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Financial Transactions and Reporting

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Financial reports and transactions are the methods of recording and analyzing the flow of funds within an entity. This is a critical process that must be performed accurately and with integrity to ensure reliable, accurate financial statements and ensure compliance with external requirements. This article will outline the general requirements and best practices for transaction substantiation and the documentation required to prove any financial transaction.

A financial transaction is an adjustment in the totality of the assets and liabilities that are recorded by an institution, or in its component components, as a result of interactions between institutional units that are conducted for commercial considerations. It does not include the writing-off or writing-down of bad debts done by creditors, or the unilateral cancellation of a debt by a debtor, which are recorded as other changes in the amount of assets account.

Substantiation refers to the exact original source documentation or work documents that support an financial transaction. The documentation should be concise enough to answer questions such as who whom, what, when and why. The proof should also connect back to the general ledger details of the transaction.

A solid financial report will demonstrate your company’s financial integrity and build confidence with creditors and investors. This will also ensure that you are on top of tax laws. A web-based reporting tool, such as datapine, will enable you to prepare financial statements in a matter of minutes. This will let you concentrate on more important tasks, such as building a plan of action.