Financial reporting standards in hospitality and your obligations

Financial reporting plays a vital role in sustaining operations and attracting investors.

To maintain transparency and accuracy in financial reporting, hospitality businesses must adhere to specific standards and regulations.

These are governed by regulatory bodies such as the Financial Reporting Council (FRC) and the International Financial Reporting Standards (IFRS).

These standards provide a framework for consistent and transparent financial reporting.

Key financial reporting standards for hospitality

In short, these bodies advocate for the following:

  • Revenue recognition standards: Hospitality businesses must adhere to strict rules for recognising revenue. This includes accounting for room bookings, food services, and other sources of income accurately.
  • Lease accounting standards: The lease accounting standards require businesses to report lease obligations on their balance sheets, affecting financial ratios and disclosures.
  • Fair value measurement: Assets and liabilities are evaluated at fair value, impacting the valuation of properties and investments in the hospitality sector.
  • Impairment of assets: Businesses must regularly review assets for impairment, considering factors like changes in market conditions and customer demand.

In addition to these standards, hospitality businesses have strict regulations on how they are taxed, and by which means they can report income.

How to stay compliant: Our advice to you

Efficiently managing and integrating sophisticated accounting software enhances financial reporting efficiency for businesses in the hospitality sector.

We strongly recommend focusing on the implementation of high-quality accounting software solutions that seamlessly integrate with your existing infrastructure, facilitating meticulous adherence to compliance standards.

Amidst the array of available applications, we specialise in deploying and supporting top-tier solutions tailored precisely to the unique requirements of your business.

Our team of seasoned business advisers is ready to assist you in determining the most suitable software compatible with your systems and providing expert guidance on optimal integration strategies.

Furthermore, we recommend engaging with proficient financial experts who can comprehensively outline your tax obligations and compliance prerequisites. A robust understanding of these elements positions your business for steadfast growth, expansion, and heightened profitability.

Reach out to one of the Finzo team today for a consultation.

Posted in Blog, SMEs, Tax.