Monitoring your Financial Position

 Keeping a watchful eye on the financial health of your association gives you the power to keep it at the top of its game. Understanding and interpreting financial reports and trends are one of the key ways you can gather information on the strengths, weaknesses, and general performance of your association. It’s essential to have the financial reporting process in place so that financial reports can be made available on a regular basis. Your responsibility for the financial reporting process also includes making sure effective controls and measures are in place, such as policies and procedures. You need to allow for adjustments in your financial activity, as well as, understand what’s being reported on, such as audit or contractual obligations, which all rely on good financial literacy. 

Financial statements can look at lot different from one association to the next. So understanding the basic principles and foundations covered in these videos will allow you to interpret what is happening and be able to ask the right questions. You are not expected to be an expert, but you are expected to be able to read, understand, and interpret your financial statements. 

In a nutshell, there are four main financial reporting statements, provided at your board and member meetings. These inform you about your association’s financial position and its performance. The first report is the balance sheet, also called the statement of financial position. The second report is the profit and loss statement, sometimes called the statement of financial performance. The third report, the statement of cash flows, is also referred to as the statement of receipts and payments. The fourth report you should have is a cash flow forecast. In this video, we’ve covered why you need to understand and interpret financial statements, and the importance of having a regular reporting process in place. We’ve also discussed the four main financial reports you should be reviewing regularly.