Board Financial Reporting: 8 Key Elements

While the specific details that each report should include can vary from organization to organization, most finance reports should include the following:

1. Executive Summary

A board finance report’s executive summary provides a short overview of the information that is covered in later sections. It serves as an introduction to the board’s current financial situation, the specific issues that are positively or negatively impacting it, and any upcoming decisions that need to be made. 

2. Financial Statements 

Board finance reports must include several types of financial statements. These documents provide the most complete summary of where your organization’s money is coming from and where it is going. They also indicate areas in which your organization is performing well financially and areas in which your board may need to consider adjusting how it uses its resources. Balance sheets, cash flow statements, and income statements are among the most important types of financial statements for most boards to include. 

3. Budget vs. Actual Performance 

Planning ahead through careful budgeting is an important step in running a financially stable organization. However, unexpected drops in fundraising, changes to spending needs, and other differences from what your board initially expected your organization’s annual and quarterly budgets to look like are common.

Carefully tracking your board’s actual spending and income during each reporting period and comparing this information to what you anticipated can help you identify potential red flags before they become more significant financial problems. It can also help your board budget more accurately in the future. 

4. Key Financial Metrics 

Board financial reports should list several financial metrics that show how the organization is performing from various angles. Depending on the nature of your organization, some of these metrics might include: 

• Gross profit margin 
• Net profit margin 
• Return on investment (ROI)
• Return on assets (ROA) 
• Working capital 
• Debt-to-equity ratio
• Operating cash flow
• Revenue growth rate

5. Cash Position and Forecast 

A clear picture of your organization’s available cash helps the board make smart spending decisions. Even if your overall assets look strong, problems can arise if too much money is tied up in investments or otherwise unavailable. Without enough accessible cash, it’s easier to overspend or struggle during emergencies. This section should also outline how your cash position is expected to change in upcoming reporting periods.

6. Capital Expenditures and Investments 

Investments and other capital expenditures play a valuable role in helping your organization grow, but it’s important to understand how they impact your available assets. For this reason, listing and describing each of these investments on any relevant board finance reports is a must. This section also helps boards identify which ventures provide the strongest ROI over time. 

7. Risks and Compliance Issues 

Handling a board’s finances always comes with certain risks, and board finance reports should clearly identify potential concerns and the steps your board is taking to mitigate them. This section should discuss fundraising efforts, investments that fall within your board’s risk tolerance, specific people who have permission to handle or spend money on behalf of the organization, and other relevant issues your board finance committee identifies. It should also clearly describe how your board is expected to handle any compliance standards or other regulations that are common in your industry. 

8. Outlook and Recommendations 

Your board finance report should close with a brief description of how your organization’s current financial health and overall performance are likely to influence performance in future reporting periods. Studying trends over several periods can provide an even more comprehensive outlook. Your board can then use this information to determine specific adjustments that are likely to support stronger performance over time.