Statutory accounts serve their purpose. They meet regulatory requirements and provide a snapshot of past financial performance. However, many business owners and management teams find that annual accounts do not provide the financial detail they need to support day-to-day or forward-looking decisions.
In these situations, management accounts and structured internal reporting become necessary tools to support planning, budgeting, and control.
The limits of statutory reporting
Statutory accounts are often produced several months after the financial year-end. By the time they are finalised and signed off, most of the information is already outdated. These reports are designed for external use, not for supporting operational decisions.
In contrast, management-focused reporting is more detailed, prepared more frequently, and tailored to the needs of the business. It may include:
- Profit and loss summaries by service line, department, or location
- Comparisons against budget with variance commentary
- Monthly or quarterly cash flow forecasts
- Working capital reporting
- Gross margin and overhead analysis
These reports are used to assess ongoing performance and make vital decisions about pricing, hiring, investment, or expansion.
Financial studies that support better internal reporting
Businesses often reach a stage where they need to review how financial data is structured and reported internally. A financial study can be used to assess whether current reports are accurate, timely, and useful.
This may involve:
- Reviewing the current chart of accounts and reporting categories
- Establishing reporting packs for use by directors or department heads
- Introducing short-term forecasting tools
- Improving the timing and consistency of monthly or quarterly reports
These adjustments help ensure that financial information is more aligned with internal management needs.
The role of management accounts
Management accounts provide a structured view of how the
business is performing throughout the year. They are
commonly prepared on a monthly or quarterly basis and help senior
teams stay informed and make decisions based on current data.
They can include:
- Operating results broken down by function or revenue stream
- Movement in balance sheet items
- Cash position and projected cash availability
- Cost tracking with comparison to previous periods
- Written analysis to explain significant movements
These reports become particularly useful when paired with budgets and forecasts that are updated regularly.
Supporting more informed decision-making
Over time, improved internal reporting supports stronger financial discipline. Businesses can set more realistic targets, monitor actual performance more closely, and adjust sooner when needed.
Examples include:
- Revising sales targets based on seasonal trends
- Adjusting staff costs in response to output or utilisation
- Planning for capital investments based on projected cash and investment goals and aligned with business growth
- Improving billing cycles and working capital planning
This type of reporting does not replace statutory accounts — it works alongside them to support ongoing oversight and planning.
How BDO Malta can assist
BDO Malta works with companies that are looking to improve their internal financial reporting. We assist in the preparation of management accounts, the design of reporting packs, and the development of tools such as forecasts and budgets. We also carry out financial studies where needed to assess and refine existing reporting structures.
If your statutory accounts are no longer giving you what you need to run the business effectively, we can help you build reporting tools that support day-to-day and future planning.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
