What is Internal Reporting?

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.