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Financial Management

Financial Reports

 

Contents

Introduction
Frequently Asked Questions
Narrative
Additional Resources
Applicable Laws

 

Introduction    Back to Top

Monthly financial reports are the tool needed to monitor the budget and compare the budget projections with what is really happening. They provide a "reality check" to verify the budget projections are accurate and the finances of the organization are secure. They are also a tool for assessing local programs and services and deciding if the governing body is meeting its goals.

Monthly Financial Reports can be as detailed as the governing body wishes. The important thing is that the information be presented in a manner that is easy to understand. There is a sample monthly financial report form in Commerce's "Model Financial Record Keeping System Manual", Chapter 12, and the "Additional Resources" section below provides a sample monthly financial report form that will suffice for a typical rural Alaska community. Also, there are several computerized record keeping programs available that provide various reporting options.

There are many resources and publications available that provide information on creating monthly financial reports and the requirements for them. See the "Additional Resources" section below for more detailed information on how to prepare a monthly financial report. Department of Community and Economic Development (Commerce) regional office staff can provide assistance with this.

Note: In addition to monthly financial reports, under AS 29.35.120, the state requires that municipalities provide yearly financial reports. See the Financial Audits and Statements section of LOGON for more information on these types of reports.

 

Frequently Asked Questions    Back to Top

What is a monthly financial report and why is it necessary?

A monthly financial report is a written document that creates a snapshot of an organization's financial situation by reporting on its revenues and expenditures (money in and money out). One of the goals of a monthly financial report is to compare the monthly and year-to-date activity against the amounts budgeted to ensure the municipality is on track with its budget projections. If there are any areas where the organization may be overspending or under-receiving, this could require adjustments to the budget to ensure the organization can still meet its goals.

Note: A monthly financial report is not a verbal report by staff, or a look at the check register and/or bank statement. It is a written report that categorizes and summarizes information in an easy to understand format that compares the budget to what is actually happening.

Who is responsible for preparing the monthly financial reports?

Under state law (AS 29.20.500(4)) the chief executive officer (mayor or manager if manager form of government) is responsible for making monthly financial and other reports required by the governing body. Typically, the actual preparation of a monthly financial report is assigned to the bookkeeping staff or treasurer to prepare. Ultimate responsibility for ensuring this is done accurately and on time, however, remains with the chief executive officer.

How much information should be included in a monthly financial report?

The governing body decides exactly how much detail they want to see and what information should be brought to their attention. Detailed financial reports can become confusing and difficult to understand. On the other hand, generalized reports often leave out the details needed to identify potential financial problems. It is possible to personalize your organization's reports so they provide enough detail to keep the governing body sufficiently informed, but do not overwhelm the reader with too much detail that hasn't been summarized appropriately.

How do you prepare a monthly financial report?

The key to creating a good financial report is in your record keeping. If the 'books of original entry' are set up well and maintained, there should never be an acceptable reason for a report not being available. The report is based on the information contained in the budget and summarized information on what financial transactions have taken place for the month. If the records are well maintained and carefully updated as each transaction occurs, all that is required is some simple addition and updating the appropriate report items. The "Model Financial Record Keeping System" Manual (Commerce) provides detailed information on all aspects of managing municipal finances and record keeping.

What standard information should the governing body see in the monthly reports?

There are many types of financial reports. The most common type of financial report is a simple comparison of revenues and expenditures. (This type of report when used in business is often called a "profit and loss statement.") Since the business of government is not to generate profit, the purpose of a report to a governing body is to keep them informed and ensure that the finances are adequate to provide the services and accomplish the goals identified for the fiscal year. A monthly financial report to a local government should at a minimum compare actual revenues and expenditures with the amounts budgeted.

The standard report format recommended for use by local governments is a report by department or project/service and line item and includes the following information:

  • Budget amount;
  • Activity for the month;
  • The total amount year to date; and
  • The difference between the year-to-date amount and the budgeted amount (balance remaining).

Should a financial report be provided at every meeting?

If your local governing body holds more than one meeting a month, it is not necessary to see a monthly financial report at each meeting. The governing body decides this. A monthly financial report, however, is required once a month at the regular meeting. Either way, the administrator needs to have financial information available for the governing body at any meeting where they might have to allocate funds or make financial decisions.

 

Narrative    Back to Top

A large part of a governing body's time is spent dealing with public funds. In order to make sound financial decisions, the governing body must receive accurate and timely financial information. There is never a valid reason for not providing a timely monthly financial report. The Alaska Department of Community and Economic Development, Division of Community and Regional Affairs staff can provide training on-site in local communities and through regional workshops or provide information on other training opportunities.

 

Additional Resources   Back to Top

Publications:

Sample Documents:

Web Sites:

Training:

The Alaska Department of Community and Economic Development, Division of Community and Regional Affairs, provides training on-site in local communities and upon request and through regional workshops.

 

Applicable Laws    Back to Top

Revised 8/7/02

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