A financial transaction is a business event that involves at minimum two parties and can impact the finances of those parties. It causes at minimum one of the parties to alter the amount of money that is in its accounts (assets and liabilities). The timing of a financial transaction may differ depending on whether the entity is using the accrual or cash accounting method. These accounting methods can affect tax reporting and taxability.

Financial statements are used by stakeholders to assess the health of an organization and its investments like stocks and loans. All companies must ensure their financial transactions are accurate and transparent.

The primary purpose of any financial statement is to provide information to help people understand the company’s current position and its long-term objectives. Financial statements include a cash flow, income and balance sheet. The first two are static images of the company’s financials and the final one is a forecast of future performance dependent on the current trends and plans.

The ability to provide accurate and transparent financial transactions and reports is a complex process. Accounting journals are the simplest method of recording the financial transactions. Each entry is manually entered by accountants. This is time-consuming and susceptible to errors.

An alternative to this is to use a single financial statement, also referred to as a consolidated financial statement. This report shows the combined results of every financial transaction at each institution within a university. By substantiating each transaction at the time of the entry and examining all material transactions on a quarterly basis, the university can create an consolidated financial statement that is free of material errors.

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