Better reporting to drive efficiency
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Continuous improvement: Better reporting for driving efficiency Esther Oh, GAICD, CRMA, CISA, CPA (Aus) [email protected]
Transcript of Better reporting to drive efficiency
Continuous improvement: Better reporting for driving efficiency
Esther Oh, GAICD, CRMA, CISA, CPA (Aus)[email protected]
Introduction
Information rich = time poor
Follow the 10-20-30 Rule…
Session Outline
Dashboard reporting Information criteria Key Risk Indicators Key Performance Indicators Tips on dashboard reporting
Would you prefer to read this ….
Example 1: Extract of sample company financials from JD Edwards Source: docs.oracle.com
Or this?
Example 2: Same information extracted into a Dashboard Source: docs.oracle.com
Example 3 : A typical Sales Dashboard Source: docs.oracle.com
A good dashboard provides key information in a clear and concise manner that supports decision making.
It provides information on business performance that can be easily evaluated to identify:
- key drivers and risks- key trends and forecasts- meaningful insights- areas for improvement
Benefits of dashboard reporting
Easy to read and digest in clear and concise presentation
Highlights key issues, risks and trends in a snapshot
Provides key areas of focus and priorities
Encourage management by exception
Saves significant time and resources
Improve real-time decision making
Limitations of dashboard reporting Not a One Size Fits All solution
Needs to be tailored for the audience, business and industry
Quality depends on the frequency and accuracy of data collected
Needs to be reviewed regularly to remain relevant and up-to-date
Value is lost if it starts to dive into great detail and complex drivers
BEWARE of the inherent risks in using spreadsheets and macros. Recommend use of business intelligence software to extract information from your financial reporting software rather than export and manipulate in Excel where possible.
What to consider in dashboard reporting
1. Content
2. Design
3. Delivery
You need to Plan!
Make it Easy and Engaging to use
Source: http://cdn.ttgtmedia.com/digitalguide/images
Content - Information Criteria
Source: http://www.aasb.gov.au
Selection of information: Relevant Reliable Material
Presentation of information: Comparable Understandable Timely
Remember SAC 2 OBJECTIVE OF FINANCIAL REPORTING : Provide information that is USEFUL for DECISION MAKING
SAC 3 QUALITATIVE CHARACTERISTICS OF FINANCIAL INFORMATION:
Design
Example 4: Financial Dashboard with tracking barometers
Design with the audience in mind:
- Demographics
- Financial literacy levels
- Jargon/language used
- Impact/consequences & importance of selected info
- Frequency of information required
DeliveryHow will it be delivered?
A 20-minute Powerpoint presentation?
Hardcopy reports?
Online through the portal?
On mobile devices?
Accessible anytime, anywhere?
Analyses past financial figures and ratiosto determine the health of the business
Technical analysis
KRIs KPIs
Fundamental analysis
Focus
What to include in a DashboardDirects time, efforts and resources effectively to key focus areas to maximise returns and
minimize risks/losses
Uses charts to predict trends and preparefor the future
Highlights key risks and monitors key performance measures
It drives the business to be more efficient, thus improving financial performance while reducing risks that may adversely impact the business.
ExamplesExecutive Summary of PNL & BS:Top 10 Products/Services/CustomersGM/NP Current against BudgetedTop 10 Expenses spent against budgeted
KRIs:AR turnover daysActual bad debts vs Prov of doubtful debtsCash balances, forecasts vs actual, working capital availableQuick ratio, leverage ratio, debt to asset ratio
KPIs:Sales Actual vs TargetSales performance by employee/regionCost savings achieved by department Example 5: Simple dashboard constructed in Excel
KRIs & KPIs should be:
SpecificMeasurableAuditableRelevantTimely
Whilst many companies measure by KPIs, very few track their KRIs …when risks not managed are often the ones that cause the company’s downfall!
Key Risk Indicators Key Performance Indicators
Metrics that provide early warning of increasing risk exposure
Metrics that provide high level indication of past performance
Provides forward looking insights on achieving the organization’s objectives BEFORE the risk event is triggered
Provides historical performance of the organization AFTER results have been achieved
Mapping KRIs to critical objectives and KPIs decreases likelihood for management override
Rewarding on KPIs alone increases likelihood of management override
Promotes risk awareness, proper management of risks and healthy risk culture
Measuring by KPIs alone can lead to unnecessary risk taking and unhealthy risk appetite
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Illustrative Example
Risks: Slowing economy => customers default => negative impact on cash flow affects => ability to pay bills on time
Objective: Manage the collection of accounts receivables to reduce write-offs and financial loss
Strategies: Issue payment reminders 5 days before Due Date, Call customer 5 days after Due Date if not paid, Escalate to CFO after 15 days overdue, package debt to debt collection agency
KRI: Accounts receivables turnover/month, payment trend for the top 25 customers
Corresponding KPI: Bad debts written off <5% Provision of Doubtful Debts/month
Tips for better reportingThe Secret recipe for Success:
- Keep it highly Visual and Interactive using drop-down menus and navigation
- Use charts and symbols like traffic lights, barometers, up/down arrows, trends
- Be prudent with colours
- Keep numbers to a minimum
- Keep communicating and continuously improving
Useful References
www.ausasiaresources.com/blog
www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/business/dashboard-reporting.pdf
