Elegant Nonprofit Reporting: System Design
Like planting a garden in spring to provide a rich harvest in the fall, taking the time to design an elegant chart of accounts, cost centers, and allocations creates the conditions in which your accounting system will eventually bear fruit – reports and dashboards rich with information that effectively tell your nonprofit’s financial story.
In our previous post in the elegant financial systems series, my colleague, Curt Klotz, provided design principles to help nonprofits “better tell their financial story and better align their financial resources in service of their mission.” In this post, we offer examples of how to use those principles to build effective reports and dashboards in the Sage Intacct accounting system.
The first step in building any report or dashboard is identifying the most effective vehicle for sharing that piece of the story.
Should the information be shared via a graph or report? If you decide to use a graph, what type paints the most powerful image? If you decide to use a report, what level of detail is required by the audience and what information is important to share? The vehicle chosen will either powerfully land your story with the consuming audience member or leave them feeling lost, confused, or worse – without faith in the information they are seeing.
Share only just the right amount of information about the financial past
In his article, Curt identified the statement of activities as a useful vehicle for presenting a nonprofit’s financial history. How do we build this report in Intacct?
Each report is made up of two main structural components:
- Account groups are used to define what information is included in the various rows of a financial report. In other systems, these are often called the roll-up accounts. Account groups transform what could otherwise be a stultifying amount of transaction detail into to an appropriately scaled summary of the same information – providing just the right amount of meaningful data to the report consumer.
- Columns can hold information organized by dimensions (programs, projects, restrictions, etc.) or other comparative data such as budget or prior periods.
Build your Account Groups:
The rows in this report are flagged to identify the layer in which they will display on the report:
- The top level account group. In this case, Support and Revenue is a group of groups — one, Support (Contributions) and the other, Revenue (Earned).
- More groups of account groups. Support (Contributions) is itself an account group made up of different types of income accounts: Individual, Corporate, Government, etc.
- Groups of account ranges. Some groups are made up of a range of sequential account numbers. For example, accounts 4000 – 4119 make up Individual Contributions.
Add the highest level of account group to your report and minimize the details.
Displaying less, rather than more, is often more powerful. Below is an example of two reports. The first shows an expanded view detailing many accounts. The second shows a collapsed view that more succinctly summarizes the information.
Detailed Report (Expanded):
Summarized Report (Collapsed):
Finally, decide on a column comparison:
In our example, we chose our cost center dimension as the comparison. In Intacct, to create a column for each cost center is as easy as selecting the columns tab of the report writer and choosing to expand by cost centers. The report writer automatically creates a column for each cost center with this one action.
How building the right graph can powerfully portray a nonprofit’s financial future
Graphic representations of financial data can make relationships between two or more data points readily apparent. Displaying the total dollar amount of the current assets side by side with the total dollar amount of current liabilities creates a graphic representation of our current ratio. The visual makes it obvious whether we have enough current assets on hand to cover current liabilities.
The first step towards building a graph in Intacct is to select the proper type. Intacct’s four main report options are:
- Pie or Doughnut
- Column, Stacked Column, Bar, or Stacked Bar
- Line, Area, or Stacked Area
- Waterfall
For our current ratio graph, we choose a bar graph as the visual aid to most effectively convey the information.
Our next step in building our graph is selecting the two components that make up the graph: primary and comparison data series.
Our primary data series will fall on the horizontal access. As we would like to see a comparison of current assets and current liabilities over time, “Reporting periods” becomes our primary series. You can easily expand by months, quarters, or years.
Our comparison data series, as the name implies, represents what we would like to compare over time. In this case, for each quarter we would like to see a comparison of current assets and current liabilities side by side. To designate the source of this information, we choose “Account groups” from the drop down menu.
Good reports come down to organizing, summarizing, and visualizing
The point of designing an elegant accounting system is to produce elegant reports – to help us make decisions, guide our staff, build trust among financial statement users, and help us shepherd our use of resources. The work we put into designing and building an elegant chart of accounts, cost centers, and allocations ultimately allows us to adeptly organize, summarize, and visualize our financial data. Our goal always being to better tell our nonprofit’s financial story.
Watch for upcoming webinars on Elegant Financial Systems Design
The Elegant Financial Systems blog series began with this post in March of 2019. The series is made up of companion pieces by Curtis Klotz and Kathy Jastrzebski – one focused on the principles of elegant design, the other on the practice of building out the design in accounting software. Please watch for our two-part live webinar series on the topic coming up in October and November of 2020. Check CLA’s Event Page in the coming weeks for more information.
Kathy Jastrzebski is a business software director with CLA’s Intacct team. CLA is an Intacct Premier Partner with a partnership that spans over 15 years and more than 400 successful implementations. Kathy brings five years of accounting experience in the manufacturing, products, service, and nonprofit industries. Along with her accounting experience, she has a passion for leveraging technology to lead finance teams worldwide through system implementations with a mission of increasing department efficiency through business process improvements.
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