend to lead to rules violations and accounting gimmicks so that a poor quarter is reported as better than it was, many businesses prefer annual reports. The violations and gimmicks happen because businesses are looking at just one quarter. Every business goes through ups and downs – some quarters are going to be slower than others. When using only an annual report, the temptation to make a quarterly report look better is not in the minds of the report creators.
However, when quarterly reports are combined with a summarizing annual report, the report creators have the benefit of the more detailed quarterlies along with the long-term outlook the annual report provides.
In addition to doing quarterlies and an annual report, using an outside firm to create the reports gives you a more accurate report as long as your business provides all the necessary information.
Additional Benefits of Annual Reports
Annual reports also have the benefit of generating public support for a company. When the reader has more information about a company, he or she may be more willing to invest in the business. Annual reports may also be used to educate the public on the business’s planning decisions, including urban renewal and zoning ordinances.
Contact France Law Firm
If you believe that your business’s profitability will benefit from quarterly or annual reports – or both, contact France Law Firm to set up a consultation to discuss your options. If you are required to file a quarterly or annual report, contact our firm to help prepare your required reports.