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FINANCIAL REPORT WRITING SKILLS – BEST PRACTICE WRITING PRINCIPLES
AND PROCESSCHARLES COTTER
TRANSNET ENGINEERING, DURBAN SOUTH
11-12 MAY 2015
PRESENTATION OVERVIEW
• 20 FUNDAMENTAL, BEST PRACTICE BUSINESS WRITING PRINCIPLES
• THE “LOOK AND FEEL” COMPONENTS OF AN EFFECTIVE FINANCIAL REPORT
• THE 6-STEP, FINANCIAL REPORT WRITING PROCESS
CAKE-BAKING ANALOGY
• BEST PRACTICE BUSINESS WRITING PRINCIPLES - INGREDIENTS
• THE “LOOK AND FEEL” COMPONENTS OF AN EFFECTIVE FINANCIAL REPORT – PICTURE OF THE CAKE
• THE 6-STEP, FINANCIAL REPORT WRITING PROCESS - RECIPE
DOES THIS LOOK FAMILIAR?
LEARNING ACTIVITY 1
• From your experience and perspective, as both a writer and a reader, identify ten (10) common errors that you’ve observed with Financial Reports.
• Match each of these 10 errors with a set of 10 best practice criteria/guidelines to counteract/improve these errors, thereby promoting effective financial report writing.
20 FUNDAMENTAL, BEST PRACTICE WRITING PRINCIPLES
• A – B – C (ACCURACY – BREVITY – CLARITY) – “BE ON POINT AND TO THE POINT”
• A – I – D –A (ATTENTION – INTEREST – DESIRE – ACTION) – “TELL THE READER WHAT YOU’RE GOING TO TELL THEM; TELL THEM AND THEN TELL THEM WHAT YOU TOLD THEM.”
• “THINK BEFORE YOU INK” – USE 80 (THINKING)/20 (INKING) PRINCIPLE
• HARMONIZATION OF THE BEST FIT METHODS – FIT FOR PURPOSE/MESSAGE/READER
• BE STRATEGIC AND SELECTIVE - PROVIDE ONLY VALUE ADDING AND RELEVANT FINANCIAL INFORMATION
20 FUNDAMENTAL, BEST PRACTICE WRITING PRINCIPLES
• “LESS IS MORE” – HAVE AN EFFICIENT AND ECONOMICAL WRITING STYLE
• EMPATHIZE - “CUSTOMIZATION IS KING/QUEEN” – CONDUCT A READERSHIP ANALYSIS TO ACCOMMODATE THEM AS MUCH AS POSSIBLE – “SPEAK THE LANGUAGE THAT YOUR READER UNDERSTANDS”
• INTEGRATE RATIONAL (LEFT BRAIN) AND CREATIVE (RIGHT BRAIN) THOUGHT PROCESSES
• MARRY BEING METICULOUS (“EYE FOR DETAIL”) WITH FINDING CREATIVE WRITING SPACE (PSYCHOLOGICAL, EMOTIONAL AND ENVIRONMENTAL)
• USE OF VISUAL STIMULI AND TECHNIQUES TO COMPLEMENT, SUPPORT AND PROMOTE A HIGHER LEVEL OF UNDERSTANDING
20 FUNDAMENTAL, BEST PRACTICE WRITING PRINCIPLES
• ENSURE QUALITY ASSURANCE E.G. PROOF-READING; EDITING; SPELL CHECKING AND VERIFICATION OF FINANCIAL INFORMATION
• USE THE PURPOSE AS YOUR WRITING “GPS” – TO CONCENTRATE/DIRECT FOCUS TO THE ACHIEVEMENT OF OUTCOMES/OBJECTIVES
• “DON’T WRITE TO IMPRESS, WRITE TO PROMOTE A HIGHER LEVEL OF UNDERSTANDING.” – BE A AGENT OF EFFECTIVE COMMUNICATION
• EMPLOY A “COMMUNITY OF WRITERS” APPROACH – THE VALUE OF CONSULTATION AND ENGAGEMENT
• PROPER STRUCTURE - USE THE PYRAMID (CASCADING) METHOD – INITIALLY PRESENT LESS IMPORTANCE INFORMATION AND CLIMAX WITH MOST CRITICAL INFORMATION
20 FUNDAMENTAL, BEST PRACTICE WRITING PRINCIPLES
• APPLY THE WATERFALL APPROACH – VERTICAL ALIGNMENT AND SYNERGY BETWEEN THE FINANCIAL REPORT FINDINGS, CONCLUSION AND RECOMMENDATIONS
• “TOUR GUIDE” MENTALITY – DIRECT; NAVIGATE; ORIENTATE, INFORM; ADVISE, ENLIGHTEN AND CAPTIVATE THE READER
• ADOPT A STORY TELLING MODE – LOGICAL AND COHERENT FLOW OF FINANCIAL INFORMATION – NO SURPRISES!
• THE REPORT SHOULD GENERATE BUSINESS INTELLIGENCE – ENABLING SMART OPERATIONAL AND STRATEGIC FINANCIAL MANAGEMENT DECISION-MAKING
• ADOPT A STRATEGIC MIND-SET – DEVELOP STRUCTURED, HOLISTIC AND WELL-PREPARED BUSINESS WRITING HABITS
THE BEAUTY OF SIMPLICITY
BEST PRACTICE FINANCIAL REPORT WRITING (COMPETENCE)
CONTENT
CONTEXTPROCESS
EFFECTIVE FINANCIAL REPORT CONTENT
TYPES OF REPORTS
• Informative
“Telling”Examples
• Evaluative
“Selling”Examples
APPROACHES TO FINANCIAL REPORT WRITING
• Dash-boarding
Data-driven and derived Report-generatingMS Excel
• Key-boarding
NarrativeReport-writingMS Word
“LOOK AND FEEL” COMPONENTS OF AN EFFECTIVE FINANCIAL REPORT
• SCOPE
• STRUCTURE
• STYLE
• TONE
• READABILITY
• CONVENTION
SCOPE OF FINANCIAL REPORTS
• Profitability
• Liquidity and Working Capital
• Equity
• Cash flow management
• Investment
• Solvency
STRUCTURE
• EXTERNAL STRUCTURE – FRONT-END AND BACK-END
• INTERNAL STRUCTURE
EXTERNAL STRUCTURE – FRONT-END
• Title page
• Table of Contents
• Executive Summary: Overview of Financial Performance Highlights
• CEO Report
EXTERNAL STRUCTURE – BACK-END
• Glossary of Financial terms and Acronyms
• List of Sources/References
• Appendices (Annual Financial Statements - AFS):
Income (Profit/Loss) Statement Balance Sheet Cash Flow Statement
• Notes/Narrative to Financial Statements
• Attachments:
Audit Committee Report Independent Auditor’s Report Accounting and other relevant policies
INTERNAL STRUCTURE• Introduction
• Financial Contextualization/Background
• Research methodology and process
• Financial review:
Overview Profitability Operating income and expenses Asset Management Risk Management Equity and Financing Activities Investment portfolio and management
• Forward-looking information: Future-directed financial strategies and forecasts/projections
• Conclusions
FINANCIAL REVIEW• Overview
• Profitability
• Operating income and expenses
• Asset Management
• Risk Management
• Equity and Financing Activities
• Investment portfolio and management
FORWARD-LOOKING INFORMATION: FUTURE-DIRECTED FINANCIAL STRATEGIES AND FORECASTS/PROJECTIONS
• Include all relevant information in this sub-section e.g. medium-term and long-term financial projections and targets and business forecasts.
• Direct reference and extraction (where appropriate) should be made to the organization’s approved Strategic Plan.
APPENDICES (ANNUAL FINANCIAL STATEMENTS - AFS)
• Income Statement
• Balance Sheet
• Cash Flow Statement
NOTES/NARRATIVE TO FINANCIAL STATEMENTS
• Present information about the basis of preparation of the financial statements
• Provide the specific accounting policies used and the details of the accounting practices you use e.g. policy for procurement or levels of payment authorization.
• Disclose the information required by IFRSs that is not presented elsewhere in the financial statements; and
• Provide information that is not presented elsewhere in the financial statements, but is relevant to an understanding of any of them.
• Furthermore, make notes of any financial items that may require explanations.
FINANCIAL REPORT WRITING CONVENTION
• Generally Accepted Accounting Principles (GAAP)
• International Financial Reporting Standards (IFRS)
• Public Finance Management Act (PFMA)
• The Companies Act (2008)
OTHER CONVENTION
• USE OF TABLES AND FIGURES – LABELLING, NUMBERING AND REFERENCING
• APPENDICES AND ANNEXURES - LABELLING, NUMBERING AND REFERENCING
• CITATION AND REFERENCING – HARVARD METHOD – ALWAYS ACKNOWLEDGE SOURCE AND AVOID PLAGRIASM AT ALL COSTS
• FORMAT, DESIGN AND LAY-OUT – INDUSTRY AND ORGANIZATION-SPECIFIC GUIDELINES AND TECHNIQUES
• GRAMMATICAL AND LANGUAGE RULES
OTHER CONVENTION
• USE ACTIVE VOICE (AS OPPOSED TO PASSIVE) – WRITTEN IN THIRD PERSON
• USE OF ACRONYMS AND ABBREVIATIONS
• AVOID JARGON AND UNFAMILIAR FINANCIAL TERMINOLOGY
• SENTENCE AND PARAGRAPH STRUCTURING
PROPER SENTENCE AND PARAGRAPH STRUCTURING
• VARY THE LENGTH OF SENTENCES
• EASY TO UNDERSTAND CONCEPTS – SHORTER SENTENCES. COMPLEX CONCEPTS – LONGER SENTENCES TO ENABLE EFFICIENT ASSIMILATION OF INFORMATION
• DON’T SUBSTITUTE A FULL-STOP FOR A COMMA – “IF YOU CAN USE A FULL-STOP USE IT!”
• ONE CONCEPT/KEY POINT, ONE PARAGRAPH. DIFFERENT CONCEPT, DIFFERENT PARAGRAPH. “DON’T MIX ‘N MATCH – AVOID LIQUORICE ALL-SORTS WRITING STYLE”
• CREATE A MEANDERING AND MESMERIZING WRITING STYLE AS YOU TRANSITION FROM ONE PARAGRAPH TO THE NEXT. AS YOU EXIT ONE PARAGRAPH START INTRODUCING THE NEXT ONE.
• MAKE USE OF SIGN-POSTING (TO NAVIGATE THE READER)
STYLE
• STYLE IS REGARDED AS THE DEGREE OF FORMALITY
• THE APPROPRIATE STYLE IS:
FORMAL (NOT INFORMAL) FACTUAL (NOT OPINION-BASED) RATIONAL (NOT EMOTIONAL) – “Connect intellectually
with your reader, disconnect your emotions and personal feelings.”
OBJECTIVE (NOT SUBJECTIVE)
TONE
• TONE IS REGARDED AS THE WRITER’S ATTITUDE – DIRECTED AT READER AND SUBJECT MATTER
• TONE SHOULD BE:
RESPECTFUL (NOT PATRONIZING)ASSERTIVE (NOT PASSIVE OR AGGRESSIVE)PROFESSIONAL
READABILITY• REFERS TO ALL THE ASPECTS THAT MAKE A FINANCIAL REPORT MORE
NOTICEABLE AND EASY TO READ - “SOFT ON THE EYE AND SOFT ON THE MIND”
• MUTUAL DEPENDENCE - THE WRITER RELIES ON THE READERS' ABILITY TO READ EFFICIENTLY AND TO UNDERSTAND THE (INTENDED) MESSAGE.
• WRITER NEEDS TO DO EVERYTHING IN THEIR POWER TO ENABLE AND FACILITATE A COMMON UNDERSTANDING
• TECHNIQUES TO ENHANCE THE READABILITY:
LAY-OUT USE OF WHITE SPACE HEADINGS/SUB-HEADINGS NUMBERING
LEARNING ACTIVITY 2
• Develop the best practice criteria and convention (rules) of an effective financial report. Focus on the following elements:
Structure
Style and tone
Readability
Convention
FINANCIAL REPORT WRITING PROCESS
• STEP 1: PLANNING
• STEP 2: RESEARCHING THINKING (80%)
• STEP 3: ORGANIZING
• STEP 4: WRITING THE FIRST DRAFT
• STEP 5: QUALITY ASSURANCE INKING (20%)
• STEP 6: SUBMIT FINAL DRAFT FOR APPROVAL AND ADOPTION
STEP 1: PLANNING (7-W’S)• DEFINE THE PURPOSE (WHY?)
• FORMULATE THE OBJECTIVES (WHAT?)
• SUBMISSION TARGET DATE (WHEN?)
• SUBMISSION AND APPROVAL PLATFORM/COMMITTEE (WHERE?)
• SCOPE OF THE FINANCIAL REPORT (WIDTH?)
• ESTIMATED LENGTH/VOLUME OF FINANCIAL REPORT (WEIGHT?)
• CONDUCT A READERSHIP ANALYSIS (WHO?)
READERSHIP ANALYSIS (RELATED TO A-B-C)
• LEVEL 1 READER/S: APPROVING AUTHORITY (NON-TECHNICAL) – INFORMATION NEED: BREVITY
• LEVEL 2 READER/S: TECHNICAL/SUBJECT MATTER EXPERT – INFORMATION NEED: ACCURACY
• LEVEL 3 READER/S: IMPLEMENTER/FUNCTIONARY – INFORMATION NEED: CLARITY
STEP 2: RESEARCHING
• METHODS – TO ACHIEVE THE SCIENTIFIC RESEARCH PRINCIPLE OF VALIDITY
• PROCESS – TO ACHIEVE THE SCIENTIFIC RESEARCH PRINCIPLE OF RELIABILITY
• COLLECTIVELY: VALIDITY + RELIABILITY = CREDIBILITY
RESEARCH METHODS
• QUANTITATIVE – NUMERIC E.G. STATISTICS
• QUALITATIVE – SUBJECTIVE E.G. SURVEYS AND FOCUS GROUPS
• SOURCES OF DATA:
ELECTRONICDOCUMENTARYEXPERIMENTALHUMAN
RESEARCH PROCESS• STEP 1: DEVELOP A DATA COLLECTION PLAN/STRATEGY
• STEP 2: DATA COLLECTION
• STEP 3: DATA COLLATION
• STEP 4: DATA ANALYSIS LEADS TO FINDINGS
• STEP 5: DATA INTERPRETATION LEADS TO CONCLUSIONS• STEP 6: VERIFICATION
• STEP 7: PUBLICATION LEADS TO RECOMMENDATIONS
STEP 3: ORGANIZING – 3-S FORMAT
• STRUCTURE (OF FINANCIAL REPORT)
• SEQUENCE (OF FINANCIAL REPORT)
• SPACING (POSITIONING OF TABLES, FIGURES, ATTACHMENTS TO THE FINANCIAL REPORT)
• RECOMMENDED ORGANIZING TOOL: MIND-MAPPING
• OBJECTIVE: TO ENSURE FLUENCY AND EFFICIENCY IN WRITING WHEN TRANSITIONING FROM THINKING (STEPS 1-3) TO INKING (STEPS 4-6)
MIND-MAPPING EXAMPLE
LEARNING ACTIVITY 3
• By following steps 1-3 of the report writing process, develop a framework/skeleton of a financial report for your organization.
Step 1: Planning
Step 2: Research methodology and process
Step 3: Organizing the financial report structure
STEP 4: WRITE FIRST DRAFT
• APPLY THE BEST PRACTICE WRITING PRINCIPLES
• USE THE APPROPRIATE FINANCIAL REPORT STRUCTURE AND FORMAT
STEP 5: QUALITY ASSURANCE
• PROOF-READ AND EDIT THE FINANCIAL REPORT
• PERFORM A SPELLING AND PUNCTUATION CHECK
• CONSULT WITH LANGUAGE AND SUBJECT MATTER EXPERTS AND RECEIVE FEEDBACK
• MAKE THE NECESSARY REVISIONS
• REFER TO THE EVALUATION CHECKLIST (PAGES 66-68 IN THE LEARNER MANUAL)
STEP 6: SUBMISSION AND APPROVAL OF FINAL DRAFT
• MAKE THE NECESSARY AMENDMENTS AND WRITE THE FINAL DRAFT
• SUBMIT TO HIGHER MANAGEMENT TO AUTHORIZE, APPROVE AND ADOPT THE FINANCIAL REPORT FINDINGS AND RECOMMENDATIONS
LEARNING ACTIVITY 4
• By using the following format (as a guideline), write the first draft of a financial report for your organization (step 4 of the financial report writing process)
• Step 5: Review the report (Submit this report to a fellow learner to get feedback). Readers should use the checklist on pages 66-68 to evaluate the financial report.
• Step 6: Writing and submitting the final draft (Based on the feedback from the fellow learner, make the necessary amendments and write the final draft)
CONCLUSION
• SUMMARY OF KEY POINTS
• LEARNING “TAKE-AWAYS"
• QUESTIONS
• TRAINING ADMINISTRATION
• CERTIFICATION
• THANK YOU!
CONTACT DETAILS
• CHARLES COTTER
• 084 562 9446
• LINKED IN
• TWITTER: Charles_Cotter