How to create an excellent annual report that brings your accounts to life

At the recent Charity Accountants’ Conference in September, Sayer Vincent’s Fleur Holden and Vivien Ma presented a session on how to create an excellent annual report.

The annual report is an opportunity for a charity to tell its story through its financial reporting and the narrative around it. Bringing accounts to life for those who are not financial experts is a vital part of producing a great report.

The session began with a look at what SORP says. The Charities SORP (FRS 102) document sets out how charities are expected to apply international accounting standards to their particular activities and transactions, and explains how charities should present and disclose their activities and funds within their accounts.

The purpose of the annual report is to be publicly accountable to stakeholders, to demonstrate stewardship and management of funds and to consider the information needs of primary users. These include funders, donors, financial supports, service users and other beneficiaries.

The session highlighted that the level of financial and technical detail needed varies depending on the audience. For example, the public, beneficiaries, and staff need top line performance and a summary, whereas the Trustees, Management and Charity Commission will need much more of a technical/compliance focus. This should be reflected in how the financials and narrative are presented and some examples were given for the different audiences.

The session suggested there are eight key questions charity finance professionals should ask themselves before putting together the annual report, which will help them when thinking about what needs to be included and the story they are telling. These are:

  1. What is our annual report for?
  2. Who is our target audience?
  3. What do we want our audience to do? Donate to us? Fund us? Do we want them to better understand the problem we are addressing and our achievements?
  4. Annual accounts and report, annual review, combination?
  5. How will readers access the report? (Hard copy, web, mobile)
  6. How do we demonstrate outcomes and impact?
  7. Who do we involve?
  8. What’s our timetable?

Finally, the session ended by highlighting that good narrative reporting answers five key questions:

  • What is the problem we are trying to address?
  • What do we do to address it?
  • What are we achieving?
  • How do we know what we are achieving?
  • What are we learning, and how can we improve?