Reporting -Financial monitoring

Why do we need financial reports?

Financial reports provide a summary of your income and expenditure. They allow you (and other stakeholders) to monitor your financial position. For instance, they help you tell if you have enough money to pay salaries at the end of the month, complete a project, or fund your plans for next year.

Financial reports have to be timely, accurate and relevant.

They also have to be easy to read. So it is always important to talk to users about what sort of reports they want and find it easy to use. It may also be useful to provide users with training on how to read financial reports.

NGOs prepare financial reports for different people including managers, trustees, beneficiaries, donors, and the government. Using these reports,

  • NGO staff and donors can monitor whether activities are going ahead as planned (and whether the NGO has enough funds for the future)
  • Beneficiaries can monitor whether money is being spent on their real needs
  • The government can monitor whether the NGO is acting legally
  • … and trustees have the job of checking all these other points!

Which reports?

As there are many different users of financial reports – internal and external stakeholders – we need different kinds of reports for different users.

  • During the financial year, accounting information is summarised and compared to the budget for internal monitoring by project managers. These reports are often called Management Accounts.
  • At the end of the year, the Annual Accounts (or Financial Statements made up of a Balance Sheet and Income & Expenditure statement) report on the outcome for the year. These are mainly for external stakeholders.
  • At intervals during the year, an NGO will also provide donor reports to funding agencies. These usually include both financial and written progress reports.

It is important to set up your accounting systems (especially accounting codes) to meet your various reporting needs.
Reporting to donors can be complicated if you have to use their own specific formats