Effective management reporting

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  • Published: . Advice

Our audits tell us that many executives lack access to the right information when making decisions.

And that the information they receive is often untimely.

Poor management reporting weakens accountability and hampers efforts to improve performance.

For those charged with governance, good management reporting gives the right people the right information at the right time.

Management reporting is not a mere compliance exercise, it is key to understanding and driving organisational performance.

The right people

As you well know, leaders have an obligation to demonstrate that they are using public funds wisely. They are responsible for achieving overall objectives and setting strategic direction—so they need reports that outline financial results across the whole entity or council. And this information must be tied to performance indicators on achieving outcomes.

The information they receive should enable them to answer: ‘is my entity or local government doing the right things, is it doing them well, and is it achieving its objectives?’ This information enables them to respond, achieve and drive strategy.

Obligations, and therefore information needs, do differ depending on the level of management. Reports should be varied across the layers of management focusing on the particular information needs of the user.

The responsibilities of the line manager or cost centre manager are typically expressed in terms of spending within their budget, whilst delivering the required functions of the cost centre or division. They need to be able to answer: ‘Are projects and activities meeting budgets and targets?’

All users of management reports must receive information in a way they can quickly digest, and so they can understand the key impacts and results. We all have our own personal preferences for how we consume data. But in most cases, financial or performance results can be easily presented in multiple ways.

Also, remember that feedback should be provided on a regular basis to report preparers so they can improve the reports in line with user needs, changing demands and priorities.

The right information

Good management reports contain relevant and reliable information. Reports must have a level of precision and degree of accuracy that precludes the user being unintentionally misled.

Ask yourself: are you and your leaders receiving relevant information that helps with decision-making? Reports should support decision-making relating to the objectives of your entity or council—both strategic and operational.  Does the provided information provided help those charged with governance in discharging their responsibilities and accountabilities?

Information also needs to be comparable, both across reporting periods and between organisational units.

  • Do the reports allow the user to compare across periods and with other entities—are they consistently prepared and presented enabling you to monitor on an ongoing basis?
  • Do the reports include comparable meaningful information? Are internal and external benchmarks provided, with meaningful analysis?

However, even if information in internal reports is relevant, comparable and reliable, it is useless if it is not understandable. Users need to quickly comprehend the meaning and significance of information. If they don’t understand the information included in reports, seek explanation and understanding.

So what works for the right information?

  • Reports that incorporate a comprehensive set of both operational performance and financial metrics, aligning each business unit to the wider strategic plan and key objectives.
  • Full accrual financial reporting aligned to external reporting standards, for consistency and simplification of year end reporting.
  • Detailed variance analysis that explains the root cause of the movement in results, supported by perspective information, and well as prospective information.
  • Financial and non-financial benchmarking both within the entity or council, and where appropriate externally against the sector and industry.
  • Clear, simple layouts which draw users’ attention to the most important information and explains through concise commentary why it is important.

What doesn’t work for the right information?

  • Variance explanations that only summarise the movement. If there’s no cause or corrective action, the users gain no insights
  • Lengthy reports with little information displayed visually and no highlighting of key messages. The users can’t quickly consume the results.
  • Lack of activity data where there is no balance between qualitative and quantitative factors.
  • Standardised reports for all levels of management with limited narrative.

The right time

Timely access to accurate and reliable information is critical to making the right decisions. The sooner information is provided, the sooner decisions and necessary corrective actions can be taken.

When does the user need what information?

Who drives the reporting timelines?

Is the frequency of reporting set by the user’s requirements for effective decision-making?