If you’ve found yourself thrown in the deep end with the responsibilities of treasurer, don’t panic. You’re feeling like you’ve been given the bow but no arrows, aren’t you? The Admin Bandit is going to give you the arrows AND show you how to hit the bullseye as treasurer.

You will need to become familiar with the target and in this case, it’s some of the terms and important documents that you may be working with. So, what is a financial report?

A financial report describes the financial health of your nonprofit organisation through a summary of key financial information. This information reflects the activity and performance of the organisation and, depending on the report, may be prepared monthly, quarterly, half yearly or for the full year.

Depending on the size of your organisation and budget you may not need each of these but you do need to know what they are. The main reports are:

  • Balance Sheet: This is a summary of the available resources available at a point in time and includes the assets, liabilities and equity. This is important for bigger organisations but those who use the cashbook system won’t need it.
  • Profit and Loss Statement: This statement which is sometimes known as Receipts and Expenditure, reports on the income and expenditure of the organisation over a period of time.  Income represents the economic benefits that come into the organisation such as from government grants, donations, interest income, and membership fees.  Expenditure represents the use or consumption of economic benefits such as purchases, salaries and wages and maintenance costs
  • Cash Flow Statement: This reflects the actual cash you receive and the actual cash you spend when they occur. It is important to note that a cash flow statement reflects the actual cash you physically have, not what you may receive. For example, an amount that is owed to you (accounts receivable) is not included as you have not actually received the cash.
  • Annual Report: This report is prepared at the end of the year and reflects the 12 month performance of the organisation. Often they are made up of the reports detailed above but in larger organisations often the annual report includes many notes to the accounts that they are required to prepare to comply with legal, reporting, accounting and auditing standards.
  • Budget: Often a budget is overlooked but this is a key financial planning document as it should be used to detail how you plan to use your resources for the year. Organisational performance can be measured as well as individual program performance

The financial report is a key document for every business or not for profit organisation. Make yourself familiar with it.