Seven Basic Steps of my Monthly Review Process (September 2023)

I review multiple financial statements every month. While I don’t have an actual checklist and there are variations from one client to the next, I tend to follow the same process each time.

  1. I almost always start with a trend report of the income statement. Reporting capabilities vary across accounting programs but I’m typically looking at a minimum of six months. One of my clients has a program that produces a trailing 12 month report. It’s perfect for this purpose. Another only produces 4 months and for that one I keep a spreadsheet so I can look at a longer period of time. I’m looking for anomalies and to make sure nothing is missed (rent, is a good example). I’m also looking at both dollars and percent of each line item to total revenue. Here’s a short video if you’d like to hear more.
  2. Next I turn to how the company did vs. budget. Do any deviations tell a story? Do any suggest something wrong in the accounting for the month? What can I learn about the business by comparing actual to budget? Have there been changes in the business since we set the budget?  Could we have budgeted a certain line item in a better way and can we incorporate that into the next budgeting cycle?
  3. My third step is to compare to the same period last year. Generally, I believe that I incorporated everything I knew about last year into the current year budget but it’s always a good comparison anyway.
  4. Usually, I turn to the balance sheet next. Again, I’m looking for a trend. What’s changed? Is inventory or receivables out of line? Do we understand trends in prepaid and accrual accounts?  Are we validating the accuracy of deferred revenue?
  5. The statement of cash flows is next on my list. Some accounting systems do a good job of producing trend reporting. Others don’t so I make sure we maintain a spreadsheet. If you’re familiar with this report, you know it’s a listing of changes in balance sheet accounts from the prior month organized in a specific way. That said, there are times when I’ll notice something on this report that I didn’t notice during the balance sheet review.
  6. Next, I turn to various KPIs (Key Performance Indicators). These vary by company. They might include employee utilization, days receivable outstanding, revenue/employee, or inventory turns.
  7. Finally, there are usually a handful of accounts where I ask to see transaction detail. Sometimes I find a mistake but usually the actual activity tells me something about what’s going on in the business. Hopefully, this is confirmatory as I’ve had conversations during the month about important changes. I don’t like surprises at month end.

Use this as a guide.  Drop me a note and let me know how it worked for you.

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to [email protected]


The archive of these monthly newsletters is posted at the Resources section of

your cash is flowing.  know where.®
Ken Homza
Copyright @ 2023 Homza Consulting, Inc.


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