Financial reporting

Producing regular reports for your board of trustees

Financial reporting is a critical component of good governance for charities and non-profit organisations. It ensures transparency, accountability, and effective financial management. This guide will help committee members and financial managers understand how to create meaningful and useful financial reports.

The purpose of financial reports

Reports serve a range of important functions:

• Accountability - Allow those managing money to explain their financial decisions and to provide a record of financial activities

• Forward planning - Help the trustees or directors prepare for future financial needs and identify any potential issues and opportunities

• Stakeholder communication - Satisfy reporting requirements for funders and generally provide clear communication to your board and leadership team

Best practices for financial reporting

Reporting format

Written reports

• Provide written reports several days before meetings

• Allow committee members time to review and prepare questions

• Avoid relying solely on verbal assurances

Level of detail

• Balance between too much and too little information

• Round figures to the nearest pound

• Focus on clarity and comprehension

Remember: It is up to the board to decide what information they want to see.

Leverage technology

Use accounting software

• Software like QuickBooks can simplify reporting

• Create and save report templates

• Generate comprehensive management reports

Key reporting principles

1. Clarity

• Use language everyone can understand

• Explain the significance of numbers

• Ensure reports are comprehensive yet concise

2. Relevance

• Provide timely and meaningful information

• Focus on forward-looking insights

3. Comparison

• Compare actual spending to budgeted amounts

• Explain significant variations

4. Frequency

• Quarterly reporting is typically most effective

• Adjust frequency based on organisational complexity

• Provide cumulative year-to-date figures

5. Special considerations

• Account separately for restricted funds

• Include explanatory notes

• Provide guidance for committee decision-making

Conclusion

Effective financial reporting is more than just numbers on a page. It's a strategic tool for guiding your organisation's financial health, ensuring transparency, and supporting informed decision-making.

If you need assistance developing your financial reports or would like feedback on your processes, please contact us for support.