Eight Red Flags that your Board Financial Package is Failing to Support Board Needs
Allan Tepper, CFO Consulting Partner LLC
One of the goals of boards is to oversee the financial performance of the company or companies to which they are associated. Informative, transparent financial statements are necessary for boards to discharge those duties. If your board financial package lacks one or more of the following, there would likely be a deficiency in the board’s oversight function.
– The financial package should contain the three basic financial statements – P&L, Balance Sheet and Cash Flow. The benefits of the P&Ls and balance sheets are fairly well known; however, the cash flow statement may not be as well known. The cash flow statement answers the question, “Where did our money go?”
– The package should contain accounts receivable and accounts payable agings.
– Critical notes to the financial statements should be included to explain complex accounting transactions.
– The P&L and balance sheet should be compared to budget.
– The package should contain reasons for variances from budget, and if it does, the explanations should be business reasons, not accounting reasons.
– The package should contain key business drivers.