Keeping readers top-of-mind has borne fruit in awards for the best annual reports at the Australasian Reporting Awards.
The Audit Office of New South Wales has scooped the 2014 Report of the Year Award in the non-commercial sector of the Australasian Reporting Awards (ARA).
The significance of the award is not lost on Auditor-General of NSW, Grant Hehir.
“Because we review other organisations on their transparency and governance [mainly NSW Government agencies], we have a strong focus on living up to the standards we expect of them,” Hehir says.
“Being able to demonstrate best practice on the annual reporting front is good for our day-to-day business of holding others to account.”
Hehir believes good financial reporting needs to be externally focused.
“It has to give a clear view of an organisation’s purpose, its culture and people, where it’s come from, where it’s going and how it intends to get there,” he says.
“That can’t be a shopping list – it has to be transparent and balanced.”
In this respect, he says the Australian public sector has an edge thanks to adoption of International Financial Reporting Standards (IFRS).
“The IFRS framework is more robust than standards applied in some other jurisdictions,” he maintains.
“It doesn’t allow a cash-based approach. Unfortunately, lack of compatibility remains a challenge for standard-setters and users in that many organisations have to report across different jurisdictions.”
However, a more compelling issue is an ever-increasing compliance burden.
"Think about what the reader wants." – Grant Hehir
“Everyone’s struggling with the volume and complexity of disclosure, which is affecting reporting clarity, and I’m not sure users get much benefit from it,” he says.
“It would be preferable to rely on independently reviewed information, but because of the complexity many users are turning to analysts’ briefings, a company’s own releases and media reports.”
To keep a check on the demand compliance is placing on internal resources, Hehir says it’s important to regularly document and communicate internally and externally.
Planning is the key – constantly watch how you’re tracking against key performance indicators and it will be a lot easier to treat an annual report as more than just a compliance exercise, he says.
Another pitfall is being too internally focused. Concentrating on a big IT or human resources initiative might seem a great idea, but are stakeholders really interested?
“Organisations are generally created for external purposes, and that has to be the starting point for a report,” Hehir says.
Hehir's Audit Office of New South Wales won the 2014 Report of the Year Award
“Think about what the reader wants.”
An annual report is not a marketing document, he emphasises.
“Focus on data and text,” Hehir says.
“If you’re using pictures and graphs, they need a demonstrable purpose. You still have to tell a story – the purpose of the organisation, the environment in which it works and how you’re generating sustainability through internal strategies – but a report needs to concentrate on the right detail.”
More so, it seems, in an increasingly online world.
“In reporting to Parliament we hardly print documents anymore,” he reveals.
“We’re at the point where the majority of users don’t want a piece of paper – it’s a waste. The nominees in the ARA for online presentation were very good. It’s less expensive and more user-friendly in that you can package it in a way where the user can determine how they dip into it.”
Meantime, Hehir attributes all credit for his office’s award coup to his people and predecessor, their commitment to improving the report’s governance components and, of course, keeping readers top-of-mind.