How to Improve Financial Reporting Transparency to Earn Your School Board’s Trust
Whether we like it or not, the financial reports we give to our school boards have a longer-term effect than you may think. The trust that you build (or lose) with each report goes well beyond the date ranges covered in the reports themselves.
It’s a cumulative effect. If report after report is accurate, easy to access, and clear, the board members will be more and more inclined to trust not just the reports, but also the people compiling them — you and your team.
Unfortunately, it takes only a single poorly put-together report to significantly damage that trust.
Let’s look at some common mistakes made by school financial accounting teams when reporting to the school board, and how to avoid those mistakes.
Mistake 1 — Your reports aren’t always accurate.
Accuracy is the foundation of reporting. Without it, no other measures you take to increase reporting transparency will matter.
If something in a report doesn’t add up — even though it’s nearly always an honest mistake — that mistake can chip away at the trust you have with your board for a long time.
Each time they look at one of your reports from then on, the board members will have a fiduciary responsibility to the community to ask themselves, “Is this accurate? Can I really trust this information?” Even if they don’t ask it outright or consciously, if it’s in the back of their minds then you’re starting each interaction with them from a bad position.
The Solution
The best way to ensure financial reporting accuracy is to make sure that there are as few steps as possible — like button clicks and other manual processes — required to get the data from your software into the report. The fewer times a human touches the data, the fewer chances there will be for human errors to occur.
Mistake 2 — It’s difficult to access your reports.
Are you printing reports on paper? Or, if giving digital reports, do board members still have to comb through massive documents filled with raw data to get the information they need?
If board members have to work hard to get the information in the first place, you can bet they’ll be somewhat frustrated by the time they get to the next phase of their job — making sense of that information. By the time they get the information and make sense of it, they may not be in a favorable state of mind to make the decisions you need them to make.
Not only can this inaccessibility frustrate board members, it also can affect their trust in you.
The Solution
To keep your board members happy and trusting, you need to make it as easy as possible for them to get the information they need.
That means if you’re giving them paper, switch to digital reports (like PDFs). If you’re giving them PDFs, find a web-based solution they can access from anywhere (given the secure login credentials).
If you are giving the board digital, web-based reports, make sure you’re able to control which information they see. This isn’t a means of hiding some information while presenting other information. It’s a way to make sure that you streamline what you’re giving them so they can get right to the important data without searching too much.
To make this last option work, your software will need to provide you with advanced filter options and the ability to set read-only permissions.
Mistake 3 — The bigger story isn’t clear.
Reporting is essentially a means of storytelling. You’re telling the story of your school’s finances for a given period — where you spent the money, what the outcomes were, and so on.
If you’re giving your board dense, mostly-raw data laid out the way you needed it to be in order to create the report (instead of how they need it to be in order to understand the report), then you shouldn’t be surprised if the story doesn’t make sense to them.
Remember, they’re board members chosen to represent the community — they’re not (necessarily) CPAs or Accounting experts.
The longer it takes them to make sense of what they’re looking at, the more opportunities there will be for misunderstandings and confusion.
The Solution
To avoid those misunderstandings, it’s absolutely critical to tell the story clearly and quickly.
Since the school board members aren’t a group of CPAs and Accounting experts, you need to translate the information for them if you want them to understand it as soon as they see it.
But how? What’s the best way to translate your data for your school board?
They say a picture is worth a thousand words, and that’s especially true when it comes to communicating to people whose minds are wired differently from yours.
The easiest and best way to translate your data story is by turning your language (numbers) into a visual experience for your board (graphs, charts, etc.). Not everyone will understand the various data sets that helped you to arrive at a forecast, but you can bet they’ll understand a side-by-side look at last month’s spending compared to next month’s projected spending if it’s illustrated in a bar graph.
Without the right software, it can be difficult to transform your data into visuals. It also makes your data susceptible to errors if you’re trying to create visuals manually.
Still, it is worth the effort if you really want to build trust between your Finance department and your school board.