FINANCIAL MANAGEMENT REPORT EXAMPLE
A GUIDE TO UNDERSTANDING AND INTERPRETING THE IFAC FINANCIAL MANAGEMENT REPORT
The report is designed to assist you to analyse the financial performance of your business. The report is based on the draft accounts which are sent to your local IFAC Office rather than on the final tax accounts which are submitted to Revenue. The reasons for this are two-fold:-
- To provide you with financial management information as early as possible without having to wait until your accounts are finalised for tax purposes in our local office.
- Stock values in your financial management report are based on market values which reflect more accurately both your financial performance and your net worth, than the tax values that are used in the accounts that are submitted to the Revenue Commissioners.
However, we emphasise that the report is based on draft results which will require amendment where it is found that information is either missing or misallocated . Please read carefully the comments on the lead page of the report and the notes at the bottom of the individual pages.
For a detailed and comprehensive understanding of your financial management performance, an in-depth interpretation of this report is required. We provide this as an additional consultancy service at a reasonable fee.
Your IFAC Recorder is available to assist you to understand the report but we recommend that before you implement any changes based on the results, you should seek professional assistance through your local IFAC Office or other competent consultants such as your Teagasc Advisor etc.
Explanation And Clarification
Comparative Analysis Report
- Acres farmed - please check this figure for accuracy. Output costs and profits are expressed on a per acre basis and it is therefore important that there is no error in the number of adjusted acres recorded for your farm. To convert acres to hectares, divide by 2.47.
- Compare the enterprise mix of your farm with the average and top 10% (see breakdown of output), when interpreting this report.
- Farms are allocated to the average or top 10% columns on the basis of profit per acre (before interest). However, interest is shown under breakdown of costs for information purposes.
Source And Use Of Funds Statement
This report is designed to provide you with an understanding of your sources of funds during the year and how they were used plus the impact on your financial position i.e. bank, creditors, etc.
If you succeed in understanding this report, then you will have a good overall grasp of your financial position.
Quarterly Cash Flow Report
While the quarterly cash flow report is based on historical accounts data, a column is provided for you to insert your own projections for the current year.
Borrowing/Investment Capacity Statement
One critical use of accounts is to assess the borrowing capacity of the farm business on an annual basis. This statement provides a basis for doing this.
The values per head quoted in this report are the market values provided by you to our Recorder and the accuracy of management accounts is very dependent on accurate estimation of market values and categorisation of stock. Please note that these values are not used in the accounts that are submitted for tax purposes and that tax values for stock are calculated by your local IFAC Office when finalising the accounts.
[Where there has been a significant change in livestock valuations between beginning and end of year based on the livestock valuations supplied by you and reported in the Trading & Profit & Loss account, the Comparative Analysis Report may be significantly distorted by these adjustments].
our interpretation of these reports should bear in mind that they are based on draft results and if you find that some information is missing or misallocated, please let us have the necessary details and we will be pleased to re-issue a revised report.