“That’s a bit harsh” I hear you say! Well you are probably right.
Your accountant is one of the most important resources for your business. A good accountant (Financial Controller) will know what financials to report and how to present them to management and the board. Surprisingly, there is a high number of accountants that struggle with the idea of concise and effective board reporting.
Many finance departments do not provide their committees and management with clear financial information which presents the key drivers of business performance in a consistent and concise format. I suspect it is an accountant thing, I can say that because I am one.
“Why are the board reports so complicated, and why can’t they be concise and more relevant” were the words I heard a few weeks back from one frustrated board member.
The idea of dashboard reporting is not a new one, or so I thought. I cannot count the number of times committee members have confided that they are confused by their monthly reports.
Most of the time, management and board members like to review the monthly numbers and use this information to fulfil their duties and responsibilities; drawing conclusions from this information is important when making an informed decision on matters at hand and to evaluate senior staff performance.
Have you heard of the Centro case in 2011? If not, let me set the scene. The committee did not properly review the finance papers and this cost shareholders billions. One reason for their slip in attention was that the directors received vast quantities of information in the committee papers. The short story, regardless of the size of your operation, quality prevails over quantity.
Even though accountants are responsible for producing the reports, guess who will be held accountable for wrong decisions – the committee. Therefore, ultimate accountability for the finance papers sits with the committee. It is in the committee’s best interest to take charge and stipulate the type and amount of information they receive. Believe me when I say that the Incorporated Associations Act or the Corporations Act will hold the committee accountable for poor decisions, so it is up to you and your committee to demand timely, concise, and accurate information from your accountant.
This is where the goal of dashboard reporting is important, not just to make life easier for the committee but also for management. The sign of a well-oiled, high functioning management team is clear communication. A daily snapshot of the previous day’s key operation metrics is critical to making informed decisions in a timely manner.
If you are looking to improve your board reporting or need help to understand hospitality accounting, I would be happy to help. If you would like a copy of free board reporting templates, please reach out on 0412 886 031 or email me at firstname.lastname@example.org