Committee Reports

Committee Reports

May 2021

It is important that committees get good financial reports, and even more important that the committee members read and understand them. [more…]

How exactly a committee report should look like depends a lot on the organisation and what they are trying to do. But there are some minimums:

  1. Financial Activity report: this shows the income and expenditure over a given period.
  2. Financial Position report: this shows where the organisation stands at a certain date. The minimum this should contain accurately is:
    1. Combined bank balances
    2. Unexpended grants (as a liability), if applicable
    3. GST receivable or payable, if significant.
  3. Comparative figures: There needs to be a column with the figures from the same period a year before for activity, and the figures on the same date a year ago for position. If there is a budget, the comparative can be the budget figures for this period for the activity statement.

Organisations using accounting software, such as Xero or MYOB, don’t always have the skills to keep the figures in the Balance Sheet up to date. That’s fine – in that case, instead of printing the Balance Sheet out anyway, it is better to have a manual report instead, just containing the three items above. They give an important at-a-glance oversight over the key indicators.

For decision-making, committees rarely need super-accurate accrual-based figures. Nor do they generally need to know how exactly each cent was spent. But they need to know roughly where they stand, and how they’ve been doing lately, to be able to judge whether things are going in the direction they want them to.

Good Monthly Reports

May 2023

The main reason for bookkeeping and accounting is not to keep Charities Services, the membership or the taxman or –woman happy. It is for you to know where you stand and how you’re going.

How important regular financial reports are depends on the size of your regular outgoings. If you are renting premises, employing people, or have other significant ongoing commitments, you’re heading for the fiscal abyss if you don’t have regular meaningful financial reports. Some grantmakers, such as Lottery and COGS, have it as a part of their grant acceptance conditions that you do so.

The second part of financial reporting is that the people using those reports understand them. That is partly a training issue, but also one that can be addressed by the reports’ format.

It is absolutely heartbreaking to see an organisation wind up, not because their mission is not valid, or because it is not needed, but because they did not understand their financial position and became insolvent. In most of these cases, employees will be left out of pocket, and will not be paid what they are owed and have worked for.

Financial reports to committee or Board meetings always need to have at least two components. Both these components need to have sensible comparative figures:

  1. Report about your financial position.

This needs to give a good overview of your key assets (bank accounts, investments, accounts receivable (if any)) and liabilities (grant money still to be spent, significant accounts payable, GST) at a certain date. The comparison date should be either the end of the previous financial year, or the same date a year ago, to establish whether your financial position has improved or deteriorated.

Many organisations just print out the Balance Sheet from their accounting software, but that is rarely accurate, because bookkeepers often pay no attention to it. Unless you’re reasonably sure that your Balance Sheet is reliable in the key aspects, you should create a manual statement that simply lists your key assets and liabilities. There are also many organisation that don’t report their financial position on a regular basis at all.

  • Report about your financial activities.

This is the report about money that you received and paid during a period. For small or medium-sized not-for-profits it makes little sense to report on a single month and compare it to the previous one. You get a better idea about how things are going by aggregating the last 3 or 6 months, and compare this with the same period of the previous year. This is because most not-for-profits do not generate continuous income but have cycles: they may apply to certain funders at certain times of the year, operate during school term time, have membership fees all come in only during a month or two, or something similar. Comparing with the same period of the previous year gives a sense of whether you are doing things better or worse than you have in the past, at least in financial terms.

It also generally makes more sense to use a cash-based report, which also shows capital expenditure (purchase of fixed assets). ‘Profit & Loss’ reports from accounting software are not cash-based, and they are highly susceptible to entry errors, such as wrong dates on invoices, or erroneous invoices. However, if a large part of your organisation’s income comes from fees or sales, an accrual-based Profit & Loss statement should be added as a third report. As with the other one, it should be aggregated for 3-6 months, and compared to the same period of the previous year.

CCA does offer board training aimed at financial literacy, i.e. understanding your own financial position. In most cases this is free. Get in touch!