Why now is an ideal time for some reporting housekeeping
4 August 2020 at 7:30 am
As organisations turn their attention to the new revenue and leasing standards, they have an opportunity to review and improve the overall content and presentation of their financial reports, writes Ben Fock, from HLB Mann Judd Wollongong.
Many NFP organisations are currently working through the process of adopting some of the new revenue and leasing standards which will see them either updating or adding to the disclosures in their current financial reporting formats. In doing this it really is an ideal time for these organisations to consider some other reporting “housekeeping” by reviewing and improving the overall content and presentation of their financial reports. The aim is to ensure that not only do they meet reporting requirements but that the reports are updated for clarity and better transparency in reflecting the operations and even the ethos of the organisation.
Traditionally financial reports have been prepared by many organisations on a basis of meeting minimum disclosure requirements, with these organisations often adopting similar reports to prior periods, save a few edits and additions. What can clearly be identified with all the reporting changes is a demand for the presentation of more relevant financial information to the users of these reports that really “tells the story” of your organisation.
The first step is to clearly identify who the expected readers / users of your financial reports will be. They will include but may not be limited to:
- financial institutions;
- government departments or agencies; and
- the general community (particularly for NFP and community organisations).
Whilst all reports will have minimum requirements based on the accounting standards that need to be met, it is important that you consider the above users. Some may have specific requirements in relation to the format and presentation of your financial information. Most however, will really be looking for information that is truly relevant in their understanding of what you do, where funds are derived and how they are spent, what assets are utilised and what liabilities or future financial commitments you might have.
Think of your reports not only as a statutory requirement but also as a reflection of your organisation. For some outside users, this report may be the only information about your organisation that they see so this is an important consideration in not only deciding what key financial data needs to be reflected but also what other content and strategic information, and in what format you present this to influence how they perceive your organisation. We have some clients referring their reports to their graphic designer to improve on the layout and presentation. Remember that whilst reports may meet requirements if they are outdated and difficult to read this can reflect poorly on your organisation.
A few key points to assist in the process of improving your reporting:
- Update the format and structure of your reports so that key information is highlighted and easily identified then have this linked to or supported by any necessary detail.
- Keep the wording in your reports and disclosures as concise and clear as possible so that key information is not lost in lengthy paragraphs.
- Remove any unnecessary information and disclosures that are not required, particularly if they don’t provide relevant or key information to your particular operations – quality over quantity.
- Ensure that there is no repetition of information throughout the report.
You can access the financial reports of many organisations on their websites so it can be beneficial to review those of similar organisations to your own just to get other ideas on how to best present your reports. Finally, discuss your reports with your auditor or advisor as they will be able to provide useful guidance and will likely be able to offer further examples for review.