TT19 Sharing financial statements

Guide to Financial Management

Top Tips 19

Sharing Financial Statements

Say ‘Financial Statements’ and most people think of accountants and auditors: something that they have to get excited (and stressed) about once a year, but which does not affect the rest of the organisation.

However, financial statements are not just a legal requirement. They provide information to all stakeholders including beneficiaries, the Board, donors and the general public. Sharing your annual report and financial statements at meetings or online is easy to do badly.

These top tips give advice on how to share your annual report and financial statements so that people can engage and understand them more easily. There are four sections:

  1. General advice
  2. Presenting to Board members
  3. Sharing with beneficiaries; and
  4. Publishing accounts on a website.

1 General advice

Focus on the big picture

Help people to get a sense of the key features of your accounts, such as total assets, liabilities and funds, total income, expenditure and surplus/deficit. People need to have a sense of the big picture before getting bogged down in the detail.

Use charts and graphics rather than lots of numbers

Many people are immediately put off by numbers. Using graphical representations will help get the message across.

Show trends

Analyse trends over 5 years or so and share interesting findings. For example, trends in locally generated income, salary expenses, total programme costs, a particular expenditure line, ratios, level of reserves etc.

 

2 Presenting to Board members

Board members need to approve the annual financial statements and use them to check that the finances of the organisation are being properly managed.

 

Consider a quiz

For a change, hand out a quiz (6-10 questions) that brings out the key features of the financial statements. Each question should refer to the page number where the answer can be found. Ask people to work together in pairs or threes to complete the quiz. Review the answers together and have a prize for the best team.

Comment on comparison to targets

The Board may have set targets such as donor dependency ratio; admin costs in relation to direct programme costs; payroll equity (% gap between highest and lowest paid); level of reserves etc. Share the targets and what has been achieved, highlighting efforts made, challenges met and future plans at the same time.

Point out any issues that require discussion or decision

Rather than going through the accounts line by line, give a big picture overview then steer members straight to any significant issues that require their input, such as low levels of reserves, overspent grants, ageing assets, difficult debts, worrying liabilities, or surprises that weren’t expected from ongoing review of the management accounts.

 

3 Sharing with beneficiaries

The quality of participation by beneficiaries is a key factor in NGO effectiveness. Most NGOs recognise the importance of being accountable to the communities we work with, but few have set up systems to deliver it.

 

Discuss the method of presentation

Discuss which method would best suit local people to make it most accessible. Maybe a meeting under a tree with a flip chart, or displaying graphs on a notice board.

Make it accessible

The information should be made accessible to help all beneficiaries understand the finances, not just a handful of representatives. Consider excluded groups, e.g. women.
Focus on figures that correspond to the activities they are involved with.

Keep it simple

Use local language and local currency.  As a rule of thumb, include no more than 15 lines of figures on a report.

Make it participatory

Allow time for questions and comments.

Get finance staff involved

Consider letting the organisation’s finance staff present the finances to the community (ideally in collaboration with programme staff). This provides useful segregation of duties and also encourages finance staff to engage with the field work.

Get resources

When presenting budget monitoring information to non-literate people, an excellent resource for tools is an organisation called Little Fish. www.littlefish.com.au/web/money_storyDeeper.html .

4 Publishing your accounts on a website

Excellent for transparency, credibility and accessibility.

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  • Convert your accounts into formats that work on web pages (e.g. html or pdf format)
  • Make it possible to get to your accounts within three clicks on your website
  • Break the annual report down into sections so that people can dip into a particular part they are interested in
  • Links to your vision and mission are critical
  • Make it accessible for people with disabilities (see Web Accessibility Initiative www.w3.org/WAI/WCAG20/quickref )
  • Take a look at Mango’s annual reports on its website

Want to learn more?

Mango’s training course Getting the basics right builds the confidence and skills of staff in small to medium-sized NGOs who are involved in programme implementation and the management and control of financial resources.

View our calendar of courses around the world here: www.mango.org.uk/training/opentrainingprogramme

See Mango’s Guide to Financial Management for NGOs for free advice and tools, including a section on receiving grants. See: www.mango.org.uk/guide

Mango: All about Money and NGOs
Mango helps NGOs to make more of their money by: running practical training, supporting people in finance roles, advising NGOs and donors, and publishing free tools and guides: www.mango.org.uk