One of the biggest challenges in Board Reporting is getting the balance right between high-level reporting and too much operational detail. What makes a good Board report? My answer …..It depends…. Here are some models I’ve found useful as a starting point.
Useful models for Board Reports
A good Board report is about much more than writing dot points or paragraphs. Factors like how long an organisation has been established, how well run it is, how strategically engaged the Board is, the resources available for reporting, and the needs of stakeholders all need to be considered.
I’ve served as a Director and an Auditor on a variety of Boards over the years – from listed companies and well-known charities to investor-funded startups – and also provided Board reports. Here are four models I’ve found useful, along with my learnings about when each can be most effective.
1. Carver Governance Policy Model – for new appointees
My first board appointment was for a very established iconic woman’s charity who ran their Board meetings with great professionalism. On my appointment, I received a Directors handbook which covered my role and responsibilities, the Board function and linkages to the operations of the organisation. The handbook also covered several principles and policies governing the organisation’s conduct based on the Carver Governance Policy Model. This was a very instructive handbook for a young person taking on their first Board position.
The Carver Governance Policy Model is a theoretical set of principles which acts as a foundation for Boards to govern in business, not-for-profit and government organisations. It is free and available for anyone to use on the official website of the creators www.carvergovernance.com
I would encourage anyone who is thinking of becoming a Board member to become familiar with this model and also to complete the Director course run by the Australian Institute of Company Directors (AICD).
2. Exception reporting
In an established and well-run business environment, exception reporting is often all that is needed for Board reporting, with the full detail of divisional results being freely available for those interested. Rather than having the Board overwhelmed with endless detail on all facets of the organisation, the Board’s attention is focused on the exceptions, both positive and negative, to the original forecasts.
The exception reporting method was well suited to my first charity which was well established, had good processes and procedures in place and unqualified audit reports with minimal management points over many years. The CEO and management also had the Board engaged in annual workshops working on strategy and the resultant business plans.
3. Balanced Scorecard reporting
The Balanced Scorcecard reporting system is a concise, focused reporting method which extends to non-financial targets. I have seen this reporting method successfully deployed at the listed company level, however the amount of support paperwork tends to be substantial.
Balanced Scorecard board reporting is about setting both quantitative and qualitative key Performance indicators (KPIs) and reporting to the Board on how the organisation is scoring. The targeted KPIs are directly derived from the strategic plan and business plans and the tool can be applied through any level of management and across any business lines.
As this method requires a lot of resources each month to produce the documents, the question to ask yourself is whether this is the best use of your resources.
4. In-depth reporting for Board reports
Private companies are at the other end of the spectrum. They generally have a few sophisticated investors with their Board’s conduct governed by a shareholder agreement under the auspices of the Corporations Act. For these types of organisations, more detailed and in-depth reporting is required.
In startups, events are typically happening very quickly, resources are tight and have to be strictly monitored. Accounting and secretarial work is often not given the attention it should, leaving Board’s uncomfortable and not informed. In this environment, more seems to be better rather than too summarised.
In the early stages of a business, it’s best to keep the format simple. A well-structured standard agenda and minute format with a conflict of interest register and ongoing action list are generally all the tools you need to have a functioning Board Report.
How Accru Felsers can help with financial information for Board Reports
Boards function best when they receive reports that have enough information to enable easy analysis, informed decision-making and development of appropriate business strategies.
Accru Felsers and most other Accru Felsers firms use very effective reporting add-ons to software packages which provide our clients with clear, meaningful, monthly or quarterly reporting against budget for their Board meetings. Please contact us to find out more about how we could make your financial reporting easier, clearer and more tailored to your organisation and Board.
We also welcome your comments on what makes a good report below!