A financial transaction is a business event which involves at least two parties and can impact the finances of those parties. It causes at minimum one of the parties to alter how to run financial deals efficiently and securely the amount of money in its accounts (assets and liabilities). The timing of financial transactions will vary based on whether the entity follows cash or accrual accounting guidelines. These methods have an impact on tax reporting and taxability.

Stakeholders rely on financial statements to evaluate the performance of a company and their investments, including shares and loans. Accurate and transparent financial transactions and reporting are an absolute requirement for all companies.

The purpose behind any financial statement is to provide information that aids those who are interested in the company’s position and long term goals. Financial statements can include the balance sheet, income statement and a cash flow statement. The first two are static statements which show a company’s financial position, while the third one is forecast based upon the current trends.

It is challenging to provide complete and transparent financial information and transactions. The most simple method for recording a financial transaction is through journal entries, which requires accountants to manually input debits and credits as well as account numbers for each individual entry. This is time consuming and prone to error.

An alternative to this is to make a unified financial statement, also known as a consolidated financial statement. This report shows the combined results of all financial transactions in each institution within a university. By substantiating all transactions at the time of the entry and reviewing material transactions on a quarterly basis the university can prepare consolidated financial statements that are free of any material misstatements.