What Accounting Reports are Presented to a Board?

Preparing the board reports for your first board meeting in Perth can be confronting. Whether you are a family business founder, CFO, Perth business accountant, or CEO, preparing the board reports in the first board meeting so they hit home and drives value for the family business can be challenging.

The timing of the meetings affects the board reports

When preparing your board package, it’s essential to consider the frequency of your board meetings. The meeting schedule, often determined by management, is a key factor in structuring your board reports. Your family business might have a charter or shareholders agreement that stipulates how often the board meets, with the possibility of ad hoc meetings for urgent matters. This underscores the importance of the board’s role in decision-making.

Many Perth family businesses using Westcourt’s CFO services adhere to a quarterly board meeting schedule, but some may meet more frequently, even monthly. The frequency of your board meetings will largely depend on your company’s stage and maturity. Startups and other rapidly growing companies often meet more frequently to support strategic decisions and company direction with their board and Perth business accountant.

It’s crucial to review your family business’s founding documents. Each constitution, trust deed, and shareholders agreement might have requirements for board meetings, and being aware of these specifics is essential for board meeting preparation. Further, banks and lending requirements might also affect the timing of board meetings. So, talking to your Perth business accountant about your family business’s minimum action items can help.

Consider the needs of your board

Accounting Data

If you’re a family business founder or stepping into your first role as a CFO, engaging with a board for the first time can be challenging. To keep the meeting running smoothly and focused on strategy, it’s vital to have your numbers and clean accounting data with KPIs accurate and readily available.

Board members are not just recipients of information, but active participants in the decision-making process. Understanding their needs and preferences in processing information, whether it’s through numbers, charts, or other visual elements, empowers you or your Perth business accountant to deliver a more effective presentation. This understanding is key to fostering a productive and collaborative board environment.

Sometimes, in a family business, family members with no direct business skills and who are not engaged in the business are present. So presenting information so all board members understand and helps those members deliver value to the board is critical.

Board members expect reports presented by their Perth business accountant to have clean data.  When your Perth business accountant presents a board pack with old data from a different spreadsheet, it is embarrassing and unacceptable.  Data errors reflect poorly on management, the CFO and CEO from the board’s perspective. Situations like these highlight the need for the accounting team to maintain version control over data, which can be managed through robust cloud accounting software.

Many outside board members are employed elsewhere, so they will need time to digest information at a board meeting. At Westcourt, we recommend that the board package prepared by your Perth business accountant and CEO be presented at least three working days before the board meeting.

Essential items to include in your board package

Visual Data

A board package, often referred to as a board pack or board report, gives board members and investors insight into your company’s metrics, strategies, and other updates related to its mission. These documents also outline the agenda for the board meeting and contribute to more productive discussions.

When preparing your board report package, it’s essential to incorporate a good amount of visual data, such as graphs and charts, sufficiently sized for easy analysis and trend identification.

Here are some items you may want to include in your board package:

  • The agenda

The agenda will dictate the time and focus of the meeting. It will prevent board members from getting distracted by urgent, low impact matters and direct what the board will consider and discuss.

An agenda will allow time for creative thought bubbles to be presented and considered, limiting the resources allocated to that process.

  • Board actions

A board will almost always have strategic action points from earlier meetings and people who indicate they will achieve specific goals at certain times.

A significant benefit of the board meetings is keeping management and the board accountable for the action items.  In particular, the founder of a successful family business often has very few, if not any, moments when they are responsible.  So, following up on promises is a significant benefit of having a board.

  • Safety

Every staff member who goes to work deserves to go home.  With the advent of industrial manslaughter and the human need for directors to care for their staff, every board report should consider staff’s physical and mental safety at work.

  • CEO Reports

The CEO is the primary driver of a family business’s profits and success. The CEO report instructs the board on the CEO’s progress and shows the board that the CEO understands the business.

For many family businesses in Perth, the CEO is the founder with little accountability. Typically, the CEO is presented with information they then control and give feedback on. So, reversing this position and establishing accountability for the CEO/Founder is essential.

The CEO report should also reflect back on the strategy of the business and discuss changes to the short-term and long-term strategy.

  • Forecasts

A company’s budgeted cash, profit, and debt position should be made at least annually, with significant events requiring your forecast to be adjusted as they occur.

The business forecast must go beyond a profit and loss in excel. The forecast capital expenditure budget, the debt reduction strategy and the debt management schedule are crucial to understanding future cash flow and finance requirements.  These combined forecasts are classically referred to as a 3-way forecast and a range of companies have software platforms like Futrli to help prepare these reports.

If you are talking cash flow, you must also consider income tax, GST, and PAYG Withholding as part of your cash flow.  With BAS payments quarterly or monthly, with large income tax integrated within the BAS the Perth business accountant must also estimate and factor in income tax into the real-time financial results to understand the business cash flow.

The business forecast will reflect the strategy the board sets and directs. The allocation of resources will clearly show how committed the family business’s board is to this strategy.

  • Actual results to forecast

Getting your Perth business accountant to report within 5 working days your actual results to forecast results is crucial for a board.  So, the actual balance sheet to your forecast balance sheet, an actual cashflow statement to the forecast business cashflow and an actual profit and loss to your forecast profit and loss is a main focus for a board reporting package.

The commentary attached to the forecast, prepared by your CFO or Perth business accountant, should be high-value. That commentary must go beyond “sales are down 2.1%” or “cash is tight” and focus on strategic items of concern or benefit that will impact the business moving forward. That could extend to surplus cash, dividend calculations, working capital shortfall, unprofitable product lines, or future financing needs.

Getting a Perth business accountant with understanding and entrepreneurial flair is critical to gaining insight into your business’s numbers, profits and 3-way forecasts. So, experience, aptitude, and training play an important role.

  • KPI Reporting

Every Perth family business has a KPI that drives the rest of the business. Sometimes, the KPI is set by the Perth business accountant, but often, operational staff monitor the KPI as well.  Many business costs are either uncontrollable or a function of turnover, so reporting and focusing on those costs is of little value.

Gaining clarity on business costs and profit drivers and linking them back to one to three KPIs is a crucial task Perth business accountants undertake to help direct and focus the board’s attention on what matters.

The business KPIs are sometimes financial and sometimes financially linked but not a direct reproduction of the financial reports presented by the Perth business accountant. So, this could include customer retention percentages, the rate of rejected products, late deliveries, or kilograms of product issued. The KPIs are different in every business and at every level.

  • Minute taking

The purpose of the board will impact the minutes.  If your board is an advisory board the need for detailed minutes (think parliament) where every word is documented is unnecessary.  However, if moderate minutes are prepared the auditors of the Perth family business or future buyers of that Perth family business will be reviewed and relied upon.  So, if the minutes are vague and meaningless, the purpose has not been appropriately considered either.

The person taking minutes should be discussed in advance. If the board is well funded, it might have a dedicated resource taking minutes. However, most Perth family businesses will either arrange for the CEO or the Perth business accountant to take minutes and note future action items.

Reducing the time to prepare your board reports

Board report preparation

The time invested in board reports is often a major hurdle in getting an effective board of a Perth SME.  Finding ways to automate the board reporting process so you can invest in strategic insight is crucial – especially when management is time-poor and the resources on the accounting team are already stretched.  This is where Westcourt can help – as a business, we are also founders, so we understand first-hand the difficulty of starting and running a family business. 

As Xero platinum partners, our deep knowledge of other platforms and experience in board reporting for large, medium-sized businesses and smaller operators make us a natural choice for making your board professional and a high-value profit driver—so why not call us today?

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