Financial Analysis

Scope: Financial analysis services cover the full range of accounting and financial analytics for management’s decision support, compliance with accounting, regulatory and tax records management and tax reporting, and for banking and cash management.  Such services can include the full range of accounting functions of a certified public accountant (“CPA”, in the USA) or chartered accountant (“CA”, in the UK and other countries), except for certification of audit or other “attest” services that are uniquely Broadly defined, “financial analysis” services may include analysis and recommendations regarding trends or specific ratios in a business organization’s income statement or balance sheet and providing periodic reports for management of transactions in the covered period. Narrowly defined, “financial analysis” services may include specific tasks or a program of tasks not involving the company’s ongoing operations.  For example, whether by database analysis or software engineering, the service provider could provide financial analysis of third-party financial information used in making decisions for buying, selling or holding portfolio investments.  Other tasks might include creation and maintenance of databases for decision-making, financial ratio analysis, break-even projections based on various financial and operational scenarios, and preparation of summaries for presentation to the board of directors, prospective customers and bank lenders.  Insurance companies may use outsourced (or captive) financial services for the design and implementation of new insurance and risk-management products. Technical requirements: For broadly defined outsourced financial analysis services, the service provider must have access to all transactional data and appropriate financial analytics and reporting software.  For narrowly defined services, the service provider needs only summary information for comparison against benchmark data or market research determined without reference to internal transactions. Benefits: Outsourcing of financial services may enable smaller companies to obtain more highly sophisticated financial analysis than would be available from the company’s employees.   External service providers offer a combination of CA’s, CPA’s, MBA’s and statisticians and knowledge management tools.   Such benefits need to be tempered against the risks of loss of technical skills internally, delays arising from distance and the need for integration of internal financial operations with audits by CPA’s and CA’s.