Annual Reports and Other Financial Documents

Communicating Financial Information

How team members can improve overall project communication

            Financial documents are all about finance—income and expenses, budgetary predictions and budgetary reality, profit and loss. The focus is on the content. The content put there by the organization, however, is only part of the message. It is important to look at what you are producing and develop the ability to see these documents as the rest of the world sees them.

1.  Annual Reports and Other Financial Documents

            Annual reports and other similar financial documents say a lot about the organization that issues them. Problems arise, however, when the messages being received are not the ones being sent.  Financial documents are all about money—income and expenses, budgetary predictions and budgetary reality, profit and loss. The focus is on the content. The content put there by the organization, however, is only part of the message.   It is important to look at what you are producing and develop the ability to see these documents as the rest of the world sees them.

Too many people—and organizations—make some foolish and dangerous assumptions about the people who will read their annual reports and financial documents. They assume that:

1.      The rest of the world will look at things the same way they do.

2.      The people who read reports will automatically believe them.

3.      People will not look elsewhere for information. They will accept organization statements and reports as the definitive words on the subject.

4.      The most dangerous assumption of all, however, is that unpleasant facts can be hidden, and that all the people reading it can be confused and fooled for as long as the organization wants to confuse and fool them.

 

Financial Communication—By the Numbers

See also : Guidelines for Reports

1]         What do you want to say?

            You cannot expect to have any sort of effective communication until you yourself understand exactly what it is that you’re trying to say.

            If you are responsible for preparing a media release about a new project in which the private sector and the government are jointly funding a research facility that will look at developing alternative energy sources, you do not have to be an expert on finance or alternative energy sources. You and your staff, however, do have to have access to experts who can explain it so well that you and your staff can then turn around and explain it to people who know less about it than you did when the project started.

2]         To whom do you want to say it?

            We’ve already looked at this. Even though the information may be read by a wide variety of people, you may have a more narrow focus as your target audience. The key point to remember is that your audience will help you shape your message.

3]         How are you going to say it?

            If you are writing a media release, it has to follow the standard media release format. If it is a letter to investors, make sure that it looks like other letters to investors. If it is an annual report, it better be quickly identifiable as an annual report.

            We are not saying that you cannot be creative. What we are saying is to present your creativity within a recognizable format. When people shop at the grocery store for eggs, they look for an egg carton. When they get home, they don’t want to find out that their egg carton is really filled with yogurt.

4]         How will you organize you ideas?

            Organizing can be as much of a physical process as a mental one. When it is time to start the actual writing, make sure that you know where everything is: figures in one file or stack of papers, interpretations of those figures in another, projections in another place, and comments about the numbers, their interpretation and what they portend someplace else. It doesn’t really matter how you organize them as long as you know where all the information is when you need it, and can get to it easily. Some people put everything on 3-by-5 file cards, others put it in neat stacks of paper, and still others pin or tape everything to the wall, or spread it out on a large table or on the floor.

            There is no one right way to do this.     Whatever works for you, works for you.

 5]        Can you be logical?

            The reason we all learned how to outline stories and reports and term papers in school was so we could present them in a logical way. Most professional writers still do use that process for long pieces of writing. In fact, most of them are paid in three stages: the first third for the outline, the second for the first draft, and the final third when the work has been rewritten, polished, and accepted by the publisher or studio.

            The logical place to start your outline is at the beginning. What is the first thing your audience needs to know in order to understand everything you are going to tell them? What do they need to know next? And so on.

            You can outline on paper, a computer screen, or a chalkboard. Once again, there is no one “right way” to do it. Whatever works for you works for you.

6]         Can you prove it?

            Journalists, investors, government regulators, bankers, financial analysts, and anyone else who reads your report will want proof that it is true. Give your audience enough information so that they can judge for themselves that it is true. Writing has more impact and is more credible when you show that something is true instead of merely stating that it is true.

            Your writing should also be specific instead of vague, and every claim needs to be backed up with facts.

7]         How many numbers do you throw at them?

            Some people want to look at every number you have, and then do their own math. Others will want to see all of them and then select some random sections to check. Then there are those who will focus on the bottom line, and those who just want to know what all the numbers mean.

            When it comes to a media release or an announcement, give those numbers that you have to in order to make your point. You can explain how they were reached, but do so without going into the math or the formulas.

            An annual report, however, will entail a lot more numbers. They are often the most important part of an annual report, and you must give all the numbers people expect to see in one. Give the numbers, and then explain where they come from, how they were derived, and what they mean.

Templates:

• Project Status Report Template 1   - Project Status report template 2 

• Project Control Checklist Template

• Project Closure Report Template

 

 

Egos and Expectations

We all have egos and expectations.

            If you write as a hobby, and you are working on a short story, a novel, a script, a poem, or any other type of writing that is not related to your work, you are entitled to consider it your intellectual property. You are also entitled to have it say what you want to say in the way you want to say it. It is your creative work. You own it. Your name will be attached to it.  If you are working on a report for work, however, it is not your work. It is the organization’s. It must say what the organization wants to say and do so in the way the organization wants it said. Even if your name is on it, the organization owns it and has the final say on its form, format, style, tone, look, and content. It is the difference between designing a racecar and putting in the ignition system. One person created the machine and the other worked on it, under the direction of the person who created and owns it.    Expectations can also get you into trouble. If you write a novel and it is published, you expect to be congratulated and praised. You deserve it. Many, many people try, but relatively few ever succeed.

If you write a report for work, you are just doing your job. If you get a “Well done!” from your boss and praise from your coworkers, that is wonderful. It’s also a bonus. All we can ever truly expect from work is a paycheck and the satisfaction of doing our jobs as well as possible. When it comes to writing in the organizational environment, put your ego in a box, and treat compliments as an unexpected bonus. To do otherwise, leads to resentments.

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Read It As Your Readers Will

            One of the keys to effective writing—any kind of writing—is learning how to look at your work the way your readers will. This can take some effort and practice, but it is definitely a skill worth developing.

            People do not read annual reports because it’s fun reading. They want information. So let’s look at an annual report, break it down into the most commonly found sections, and see what a reader is looking for in each one. Your job is to tell the truth about the organization. . Once you know what the reader is looking for, you’ll know what has to be in it. This is not to say that the reader will be pleased by everything. You are not writing it to deliver only good news.

            An annual report is a historical document. It is always written about the past, and therefore is out-of-date even before it is actually printed and distributed.

CEO’s Letter

            Your readers will expect this to be filled with good news and optimism. However, if there are problems, they should be at least mentioned here. Details can put elsewhere. If the organization has been under government, public, or media scrutiny in the past year, your readers will know it, and will want to hear what the CEO has to say about it.

Management Discussion and Analysis

            This is where your reader expects to see the details of those things mentioned in the CEO’s letter, along with other important decisions, directions, and trends. While the CEO’s letter is often optimistic in tone, this is written more like a standard project/programme purpose analysis. This will probably be read and compared to the CEO’s letter.

 

Auditor’s Report

            This should be a simple letter from the accounting organization that audits the organization’s books. It should state that the figures are true, and that they give an accurate picture of the project/programme purpose.

Sales, Subsidiaries, and Marketing Report

            This details what the organization does, and when, where, and how it does it. It should also deal with all branches, subsidiaries, and the entire product line. Your reader will expect a clear picture of where and how the organization makes most of its money.

Financial Statement—“Current” Year

            This is where all the numbers come in: sales, profits, expenses, spending, inventory, cash flow, as well as debt loads and levels. Readers want the numbers presented simply. If there are “explanations” include them as footnotes.

Financial Statement—Previous Years

            This states how the organization has performed over time. Readers will expect to learn about stock performance, sales figures, income from the various operations, divisions, branches and subsidiaries, as well as different product or service lines. They will also want to know how long-term debt and the various earning and spending ratios have been handled.

Footnotes

            As a rule, only the truly knowledgeable—and obsessive—read this far. Those who look here are looking to see what, if anything, is being hidden.