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    Being honest: award-winning annual reports

  • Posted on March 29, 2018 by

    Images from Network Rail's winning annual reportHow do you make complex departmental annual reports easily understandable? Do you clearly outline your goals and achievement of them? Is it easy for the public to understand your organisational risks and their management? Being clear, concise, honest and open in annual reports is a real skill. To inspire creativity and usability, our yearly guide to good practice in annual reports this year presents examples from both the public sector organisations we reviewed in the Building Public Trust Awards, and some of the private and third sector examples highlighted in other categories.

    The Building Public Trust Awards, sponsored by PwC, have been running for 15 years and the NAO co-sponsors the public sector award. As part of this, we have seen continuing improvements in the quality and progress towards annual reports that are:

    Accountable, Accessible, Transparent and Understandable

    PwC’s Building Public Trust Awards site outlines the winners and runners-up of several private and third sector categories, while the NAO is one of the judges for the public sector category, reviewing 50 organisations’ reports. The overall public sector winner was Network Rail, which won the award for the second successive year with concise and readable reporting supported by good use of graphics.

    As judges we assess each annual report in nine areas. I highlight in this post just some of the reports that impressed us, particularly in more graphic ways – as this is a blog. I was also pleased to see some departments referencing their single departmental plans and demonstrating what progress has been made against the public commitments made within these.

    I encourage you to explore the many other examples in our document Good Practice from the ‘Excellence in Reporting in the Public Sector’ Award – Building Public Trust Awards.
     


    Strategy

    We looked for:

    • Clarity around purpose, strategic objectives and key programmes/projects.
    • Balanced view of progress against objectives.
    • Details of future plans to implement priorities.
    • Strategy clearly linked to performance measures and risks.

    Example: The Department for Transport’s report (p.9) sets out clearly its objectives and sub-objectives.
     
    DfT strategic objectives diagram


    Risks

    We looked for:

    • Clear articulation of the organisation’s structure.
    • Linkage between risks, strategic objectives and annual report narrative.
    • Quantified risks.
    • Discussion about how the dynamic of the risk profile has changed over time, including developments in relation to specific risks disclosed.

    For example, our guide shows how the Department for Business, Energy and Industrial Strategy uses images to link the risks they identified to their strategic objectives.
     
     


    Operations

    We looked for:

    • Discussion of the different delivery models, the reasons for using these models and how they achieved value for money.
    • Narrative around how business operations support wider parliamentary objectives.
    • For significant contracted-out services, discussion around how these contracts are awarded and how the entity manages the on-going contract.
    • Consideration of capital investment and how it achieves value for money.

    Example: The Crown Estate’s report (pp.10-11) sets out clearly each element of its business model.
     
    Crown Estate operations diagram


    Governance

    We looked for:

    • Narrative that clearly demonstrates the governance structure and tone at the top.
    • Transparent information about how the Board works effectively to govern the organisation.

    Example: Network Rail’s report (p.53) shows how its work fits into the broader picture by illustrating its relationship with other organisations.
     
    Network Rail's relationship with other organisations


    Measures of success

    We looked for:

    • Quantified Key Performance Indicators (KPIs) aligned to strategic objectives.
    • Balanced assessment of goals achieved and performance against target.

    Financial performance

    We looked for:

    • An understandable and fair reflection of financial performance, consistent with the underlying financial statements.
    • Discussion of actual performance against expected/budgeted performance.

    Example: The Legal Aid Agency’s report (p.18) both provides a clear visual display of where it spends its money and an explanation of where figures have changed by comparison with the previous year.
     
    Diagram of Legal Aid Agency spending


    People

    We looked for:

    • Discussion and quantitative analysis of people factors in the organisation.
    • Details of equal opportunities and diversity in the organisation.

    External drivers

    We looked for: Consideration of the external drivers that influence and impact on current objectives and performance

    Example: Action for Children’s report (pp.10-11) uses an engaging way to demonstrate how its work improves the lives of children.
     
    Action for children diagram


    Understandable

    We looked for:

    • Use of plain English, graphics and appropriate layout to enable the user to understand and gauge the importance of the information presented.
    • Clear structure to help users navigate the annual report.
    • Concise summaries with links to further information as required.
    • Use of different mediums to provide information.

    Example: Among a range of engaging graphics in the good practice guide is the John Lewis report’s simple, but effective approach of providing “in a nutshell” summaries of key sections of its Annual Report.
    Egs of John Lewis's 'in a nutshall' summaries


     
    I hope you find our good practice guide useful. I welcome your comments and invite you to contact us if you have any queries or would like to discuss reports in more detail.
     
     

    Kate MathersAbout the author: Kate Mathers is one of the judges for the Building Public Trust Awards and one of the NAO’s Executive Leaders, with oversight of our financial audit work. Kate joined the NAO in 2000, taking a range of roles, including as the Director responsible for the NAO’s Financial Audit Practice and Quality team. She is a Chartered Accountant with many years’ experience auditing a wide range of public sector bodies. She has held senior management positions in finance and operations while working on secondment at the Independent Parliamentary Standards Authority, sits on the ICAEW’s Council and is a member of HM Treasury’s independent Financial Reporting Advisory Board.


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  • 2 Comments

    2 responses to “Being honest: award-winning annual reports”

    1. Manj Kalar says:

      Excellent analysis/resource, timely and helpful to departments as they work on the annual report and accounts – clearly showing what good looks like and why.
      Well done to you and the NAO team for pulling this together

    2. By june and july there should be no contract left to manage at carillion.However due to accounts in fy17 ,possibly running into the year 18,it is possible that payments made before closure and cessation post dated to another date may still be in the pipeline.The scenario is the cost will have to be borne by who takes it into the books.

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