Special purpose financial reports (SPFRs) are a complete set of financial statements. While this may just sound like a profit and loss (P&L) and balance sheet, SPFRs generally include the following:
- Director/trustee/partner declaration
- Compilation report
- Profit and loss
- Balance sheet
- Notes to the financial statements
What Makes SPFRs So Special?
The additional information included in the director’s declaration, compilation reports and notes to the financial statements make SPFRs special as they ensure the financial statements have been prepared to meet the financial information needs of specific users.
This declaration assigns responsibility for the accuracy of the financial information provided in the SPFRs.
This is achieved by the relevant individual (involved in the entity) declaring that the entity’s financial position is presented fairly and in accordance with the accounting policies described in the ‘Notes’ to the financial statements.
This declaration will also generally state that the relevant individual believes there are reasonable grounds to believe that the entity is solvent.
This is important in ensuring that the responsibility for the accuracy of the financial information in the SPFRs rests with the individual signing the declaration rather than the accountant.
This report accompanies the compiled financial statements and generally states that the financial statements are the representation of the management of the organisation and have not been reviewed or audited.
Importantly, while the accountant states he/she has compiled the SPFRs in accordance with relevant accounting policies (outlined in the notes) and APES 315 (accounting professional and ethical standards), the compilation report offers no opinion or assurances on the financial statements themselves.
The compilation report is therefore critical in maintaining the professional integrity of the accountant by outlining the key responsibilities and restrictions for the information contained in the financial reports of the SPFRs.
Notes to Financial Statements
The notes to financial statements are used to give additional information to financial statement users and outline some of the assumptions and assertions in the methods used in preparing the financial reports.
Generally, in SPFRs the notes will set out to explain the entity is not a reporting entity, whether the method of accounting that the entity uses is cash basis or accruals basis, and the accounting policies that have been adopted in the preparation of financial statements. Such accounting policies may include the way in which stock has been accounted for or the method used to value fixed assets.
Combining the traditional financial data with the above declaration, report and notes ensures that SPFRs meet the financial information needs of specific users while assigning responsibility of the content of the reports to the relevant parties.
SPFRs Now Available in Intuit QuickBooks Online
Now that you know why SPFRs are special, Intuit has released a special new development in Intuit QuickBooks Online.
SPFRs can now be generated straight out of Intuit QuickBooks Online. This is potentially a huge time-saver for most accountants.
Previously, accountants would need to journal information out of Intuit QuickBooks Online and into a separate standalone ledger program to generate SPFRs. This data transposition is a poor use of a staff member’s time. With SPFRs now being generated straight out of Intuit QuickBooks Online, it will save accountants an average of one hour per client in data transposition.
This will mean that SPFRs can be prepared more efficiently, resulting in happier staff. This additional time saved can now be spent in assisting the client in a more meaningful way, which in turn will lead to happier clients.
What SPFR Packs Are Available in QuickBooks Online?
SPFR packs now exist in Intuit QuickBooks Online for each of the following entity types:
- Sole traders
Watch this short video to find out how to access SPFRs in QuickBooks Online: http://intuit.me/28ZVDAE
Users will still need to input a few variables such as director names and partner details (and we are working on ways to automatically pull these values from QBO in the future).
How flexible are the SPFRs?
The SPFRs are very flexible in Intuit QuickBooks Online. Accountants can easily change the reports included in the SPFR package for clients.
Accountants may wish to change to a different P&L format or an ‘Expanded Balance Sheet’ or even include a ‘Statement of Cashflow’ for a specific client.
They may also have full flexibility in changing dates and comparative periods. Additionally, all text in the SPFRs can be easily edited based on the organisation’s specific needs
As an accountant, once you’re happy with the SPFR it can be formatted to PDF, Word or emailed directly to your client.
This is a really special development in how accountants can continue to build relationships with their clients using QuickBooks Online.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.