What is Internal Reporting?

Internal reporting involves the compilation of financial and operational information on a frequent basis, which is distributed to those within an organization who can use it to improve performance. Examples of the information included in internal reports are expense trends, failure rates, detailed sales data, and employee turnover. Internal reports are not shared with anyone outside of the firm. Only financial statements are usually issued to outsiders.

The single most crucial report that the controller should issue is the flash report. This is the ultimate in short-term information, for it is designed to inform management of issues that are occurring either right now or in the immediate past. The intent of the flash report is to warn management of problems in areas necessary for the short-term survival of the company. Thus, the report should not contain any information on which managers are unlikely to take action. A sample flash report appears in the following exhibit.