Many management reports are not a management tool, they are merely memorandums of information. Management reports as a management tool help with the alignment of behaviour in that the reports encourage action to take place, on a timely basis and in the correct direction. In other words, you need to measure and report on those activities the Board, management and staff need to focus on – â€œwhat gets measured gets doneâ€.
Accountants need to be great communicators to fulfil their role successfully. Gone are the days when reports could simply be drafted without consideration of the readerâ€™s needs. Reports should focus on how to best get the message across. What are the salient points? Where can this report add value to the readers understanding? And how can I deliver this report on a better practice time frame? This article is from a comprehensive white paper on decision based reporting which also covers Board and project reporting, reporting of performance measures (24/7,daily, weekly, and monthly), focusing on late projects and late reports and ways to enhance human resources data.
1. THE FOUNDATION STONES OF REPORTING
Board members and the senior management team have complained for years that they are sent too much information, yet we still insist on preparing a large month-end finance report. The cost of preparing, analyzing, and checking this information is a major burden on the accounting function, creating significant time delays and consequently minimizing the information’s value.
Over the years of studying reporting I have developed some foundation stones for reporting:
- Reports should be completed quickly on a true and fair view basis avoiding unnecessary detail. For example, is it necessary to report Sales of $23,456,327? Surely $23.5 million is much easier to read and relate to.
- Where possible, limit the report to one page, albeit sometimes a fanfold page (A3). This forces one to be concise by keeping it to commentary to highlight points and inserting only graphs that really matter.
- Have a comprehensive quality assurance process so the reports are totally consistent internally and agree to the source numbers every time.
- Use best-practice graphics—following the guidelines of Stephen Few, an expert on data visualization. Incorporate trend analysis on key lines going back at least 15 months so that you have a direct comparison to last year.
- Utilize twenty-first-century reporting tools so managers can see their reports on their tablet.
- Reports need to be completed quickly on a true and fair view basis. This requires that at all times we reflect on materiality at a group level and ensure that the numbers agree to source, are prepared using robust systems (that excludes spreadsheets), and have been reviewed for reasonableness.
For more obtain David Parmenter’s working guide “One Page reporting for the Finance team”