Streamlined Financial Reports : Let Managers Act! – March 2014

The following addresses an important topic in Financial Reporting.  Quite possibly, the most important purpose of the financial reporting function is to provide accurate, timely information to managers and owners.  These parties use this information to make plans regarding the company’s strategic competitive position, related tactics, and assess its financial condition, including capital needs.

Due to the vast array of financial information generated by a given company, users of such information must often devote substantial time to review and understand the information.  In this regard, an important duty of the CFO is to cut the clutter in monthly reports sent to managers and owners.  These reports should “cut to the chase” and reduce confusion for those not trained in finance.

A key characteristic of such efforts is to provide more and better information in the front of the report.  This eliminates the need to flip back and forth through a printout or moving through the tabs of a spreadsheet and then scrolling through the page’s contents.  As a result, users can focus on crucial information such as the amount and volume of contribution to revenue and profit as well as comparisons which utilize actual results, budgeted numbers, and prior period results.  For those interested in details, the full report can still be made available.

The advantages of this approach include:

  • More time devoted to forward looking analysis
  • Greater accuracy of the information
  • More engagement by users
  • Better comparisons
  • Smoother review

Undertaking a streamlining project can be onerous with such efforts meeting institutional inertia from various parties.  Those firms that have been successful in implementing a streamlined process offer numerous tips such as the following based on PW-Coopers, Practical Guide to IFRS: Streamlining the Annual Report.

  • Make the report easy to navigate.  If the reports are online, try making them interactive with drill down capability that easily gets the user back to the Home Page.
  • Play up the most important information.  Consider a summary of key information in the front of the report. Burying key information towards the end of the report in elaborate prose helps no one.
  • Connect the information.  Companies should link strategy to objectives; objectives to performance; performance to pay.
  • Avoid reporting in silos.  If the information presented is not  relevant to the full audience, consider including it as a supplement.
  • Consider the quality of the disclosures.  Disclosures should not be boilerplate, but rather company specific.

In conclusion, a focus on streamlined financial information for users fits the dictum: smaller and simpler is better, for the good of everyone.

For more information please use the following link:

Capitol CFO Solutions serves clients in Washington DC, Maryland, and Virginia. Please contact us for a free consultation.