7 Key elements of reporting to boards

The reality is most executives struggle to write reports to the board. I have attended board meetings where the board pack exceed 500 pages and 2 lever arch files. That is not ideal. In fact, I have come to slightly mistrust managers who submit large packs as I am wondering what is hidden in this overload of information. Many managers have told me that boards are never satisfied with the information and some directors are always asking for more information – perhaps the reports are indeed not comprehensive enough to enable decisions by directors.

Danka Starovic authored a great article for CIMA on the essential elements for a board report. According to him a report should have the following:

  • Executive Summary
  • Action Plan
  • Profit and Loss
  • Projected Outturn
  • Cash flow
  • Capital Programme
  • Balance Sheet

He expands each element with a good practice and bad practice.

    • Executive Summary

The idea is not to confuse, but instead to provide a clear and succinct synopsis of performance provided by key indicators. Supporting documentation has to be clearly referenced

    • Action Plan

Corrective actions have to be defined and set out clearly with an appropriate sensitivity analysis indicating best-and-worst case scenarios.

    • Profit and Loss

It is imperative to table a comparative P&L account juxtaposed against budget with material variances explained via a brief narrative. The year-to-date position has to be updated. Adding diagrams aids readers who are more graphically minded.

    • Projected Outturn

Presenting a revised forecast aids the basis for decision-making in boards.

    • Cash flow

Tabling a historic view of cash flow has value, but to truly assist a board executives need to table a 12-month cash flow forecast with sufficient information of cash receipts and payments.

    • Capital Programme

Analysis of capital projects indicating not only over/underspend but also progress against plan and budget and projected expenditure with major variances explained.

    • Balance Sheet

A clear view of the working capital situation with performance indicators, for example, providing a view of debtors and creditors age analysis.

In the end a report is there to provide sufficient information to the board so that the directors can execute their leadership function

 

By: Ronelle Kleyn
Director, Chartered Secretary, Attorney, Urban Farmer and Mom
FluidRock


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