Financial reporting accuracy: Are you using the numbers right?
- 7 days ago
- 6 min read
Finance says revenue is $3.8 million
Sales report they have sold $4.2 million so that is their revenue number
Operations claim $4.5 million of work has been delivered as "done"
The cashflow report seems to indicate collections of only $2.9 million
Each team can explain its own number, and you as the CEO/Founder are still expected to know whether to put on new staff, invest in growth, borrow or pull back.
No one can show which number is accurate, which one is valid for the decision being made, or how the figures connect so you become the referee instead of the decision-maker.
If you are worried that your reports are not aligned or telling the RIGHT truth and don’t know where to start, use the free Are Your Numbers Right? Scorecard.
It is a CEO cheat sheet designed to help you identify weaknesses in definitions, source data, reconciliations, adjustments, spreadsheet controls, ownership and report timing, so that you know what are the right numbers.
Financial reporting accuracy: Different numbers are not always wrong
Your sales system, accounting system, payroll platform and operational system are all built for different purposes and so they tend to record different events at different points in time - so your numbers will not always be the same, nor should they be.
The problem starts when the business uses the same label for different measures, no one can explain the gap, or the reconciliation only happens after a decision has gone wrong.
As CEO you don't need every report to show an identical figure, but you do need to know what each figure means, where it came from and how it connects to the others.
The CRM records a contract as soon as it is signed.
Operations records the work when it is delivered.
Finance recognises the revenue under accounting rules.
The cash report records the payment when the customer finally pays.
All four numbers may be accurate within their own systems, but only one or two may be valid for the decision you are currently grappling with.
Accuracy asks whether the figure has been calculated and recorded correctly. Validity asks whether it measures what the report claims and whether it is suitable for the decision being made.
The numbers in your sales pipeline can be accurate without yet impacting revenue.
A profit report can add up perfectly while omitting labour or overhead costs that have not yet been paid.
A cash-flow forecast can be mathematically correct but still be misleading because its collection dates have not been updated.
What a trustworthy report looks like
A CEO should be able to ask straightforward questions and receive direct answers. What does this number measure? Which period does it cover? Where did the source data come from? What was it reconciled to? What changed? Who reviewed it?
The answer shouldn’t require a two-hour meeting or a search through six spreadsheets.
Reliable reporting doesn’t mean every system produces an identical number. It means the relationship between the numbers is understood, the differences are explained and the final report is supported by evidence.
Five warning signs that your reports are not ready to rely on
1. The same question produces several answers
Ask sales, operations and finance for revenue and you receive three different figures. Ask for labour costs and one report includes only gross wages, while another includes gross wages, superannuation, payroll tax, leave, contractors and workers compensation.
Different systems will produce different figures when they record different stages. The warning sign is that the figures use the same label and nobody can explain the bridge between them.
2. Nobody clearly owns the final number
One person extracts the data, another changes the spreadsheet and a third presents the report. When the number is challenged, each person points to someone else.
A reliable report needs clear responsibility for the source data, the definition, the preparation, the review and the final sign-off. Shared involvement is normal; shared uncertainty is not.
3. The report can’t be reproduced
If the person who normally prepares the report is away, another capable person should be able to follow the process and reach the same answer. If they can’t, the business doesn’t have a reporting process. It has individual knowledge supported by a spreadsheet.
This often becomes visible when a key employee leaves, a board member asks an unexpected question, or a bank requests evidence behind a figure.
4. Manual adjustments are common but poorly explained
Accruals, timing differences and corrections are normal parts of financial reporting. Unexplained plugs and recurring overrides are not.
If a figure is routinely changed to make two reports agree, ask what the adjustment represents, who approved it and why the underlying cause has not been corrected. A repeated workaround is usually evidence of an unresolved process problem.
5. There are several spreadsheet versions
Spreadsheets are useful and often necessary. They become risky when there are several copies, formulas are overwritten, adjustments are hard-coded and nobody can identify the final approved version or match things back to the source data.
The concern is not that a spreadsheet exists. It is that the number can’t be traced back to source data and reproduced without relying on one person’s memory.
As CEO are you doing "hidden" reporting work?
When reporting controls are weak, the reconciliation work doesn’t disappear, it gets done informally. The CEO starts judging which number feels plausible, who prepared them and whether the differences are large enough to impact any decisions.
Management meetings are spent debating the past instead of deciding what happens next, and hiring and investment decisions are delayed. Meanwhile forecasts are starting with uncertain opening data, and building on weak foundations.
There is also a governance cost:
The board can’t hold management to account if definitions change between meetings
Banks, funders and potential buyers become cautious when results can’t be traced and explained.
Confidence tends to fall quickly and before anyone is able to prove if the underlying business is performing well or badly.
For each key number, work through five questions.
1. What exactly are we measuring?
Write down what the measure includes, what it excludes and when it is recorded. The definition should be clear enough that two competent people using the same source data reach the same result.
2. Where does the source data come from?
There may not be one system containing the whole truth. There should be one agreed source for each component.
The CRM may own signed contract data; the operational system may own work delivered; payroll may own paid hours; the accounting system may own recognised revenue and expenditure. Each source must have a named owner responsible for its completeness and quality.
3. How is it reconciled?
Build a visible bridge between the stages rather than forcing different reports to agree.
For revenue, trace contracts signed to work delivered, invoices raised, revenue recognised and cash received. For labour, connect rostered hours to paid hours, leave, on-costs and the expense recorded in the accounts. Differences should be expected, quantified and explained before the report reaches the CEO.
4. What was adjusted?
Manual changes should be visible, documented and approved. The report should distinguish source data from later adjustments and explain any material movement from the previous version.
5. Who reviewed and signed it off?
Set a reporting timetable that names the preparer, reviewer and final approver. Agree the cut-off date, when reconciliations must be complete and how unresolved exceptions will be disclosed.
A reliable reporting close should be routine. It shouldn’t depend on a monthly rescue mission.
How to Find the weak point before trying to fix everything
The Are Your Numbers Right? Scorecard won’t recalculate every figure or replace a formal audit. It will help you test financial reporting accuracy and identify where confidence in the numbers begins to break down.
Use it to assess source ownership, definitions, reconciliation, timetable and sign-off, reproducibility, version control, spreadsheet discipline and unexplained adjustments. The result will show you where the reporting process is sound, where evidence is weak and what should be investigated first.
If the scorecard exposes problems across several areas, Fractional CFO support can establish the definitions, controls, reconciliations and reporting timetable needed to restore confidence without adding a full-time CFO role.
If you are the CEO carrying uncertainty around what number is "Right", an introductory financial clarity call can help you work out what needs attention first.
Comments