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What is Internal Reporting?

Mary McMahon
Updated May 16, 2024
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Internal reporting is a business practice which involves collecting information for internal use. Big firms rely on internal reporting to make a variety of management decisions and small companies can also benefit from internal reports. In some companies, a specific staff member is charged with internal reporting, while in others, people complete internal reports as part of their jobs. These reports are not designed to be made public and may include confidential or proprietary information.

One important area of internal reporting is financial reporting. Financial reports are used to monitor a company's financial health and can inform decisions which need to be made about the direction in which a company will be taken. For example, an internal report could reveal that one division spends a lot of money without generating very much revenue and managers could discuss how to make that division more efficient or consider the possibility of closing that division altogether.

Internal reporting can also include reports on employees. These reports can discuss efficiency, job performance, and other aspects of employee activity which may be of concern. Many companies also support whistleblowing activity, encouraging employees to file reports if they suspect that activities may be violating the law or company policy. For instance, a bookkeeper could express concern about the financial reports of another branch of a company or an employee could report a manager who was behaving inappropriately.

A basic internal report may simply provide factual information which has been collated into a single document for convenience. Others may offer commentary and insight. Companies with specific managerial approaches may generate internal reports which reflect not only factual information about the company, but provide an assessment which is designed to determine how well the company is following through on its managerial approach and stated policies. These reports can also include things like the results of employee surveys, business studies conducted by third parties asked for evaluations, and other data which might be deemed relevant to management.

When a specific employee is tasked with gathering information for internal reporting purposes, this employee is usually given free run of a company to collect information. She or he may have support staff who can perform tasks related to internal reports such as budget analysis and employee interviews. This employee must have full access in order to generate accurate and helpful internal reports for use by management. This employee is also held to a confidentiality agreement because of the sensitive nature of the materials he or she handles.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

By anon297688 — On Oct 16, 2012

I understand completely, irontoenail. It's hard to hear that someone has rubbed you the wrong way behind your back, but can be especially hard if the offender claims to be trying to help the victim by making his/her comments.

By irontoenail — On Aug 23, 2011

@indigomoth - I can understand that. One of the problems with internal reporting is that it is handled within the company. If it is a small company - or a small school - where everyone knows everyone else, it is hard not to take a critical report personally.

After all, you know the person who has just said bad things about your work.

On the other hand, it must be difficult to remain objective if you are making the report. I don't know many people who wouldn't be influenced by friendships and so forth.

Personally, I think it is better to get an outsider in to do this if you have a small business. It makes more sense and saves a lot of recrimination down the line.

By indigomoth — On Aug 22, 2011

Internal reporting can also be done in schools. I know my mother, who is a school principal, relies on internal reporting to keep her school running smoothly in between the big audit school management runs every few years.

In fact, having a working system of internal reporting in place is one of the things the audit looks at.

It can be a really difficult time of year for my mother though, because of course not all the teachers like what is said in their reports and people tend to get very defensive and unpleasant to work with during and after the report.

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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