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.
Further support
If you need any help with our resources, feel free to contact us. We are happy to explain them and offer training. We can even redesign the tools a bit, perhaps expand them or develop new features, because these resources are fairly basic tools and they're not designed for everyone.
You may need to amend the tools yourself a little bit to suit your individual needs as an organisation, and we would encourage you to adapt them and make the resources work for you.
We hope you enjoy them and find them useful. Providing free advice and resources helps us achieve our own charitable goal, which is to help organisations run themselves more efficiently and effectively.
Helpful reading
If you found this useful, why not try: