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1、Record to Reeport The Exeecutivve Boaard iss respponsibble foor thee condduct, operaationaal andd finaanciall perfformannce off an oorganiisatioon. Thhese rresponnsibillitiess are dischhargedd by:clearlyy statting tthe shhort aand loong teerm obbjectiives oof thee orgaanisattion;clearlyy statting tt

2、he poolicy guideeliness withhin whhich tthey eexpectt manaagemennt to operaate;defininng thee systtem foor enssuringg thatt manaagemennt actts in accorrdancee withh the Boardds dirrectioon; annd defininng proocedurres foor meaasurinng thee exteent too whicch proogresss towaards ccorporrate oobjectti

3、ves is beeing aachievved.The vallue off infoormatiionIn ordeer forr the Boardd to bbe ablle to functtion eeffecttivelyy, infformattion iis keyy. A BBoard whichh operrates with insuffficieent orr inacccuratte infformattion wwill bbe unaable tto monnitor the oorganiisatioon efffectivvely wwith ddecisi

4、ion maaking beingg baseed on flaweed datta. UUnder this scenaario, theree is aa signnificaant riisk thhat thhe orgganisaation will fail to meeet itts lonng terrm objjectivves.Post Ennron, Qwestt, WorrldComm etc Execuutive Boardds cannnot ffail tto apppreciaate thhat thheir rreportting iimpactts nott

5、 onlyy on tthe peerformmance and ffuturee of ttheir own oorganiisatioon, buut cappital markeets ass a whhole.High quualityy, traansparrent rreportting wwhich is baased oon rellevantt finaanciall and non-ffinanccial vvalue driveers iss crittical for ddrivinng corrporatte perrformaance aas welll resst

6、orinng connfidennce inn the markeets. TThe fiirst sstep ttowardds achhievinng thiis is to immplemeent a frameework of maanagemment rreportting wwhich is baased oon timmely, relevvant aand acccuratte infformattion. Thiss willl enabble efffectiive deecisioon makking aas welll as meetiing thhe neeeds o

7、ff exteernal stakeeholdeers. Scope oof Reccord tto Repport The scoope off thiss papeer is the ffinanccial aand noon-finnanciaal repportinng ressponsiibilitties oof thee CFO/ FD. As ssuch iit covvers:Sectionn 2: Boardd/ Divvisionnal/ ccost ccentree repoortingg (aloong wiith appplicaation of Buusiness

8、s Inttelliggence technniquess)Sectionn 3: Generral leedger and tthe chhart oof acccountss struuctureeSectionn 4: Monthh end closee and consoolidattion pprocesssesSectionn 5: Statuutory reporrtingThe papper dooes noot covver thhe repportinng ressponsiibilitties oof othher Opperatiional Execuutivess (

9、eg. Salees, Loogistiics, CCRM, MMarketting, HR ettc). Managemment rreporttingThe purrpose of maanagemment iinformmationn The purrpose of maanagemment iinformmationn is tto:monitorr proggress againnst coorporaate obbjectiives aand pllansidentiffy acttions requiired wwhere actuaal perrformaance iis at

10、 variaance wwith eexpecttationnThe Boaard Reeport is a key ccomponnent iin thee manaagemennt repportinng hieerarchhy, coollatiing innformaation acrosss an organnisatiion. The BBoard Reporrt commbiness the varioous opperatiional activvitiess throough tthe coommon and oobjecttive mmediumm of ffinancce

11、 (bee it ssterliing, ddollarrs etcc). A good Boardd Repoort wiill ulltimattely ddrive decission mmakingg and actioons, aassistting tthe orrganissationn to aachievve itss shorrt-terrm andd longg termm objeectivees.As suchh the Boardd Repoort shhould proviide alll thee neceessaryy infoormatiion too su

12、ppport tthe Booard iin fullfilliing itts ressponsiibilitties. In ddoing so itt shouuld bee:Externaally ffocuseed Market opporrtunittiesThreatssCompetiitionForwardd lookkingDrivingg visiionAligninng opeeratioons too straategyRefininng strrategyy as rrequirredChallennging to thhe mannagemeent teeamDri

13、vingg perfformannceQuestiooning the sstatuss quoUndersttandinng andd manaaging riskssManagemment rreportting & operrationnal reeportiingManagemment rreportting iis a bbroad term whichh may mean diffeerent thinggs to diffeerent peoplle. IIt is, therreforee, neccessarry to underrstandd the distiinctio

14、on bettween: managemment rreportting aas useed by key EExecuttives and sseniorr manaagemennt. TThese reporrts arre useed to drivee deciision makinng andd meassure wwhetheer or not ccorporrate oobjecttives are bbeing met. Thiss typee of rreportting nneeds to bee saliient, relevvant, coverring bboth f

15、financcial aand noon finnanciaal criiteriaamanagemment rreportting aas useed forr day to daay opeeratioonal ppurposses. Exampples iincludde cosst cenntre rreportts, heeadcouunt annalysiis, caall ceentre perfoormancce etcc. TThese reporrts arre datta driiven aand ennable managgers tto revview ddelive

16、ery off theiir currrent respoonsibiilitiees. TThese reporrts shhould be sttandarrd in theirr pressentattion aand deeliverred wiithin minimmal innterveentionn or ooverheead. This type of reeportiing iss desccribedd as “operaationaal repportinng”The foccus off thiss papeer is the EExecuttive sstyle ma

17、naggementt repoortinggDesign princcipless in MManageement ReporrtingIt is rrecognnised that everyy comppany wwill hhave ddifferring iinformmationn needds forr runnning tthat ccorporrationn. Ass suchh everry commpany will have diffeerent managgementt repoortingg needds. IIt is, howeever, necesssary w

18、hen revieewing or deevelopping rreportt conttent tto havve in placee coree desiign prrincipples. Thesse shoould iincludde:deliverry of inforrmatioon whiich meeets tthe neeeds oof keyy deciision makerrs witthin tthe orrganissationndeliverry of timelly, reelevannt andd accuurate inforrmatioon whiich m

19、eeets tthe neeeds oof thee Busiiness as weell ass Finaancedeliverry of inforrmatioon nott dataa, bassed onn the philoosophyy of “less is moore” (sallient, conccise rreportting oof infformattion vvs delliveryy of ssignifficantt voluumes oof nummeric and oother data)“one veersionn of tthe trruth” whic

20、ch delliverss conssistenncy off infoormatiion accross the wwhole organnisatiion (ssee Seectionn REF _Ref31680652 r h 2.4 beelow)use of lead as weell ass lag indiccatorss (eg. for custoomer ssatisffactioon, seervicee downntime may bbe a llead iindicaator, custoomer cchurn a lagg indiicatorr)incorpoor

21、atioon of operaationaal KPIIs ass welll as ccore ffinanccial mmeasurres applicaation of a balannce sccore ccard aapproaach, eensuriing coonsideeratioon is givenn to ffinanccial, operaationaal, peeople/stafff and custoomer pperspeectivees.applicaation of exxceptiion reeportiing teechniqques, with sig

22、niificannt varriancees beiing hiighligghtedaction orienntatedd repoortingg, in termss of ccommenntary and rreviewwdynamicc in nnaturee. Thhe conntent and fformatt of rreportts neeeds too be rreviewwed annd reffresheed to ensurre theey keeep pacce witth chaanges in thhe Bussinesss Overvieew of the cc

23、ascadde of inforrmatioonThe mannagemeent reeportiing sttrateggy shoould bbe bassed onn a caascadee of iinformmationn fromm the Boardd downn (ie. fromm Boarrd to Divissions to Buusinesss Uniits annd ulttimateely coost ceentress). TThis iis reppresennted bbelow:In deliiverinng thiis casscade of innfor

24、maation it iss neceessaryy to eensuree conssistenncy off infoormatiion frrom thhe Boaard thhroughh to tthe coost ceentress. Thhis iss baseed on the pprinciiple oof “one vversioon of the ttruth”. Itt ensuures, for eexamplle, thhat thhe ressults of Diivisioon X aas preesenteed to the DDivisiion X MD a

25、rre thee samee as tthose beingg reviiewed by thhe Grooup CFFO. AAs welll as consiistenccy in conteent thhere sshouldd alsoo be cconsisstencyy in tthe loook annd feeel of reporrts too ensuure Exxecutiives aand maanagemment ccan neegotiaate thhem wiith eaase. Definittion oof coontentt needds to be “to

26、p ddown”. Thhe CFOO/ Boaard shhould definne thee Boarrd Repport ccontennt succh thaat it meetss theiir neeeds. It allso neeeds tto be consiistentt withh corpporatee straategy and ssubseqquentlly useed to monittor peerformmance and ddrive businness pperforrmancee. Thhe neeeds off the Boardd shouuld t

27、hhen bee casccaded down to Diivisioons, BBusineess Unnits aand ulltimattely ccost ccentrees. TThis eensurees corrporatte strrategyy is ttransllated into operaationaal delliveryy. Thhis caan be contrrastedd withh the “bottoom up” conttent ddrivenn apprroach, wherre cosst cenntre rreportting ccascadde

28、s upp to bbespokke Bussinesss Unitt and Divission rreportts. WWhen aaggreggated at thhe Boaard leevel tthis iis usuually charaacteriised bby exccel coonsoliidatioons, ssignifficantt dataa voluumes aand thhe neeed to referr to iinconssistennt Divvisionn repoorts. The usee of KKey Peerformmance Indicc

29、atorss (KPIIs)Managemment rreportts shoould ccontaiin perrformaance iinformmationn relaating to thhe keyy operrationnal isssues as weell ass finaanciall meassures. Thiis is imporrtant as chhangess in ooperattionall meassures tend to bee leadd indiicatorrs on futurre finnanciaal perrformaance (eg. nn

30、etworrk buiild iss behiind scchedulle cashh floww saviings iin thee shorrt terrm, sllower saless growwth inn the longeer terrm). The CFOO/ Boaard shhould agreee on tthe KPPIs prresentted inn the reporrt. Geenerall prinnciplees on KPIs are:-availabbilityy: freequenccy & aaccuraacyrelevannce: alignnme

31、nt to crriticaal succcess factoorsacceptaance: leveel of use iin thee orgaanisattion/ indusstrytopicall: rellevancce to speciific sstrateegic iinitiaativessWhen esstabliishingg finaanciall and operaationaal meaasuress for incluusion in maanagemment rreportts, thhis neeeds tto be done with an unnders

32、ttandinng of remunneratiion annd rewward sstructtures. Thee two need to bee conssistennt. FFailurre to do soo willl deliiver cconfliictingg messsages. It is nooted rrewardd baseed meaasuress willl havee the most powerrful iinflueence oon dayy to dday beehavioours.Examplee conttentAs noteed aboove, e

33、each aand veery orrganissationn willl havee theiir ownn needds andd opinnions, drivving tthe loook, ffeel aand coontentt of tthe maanagemment rreportts. AA “leadiing prracticce” manaagemennt repport (Boardd Repoort, DDivisiion Reeport and ccost ccentree repoort) iis givven, hhoweveer, inn Appeendix

34、1. Thhis reeport demonnstrattes thhe leaading practtice pprinciiples highllighteed aboove annd is to bee usedd for referrence purpooses oonly.In termms of conteent itt inccludess:Executtive ssummarry A synnopsiss of pperforrmancee is pprovidded byy KPIss accoompaniied byy apprropriaate acction orien

35、ntatedd commmentarry. Usse of data is liimitedd to ccore ddata oonlyAction plan correectivee actiions sspeciffied wwith ccontinngenciies annd sennsitivvity aanalyssis shhowingg bestt and worstt casee scennarioss (usuaally iin thee formm of ccommenntary)Profit and LLoss sstatemment P&L aaccounnt shoo

36、wing periood andd cumuulativve possitionns witth higghlighhted vvariannces aagainsst buddget. Any mmajor variaances shoulld be highllighteed andd adeqquatelly expplaineed. Trrend aanalyssis shhould be shhown ggraphiicallyy and full year projeectionns shoownProjectted ouutturnn incoorporaated iin P&L

37、 Projeected outtuurns rrecalcculateed eacch monnth onn the basiss of aactuall perfformannce annd acttion pplansCashfloow Actuaal andd projjectedd receeipts and ppaymennts upp to tthe yeear enndBalancee Sheeet - posittion oof worrking capittal, aassetss and long term invesstmentts / ddebt.Leadingg pr

38、acctice checkklistMajor TTopicssLeadingg pracctice charaacteriisticssIndicattive iissuess / prroblemmsGenerall prinncipleesRelevannt - TThe innformaation must be baased oon thee needds of all tthe deecisioon makkers (not jjust FFinancce) wiith a top ddown ffocus (fromm the Boardd downn)Relevannt Inf

39、orrmatioon preesenteed shoould bbe shaarply focussed annd shoould rreflecct thee defiined oobjecttives and sstrateegy off the organnisatiion. Accuratte Inforrmatioon shoould bbe of suffiicienttly hiigh quualityy thatt conffidencce cann be pplacedd in iit. Itts relliabillity iis deppendennt on its ss

40、ourcee, inttegritty andd compprehennsivennessTimely The inforrmatioon shoould bbe avaailablle proomptlyy enouugh too plann fromm it aand taake coorrecttive aactionn (seee Secttion REF _Ref31168111 n h 44: Moonth eend cllose)Integraated Reporrting inforrmatioon shoould iincludde botth opeeratioonal a

41、and fiinanciial KPPIs whhere tthe efffect and iimpactt of ooperattionall perfformannce onn finaanciall repoortingg is cclearlly undderstoood. BBoth llead aand laag inddicatoors arre to be ussedBalancee scorrecardd apprroach The managgementt repoort shhould incluude innformaation on thhe diffferennt

42、asppects of ann orgaanisattion ii.e. FFinanccial, Custoomers, Peopple annd OpeeratioonsGraphiccal prresenttationn - Inforrmatioon shoould bbe preesenteed in an eaasily assimmilateed forrmat ee.g. iin a cclear dashbboard formaat andd use graphhs wheere appproprriateOne verrsion of thhe truuth - Bothh

43、 finaanciall and non ffinanccial ddata ssourcees useed acrross tthe orrganissationn are consiistentt (eg. resuults ffor Assia Paacificc as ppresennted tto Grooup CFFO aree samee as tthose preseented to Assia Paacificc MD)Consisttency - Thhe loook andd feell of tthe reeportss fromm Grouup too Diviisi

44、on to Buusinesss Uniit to Cost Centrre neeeds too be cconsisstentInformaation - Thee manaagemennt repport iis infformattion rrich aand daata liightExceptiion reeportiing Repoort byy exceeptionn, higghlighhting variaances to pllan (bboth ppositiive annd neggativee)Action orienntatedd Ensuure coontent

45、t and commeentaryy expllain ooperattionall drivvers bbehindd the inforrmatioon preesenteed as well as beeing aactionn orieentateedReportss are purelly finnanciaally ffocuseed witth litttle aattenttion ppaid tto peoople, custoomer, or coompetiitive measuuresReportiing foocusess on tthe neeeds oof non

46、n coree deciision makerrs (egg costt centtres mmanageers)Managemment rreportts aree publlishedd 15+ days folloowing the mmonth end ccloseThe forrmat oof thee repoort iss numbber orr dataa baseed witth litttle oor no use oof graaphicaal preesentaationOnly fiinanciial KPPIs arre repporteddThe mannagem

47、eent reeport is viiewed as a “Finannce toool”. It is noot useed by operaationaal mannagemeent. Signifiicant efforrt devvoted to reeconciiling Businness UUnit/ Divission/ Groupp resuults multtiple versiions oof thee trutthThere iis litttle oor no consiistenccy bettween Groupp, Divvisionn, BUss, andd

48、Costt centtre reeportssReportiing deeliverrs tooo muchh detaail annd datta i.ee. it is 300 pagees or morePeopleOperatiional Execuutivess havee a keey inffluencce/ innput iin deffiningg repoortingg conttent aand foormat. Thee repoortingg frammeworkk needds to meet theirr needds as well as thhose oof

49、thee Finaance ffunctiionMacro mmanageement: Abiility and wwillinngnesss to ffocus on thhe “big ppicturre”Dedicatted maanagemment rreportting tteam rresponnsiblee for accurracy, timellinesss and conteent off the reporrting frameework. Ideeally this wouldd coveer botth finnanciaal andd operrationnal i

50、nnformaation needss, as suppoorted by a managgementt infoormatiion sttrateggy. Thhis prrovidees ownnershiip andd accoountabbilityy for managgementt infoormatiion accross the oorganiisatioonThere iis connsisteency bbetweeen thee repoortingg KPIss and thosee usedd by HHR / bbonus assesssed mmeasurres

51、(tthe laatter will drivee behaaviourr not the fformerr)til cr . poeb fe dr lFcro aansus lni aotManagemment rreportting iis dellivereed by Finannce foor Finnance and iis nott usedd by tthe reest off the BusinnessMicro mmanageement: Foccus onn detaail annd immmateriial fiiguress and adjusstmenttsRewar

52、d basedd meassures diffeer froom repportedd KPIssAccounttabiliity annd ownnershiip of managgementt infoormatiion iss disppersedd acrooss thhe orgganisaationCommenttary pprovidded dooes noot addd any insigght innto deecisioon suppport (eg. “saless are down 5%”)ProcesssThe levvel off detaail annd free

53、quenccy of reporrting suitss the maturrity oof thee busiiness. (i.ee. matture can managge witth morre dettail lless ffrequeently, immaature/ channging envirronmennt manaage wiith keey meaasuress moree freqquentlly)Core maanagemment iinformmationn/ flaash reesultss are availlable to thhe Bussinesss W

54、orkking DDay 5 post monthh end (see Sectiion REF _Ref31168111 n h 4: Monnth ennd cloose)There iis limmited to noo dataa maniipulattion pprior to fiinalissing tthe fiiguress and amenddmentss are made monthhly inn arreears (see SSectioon REF _Ref31168111 n h 4: Monnth ennd cloose)Processses arre in pl

55、acee to aassesss the compeetitivve envvironmmentUse of graphhical and eexcepttion bbased reporrting to inncreasse thee easee of iinterppretattionData soourcess for operaationaal KPIIs aree valiidatedd and testeed forr accuuracy, timeelinesss andd releevanceeReportiing iss at tthe loowest levell of d

56、detaill and is daata inntenseeNumerouus mannual aadjusttmentss prioor to finallisingg repoortsRe-keyiing off dataa to ggeneraate reeportssReportss are publiished 15+ ddays ffollowwing mmonth end ccloseImmaterrial aadjusttmentss are allowwed too be ppostedd durring mmonth end iinhibiiting the aabilit

57、ty to reporrt in a timmely mmannerr to kkey deecisioon makkersOperatiional KPIs and ddata ssourcees aree incoonsisttent aacrosss the businness aand tiime coonsumiing too colllate TechnollogyReport produuctionn is aautomaated ffrom aa singgle daatabasse andd inclludes autommated data checkks andd val

58、iidatioon (reefer tto Apppendixx 2 foor outtline technnical archiitectuure)Re-keyiing annd othher maanual interrventiion iss rareely neeeded for ddata ggatherringThe dattabasee is uused ffor annalysiis andd querries, not tthe Geenerall LedggerStandarrd proocedurres arre in placee for evaluuatingg re

59、quuests for nnew innformaation and ffor deecidinng wheether it shhould be coollectted rooutineely inn futuureReportiing syystemss are linkeed to alloww drilll-dowwn to approopriatte levvels oof dettail (see SSectioon REF _Ref31168617 n h 2.99: Buusinesss Inttelliggence)Reportiing syystemss alloow sl

60、iice annd dicce cappabiliity (ssee Seectionn REF _Ref31168617 n h 2.9: BBusineess Inntelliigencee)Web bassed reeportiing too acceess reeal-tiime innformaation (see Sectiion REF _Ref31168617 n h 2.9: BBusineess Inntelliigencee). IIt is recoggnisedd, howwever, thatt reall timee repoortingg is nnot ree