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It’s 10:00am on a Monday morning and you’ve got a Trustee meeting that evening, for which you’ve just received an email with the agenda and attached financial reports – SOFA, balance sheet and trial balance for the month and period to date. What do these figures mean? How and why have they changed compared to last month? How much cash have you got available to spend?

Sound familiar? You’re not alone. Small finance departments and limited resources often mean that charities’ regular financial reporting lacks the necessary focus and detail to provide Trustees with the relevant and appropriate information to make informed decisions. So how can this be overcome?

Too much time may be spent looking back, producing reports on what has happened. Whilst it’s useful to know how much money the charity has spent and received, it is equally, if not more, important for Trustees to consider the future. Finance staff should have an expectation of the amount of income and expenditure going through the charity in the next 12 months and therefore produce rolling budgets based on this with annotations explaining any large variances between actual and budgeted figures. They should also be able to produce a cash flow forecast for the next month to enable Trustees to identify any cash shortfalls or surpluses.

Another common issue with finance reports is that they are often prepared on a completely different basis to the end of year financial statements, with different descriptions and headings. It can be confusing for Trustees to see financial reports throughout the year, and then be presented with financial statements that bear no resemblance to what they have previously seen.

Trustees should provide finance staff with constructive feedback in order to ensure that the reports produced provide them with sufficient information, but do not become too onerous or time consuming to produce.

If you require any advice on this subject or would like help setting up your charity’s financial reports, please get in touch with your usual Kreston Reeves contact or email, or visit our charities page to learn about our services.

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