Updated: Jul 15, 2020
Keep it Simple Stupid – If you are looking for a motto when it comes to producing financial reports for private companies, keep KISS in mind. One way to keep things simple is to utilize modified cash basis or income tax basis for report preparation. These statements generally tell users what they want to know about the cash flows from business operations. Cash flow drives the business and decisions, and as an added benefit, these methods are generally the basis for maintaining books.
Often bank loan agreements, leases, vendor contracts and other third parties have standard language that require periodic GAAP basis financial reports to be prepared for review. GAAP (Generally Accepted Accounting Principles) are complex in nature and a costly manner to maintain financial records, especially when one needs to adjust simpler bookkeeping methods for external reporting. For a private growth company, it’s like taking a sledgehammer to a gnat.
Through many years of advising and assisting clients with financial reporting, the team at The KF Group has assisted clients in following Albert Einstein’s advice to keep everything simple, but no simpler. Often by simply asking to provide modified cash basis or tax basis financial reports, we have saved clients thousands of dollars in accounting fees and internal time investment.
Make everything as simple as possible, but not simpler.
We at The KF Group have the experience and expertise to produce the most complex financial statements for clients when such are necessary. We perform complex consolidations, advise on post transaction accounting, prepare reports for utilization in filings with the SEC and help clients understand complex adoptions of new standards. However, we also know when it’s enough to just KISS those reports.