Financial reporting software turns accounting records into reports such as income statements, balance sheets and cash flow statements. For a group, it also needs to support the entity, currency and reporting basis behind each view.
The most useful test is a familiar one: choose a figure in the pack and explain where it came from. A report that finance can trace and reproduce is worth more than a dashboard that only looks complete.
Which financial statements does the business need?
List the outputs, audiences and deadlines before discussing software. Entity accounts, consolidated management reports and statutory statements can use related data while serving different purposes.
Define the reporting basis for each output. Management adjustments or a local accounting treatment can create legitimate differences between reports. The team needs a controlled explanation of those differences, even when the same platform produces both.
Use a report register to make the requirements concrete:
| Output | Scope to specify | Reconciliation to request |
|---|---|---|
| Entity income statement | Entity, period, accounting basis and dimensions | Report lines back to the relevant ledger accounts |
| Entity balance sheet | Reporting date, currency and adjustment basis | Opening balances, movements and closing balances |
| Cash flow statement | Method, account mappings and non-cash adjustments | Movement in cash back to the balance sheet |
| Consolidated statements | Included entities, translation and group adjustments | Entity totals through eliminations to the group result |
| Statutory filing package | Jurisdiction, required statements, notes and disclosures | Approved accounts to the figures in the filing |
A platform may supply the accounting figures while another tool prepares the statutory package. Put that boundary in the buying brief. The management reporting guide covers the separate job of combining these figures with operating measures and decisions for the board.
What should the data structure support?
Start with the chart of accounts and the dimensions people need to analyse. Entity, department and product may belong in separate fields instead of multiplying account codes for every combination.
Check how finance validates and maintains those fields. A flexible report builder cannot recover a department that nobody recorded, or resolve two teams using the same label differently.
Ask the vendor to build a report from a representative extract. Include transactions with missing dimensions and show how the team finds and corrects them. That exercise tests the data process as well as the report designer.
Can a reviewer trace and reproduce the numbers?
Choose a material balance and drill down through the accounts to the supporting transactions. Inspect adjustments, filters, currency settings and the period included.
Then save the reporting position and make a later change to the books. The team should understand whether a refreshed report changes and how it preserves the version previously approved. Live information and a signed-off reporting pack have different uses.
For a group, repeat the exercise on the consolidated result. The financial consolidation guide explains the mappings and adjustments that sit between entity accounts and group statements.
How do accounting adjustments reach the reporting pack?
Use one closed period and trace each material adjustment through the pack. The finance team should be able to reproduce the posted actuals before adding forecasts or management commentary.
| Input | What to trace | Keep distinct from |
|---|---|---|
| Accrual or prepaid expense | Supporting calculation, journal and income-statement period | A forecast of future spending |
| Intercompany balance | Entity entries, reconciliation and group elimination | External revenue or expense |
| Currency adjustment | Original currency, rate, accounting basis and report effect | A cash movement |
| Revenue schedule | Contract dates, releases and the ledger balance | Invoices, receipts and ARR |
| Budget or forecast | Named source, version, assumptions and refresh date | Posted actuals |
A report can combine actuals and planning data if it identifies those sources and definitions. That does not make a ledger report a complete planning system. Ask the reviewer to select a variance, trace the actual to its posting and identify the budget version used for comparison.
Use the financial close checklist for sign-off and the management reporting example for commentary and operating measures.
Does the software produce statutory accounts automatically?
Don't infer that from a financial reporting label. Check the required statement formats, notes, disclosures, local filing requirements and review process for each jurisdiction. A ledger report may supply the figures without producing the complete filing package.
The same care applies to multiple accounting bases. Ask the vendor to show the actual differences relevant to the business and how it records, reviews and reports them. A country name in a feature list is not a substitute for that demonstration.
Where does Light fit?
Light's financial reporting product works with the accounting data in the platform. Its Google Sheets integration provides another way to use ledger information in a reporting workflow.
Evaluate both against the outputs your team needs. Check permissions, refresh behaviour, drill-down and the treatment of manual adjustments. If people export a report, agree how they label and control the version.
How do you decide whether the change worked?
Measure preparation time, recurring manual adjustments and the time needed to answer follow-up questions. Record how often the team rebuilds a report because its definitions or source data changed.
A useful reporting setup makes the number easier to explain and the process easier to repeat. Bring a current pack to a Light demonstration and use it as the acceptance test.
