Best practice, financial report writing principles and process

1. FINANCIAL REPORT WRITING SKILLS –
BEST PRACTICE WRITING PRINCIPLES
AND PROCESS
CHARLES COTTER
TRANSNET ENGINEERING, DURBAN SOUTH
11-12 MAY 2015

2. 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

3. 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

4. DOES THIS LOOK FAMILIAR?

5. 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.

6. 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

7. 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

8. 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

9. 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

10. THE BEAUTY OF SIMPLICITY

11. BEST PRACTICE FINANCIAL
REPORT WRITING (COMPETENCE)
CONTENT
CONTEXTPROCESS

12. EFFECTIVE FINANCIAL REPORT
CONTENT

13. TYPES OF REPORTS
• Informative
“Telling”
Examples
• Evaluative
“Selling”
Examples

14. APPROACHES TO FINANCIAL REPORT
WRITING
• Dash-boarding
 Data-driven and derived
 Report-generating
 MS Excel
• Key-boarding
 Narrative
 Report-writing
 MS Word

15. “LOOK AND FEEL” COMPONENTS OF
AN EFFECTIVE FINANCIAL REPORT
• SCOPE
• STRUCTURE
• STYLE
• TONE
• READABILITY
• CONVENTION

16. SCOPE OF FINANCIAL REPORTS
• Profitability
• Liquidity and Working Capital
• Equity
• Cash flow management
• Investment
• Solvency

17. STRUCTURE
• EXTERNAL STRUCTURE – FRONT-END AND
BACK-END
• INTERNAL STRUCTURE

18. EXTERNAL STRUCTURE – FRONT-END
• Title page
• Table of Contents
• Executive Summary: Overview of Financial
Performance Highlights
• CEO Report

19. 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

20. 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

21. FINANCIAL REVIEW
• Overview
• Profitability
• Operating income and expenses
• Asset Management
• Risk Management
• Equity and Financing Activities
• Investment portfolio and management

22. 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.

23. APPENDICES (ANNUAL FINANCIAL STATEMENTS - AFS)
• Income Statement
• Balance Sheet
• Cash Flow Statement

24. 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.

25. FINANCIAL REPORT WRITING
CONVENTION
• Generally Accepted Accounting Principles
(GAAP)
• International Financial Reporting
Standards (IFRS)
• Public Finance Management Act (PFMA)
• The Companies Act (2008)

26. 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

27. 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

28. 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)

29. 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)

30. 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

31. 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

32. 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

33. 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

34. 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?)

35. 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

36. 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

37. RESEARCH METHODS
• QUANTITATIVE – NUMERIC E.G. STATISTICS
• QUALITATIVE – SUBJECTIVE E.G. SURVEYS AND FOCUS
GROUPS
• SOURCES OF DATA:
 ELECTRONIC
 DOCUMENTARY
 EXPERIMENTAL
 HUMAN

38. 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

39. 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)

40. MIND-MAPPING EXAMPLE

41. 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

42. STEP 4: WRITE FIRST DRAFT
• APPLY THE BEST PRACTICE WRITING
PRINCIPLES
• USE THE APPROPRIATE FINANCIAL REPORT
STRUCTURE AND FORMAT

43. 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)

44. 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

45. 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)

46. CONCLUSION
• SUMMARY OF KEY POINTS
• LEARNING “TAKE-AWAYS"
• QUESTIONS
• TRAINING ADMINISTRATION
• CERTIFICATION
• THANK YOU!

47. CONTACT DETAILS
• CHARLES COTTER
• 084 562 9446
• charlescot@polka.co.za
• LINKED IN
• TWITTER: Charles_Cotter