14 Ways to Impress and Inform Your Board

Last Updated: Friday, September 9, 2016 by Johnathan Briggs
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Executive Summary

CIMA "Good Practices" Made Better:
 → use dashboard data visualisation tools to improve usefulness  → get real-time data for faster decision making  → make reports comparable & reliable  → reduce costs to prepare reports each month / quarter  → combine targets with actuals with user-adjustable levels of granularity Approx. Skim Time: 1min 30sec~ 280 wordsFull Read Time:7min 3`0sec~ 1500 words

CIMA Recommends Poor Practices be Made Good

Target Dashboard Recommends CIMA Good Practices Made Better

Most accounting qualifications train people for private practice, working on external audit and tax issues. The Chartered Institute of Management Accountants (CIMA) prepares people for a career in business. It teaches skills for strategic advice, managing risk and making key decisions.

The CIMA website has recommended several good practices, noting the all too common poor practices needing improved as well. That guiding document was originally published in 2003, but remains one of the most thorough treatises on both the method and justification for effective board reporting to this day.

At Target Dashboard, we've added what we believe to be better practices, made possible through the use of modern, quality dashboard software (any quality software, not necessarily that created by Target Dashboard) and therefore assists report preparation in the world of 2016.

Note: The observations of Poor Practices and recommended Good Practices are from the 2003 publication found on the CIMA website, thus CIMA intellectual property. The Better Practices are courtesy of Target Dashboard and may be freely referenced, with attribution.

1. Relevant

a. Poor - Detailed analysis of income and expenditure and variances for all directorates in 32-page report. Limited narrative. No corrective action identified.
b. Good - Focused financial report of three to six pages in length. A good report will summarise the issues and highlight the overall position, making use of graphs and charts to replace lengthy tabular information where appropriate.

c. Better - Summary graphs and charts provide at a glance overviews of aggregated tabular information, broken down by department, period and performance targets. The multi-view visuals are supplemented by progressively more detailed reporting information, first summarised in 3-5 pages, then followed by supplemental full figures.

Provide summary charts and graphs which can drill down into more focused views, then summary tabular data before finally including the full, lengthy details.

2. Integrated

a. Poor - No activity data presented in the financial report. No balance between qualitative factors and quantitative ones.
b. Good - Activity data linked to financial performance. Variances calculated and explained. The report should integrate non-financial and financial reporting.

c. Better - Dashboard views of strategic and tactical CSF/KPI's, targets superimposed on actuals with highlighted exceptions, drilldown ability to interconnected/varied data sources.

Combining financial & non-financial information, integrating variances in chart and graph views, to provide at a glance overviews, when combined with drill down details, is an excellent approach.

3. In-Perspective

a. Poor - Massively detailed P&L account. Insufficient detail to support issues identified in the narrative report.
b. Good - Abbreviated P&L account shows period and cumulative positions with highlighted variances against budget. Major variances adequately explained. Trend analysis included. Full-year projections updated.

 

c. Better - Performance to, above, and below target highlighted accordingly, trends visible with drilldown, data segmented based on department, period, objective, with targets and previous projection accuracy summarised.

Target vs actual, trend charting, department or project level segmentation - make exploration and analysis a breeze.

4. Timely

a. Poor - Information presented 28 days after period end.
b. Good - Report available within five working days of period end.

c. Better - Report always available and updated within 5 minutes of real-time.

Real-time data is a necessity. 5 day or 28 day lag is no longer acceptable.

5. Reliable

a. Poor - No key issues identified, or no explanation offered.
b. Good - Every key issue identified with sufficient explanation.

c. Better - 100% assurance of mathematical calculation accuracy. Key issues, CSF's and KPI's included, always.

Multiple dashboards, tailored to the scope of issues, is an ideal balance between granularity and ease of consumption.

6. Comparable

a. Poor - Inconsistent format and style of report. No use of performance indicators.
b. Good - Consistent style across reports. Performance indicators used to illustrate trends in liquidity, asset utilisation, etc. Comparison with budget/previous year.

c. Better - Dashboard content with uniform style which doesn't vary from month to month, contains CSF's and KPI's and prior period vs current, prior year vs current plus cumulative views of month, quarter, year.

Auto-updated data tables, charts and graphs which are embedded in reports, are a great way to keep consistent in format and are assured KPI's don't appear/disappear from time to time.

7. Clear

a. Poor - Copious financial tables at the beginning of the report. No title or contents pages. Information presented in complex spreadsheets.
b. Good - Appropriate use of graphs, colour-coding and clear chapter headings.

c. Better - Use of a visual-first design approach, with significant colour variations to differentiate as well as accentuate variances from target/baseline. Multiple dashboards based on strategic purpose/audience plus tactical needs. Ability to then drill into the desired level of detail.

Use charts and graphs with actuals vs. targets using colour-coding to show on- or off-target.

chart with green and red bars representing target met or not met

8. Executive Summary

a. Poor - No simple overview. Information is there, but in a confusing order with no cross-referencing. Typically excessive use of data or unrefined information.
b. Good - All key issues identified in an introductory executive summary with a synopsis of performance provided by key indicators. Supporting documentation and appendices clearly referenced.

c. Better - SAME AS 3 AND 7 ABOVE

9. Action Plan

a. Poor - No action plan.
b. Good - Corrective action specified with contingencies and sensitivity analysis showing best- and worst-case scenarios.

c. Better - Action plan includes historical trends, projections and targets which set parameters for scenario construction.

Action plans are necessary and should include actuals as well as targets with historical data, trends & projections.

10. Profit & Loss

a. Poor - Summarised cumulative income and expenditure account. Insufficient detail to support issues identified in the narrative report.
b. Good - P&L account showing period and cumulative positions with highlighted variances against budget. Major variances highlighted and adequately explained. Trend analysis shown graphically. Full-year projections updated.

c. Better - SAME AS 6 ABOVE

11. Projected Outturn

a. Poor - No projected outturn plan.
b. Good - Projected outturns recalculated on the basis of actual performance and action plans.

c. Better - Actuals are constantly recalculated for up to the minute accuracy, charted, along with projection/target and variances from prior period(s).

Real-time calculations should be used for creating always-updated views of actual performance and projected outturns.

outturn vs year prior scorecard with actual, trend, change percentage, year to date, target and deviation from target

12. Cash Flow

a. Poor - No cash flow information, or only historical.
b. Good - Profiled cash flow summarising actual and projected receipts, payments and balances on a regular basis to year end.

c. Better - Always updated cash flow with near real-time data for up to the minute accuracy.

Like outturn, cash flow should be updated in real-time and embedded as live data.

13. Capital Programme

a. Poor - No data provided, or only that on under/overspend.
b. Good - Analysis of progress of major capital schemes showing percentage completion, current and projected expenditure, completion cost and timescale

c. Better - Cumulative dashboard view of completion in the current period/quarter/ytd, progress trend along actual and target, cost and timescale relative to actual and target, highlighted to illustrate deviations from target and exception notifications when course strays off of projected target path.

Major capital schemes progress should be charted real-time, versus target, and include drill-down & roll-up of the current period, quarter and YTD.

14. Balance Sheet

a. Poor - No working capital information.
b. Good - Indication of working capital position presented in tabular form or using performance indicators – eg, debtor and creditor days.

c. Better - Digital dashboard displaying numerical form, as well as CSF's and KPI's relating, with up to the minute position information and drill down enhanced details.

Leaders of top companies respond faster, when performance starts to lag, not after it has lagged for a full month.

Summary

Making use of quality dashboard software is one way in which reports designed for the Board of Directors can expand capabilities, reduced time and cost to report, and generally make an organisation more agile, yet consistent, at the same time.

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