Writing the report: type, structure, headings and the report format

Passing the Case Study takes two skills: analysis and report writing. A weakness in either one can sink the paper, and examiners have named poor report writing in almost every examiner’s report. This topic shows how to choose the type of report, what to cover for each kind of analysis, and how to structure the report from introduction to appendices.

The three kinds of analysis

Case Study requirements ask for one or more of three analyses, and you then write a report to advise a client or to help your boss decide.

Internal and external reports

Before you write, decide who the report is for. An internal report goes to someone in your own organisation, usually your boss or the board. An external report goes to someone outside it, in the Case Study usually a member of your client’s staff such as the managing director or the chief financial officer.

Then settle the purpose: is the report to inform, advise, direct or persuade? Find out the reader’s position, because it decides your language and style. Keep five things in view: the purpose, the type (informational or analytical), the structure, the audience and headings that make the report easy to read.

A business analysis report

The purpose of a business analysis is to move the company forward. It gives management information for operating, tactical and strategic decisions. It must show strengths and weaknesses and also the opportunities and threats in the industry, the national setting and the international setting. The outcome is a set of decisions and action plans to build on strengths, reduce weaknesses, seize opportunities and avoid threats.

Useful sources are board and management minutes, financial statements analysis for at least five years, chairman’s and directors’ reports for five years, any earlier strengths, weaknesses, opportunities and threats (SWOT) analysis, and market and industry surveys. To build a SWOT, start with strengths, weaknesses, recent growth and core competence. Write down the vision, mission and key objectives.

From these, list the critical success factors and key performance indicators, then assess performance against the stated objectives.

A financial statements analysis report

This analysis always focuses on three things: profitability, position and future potential. Management wants profitability and position, to plan ahead. An investor looks at future earning ability. A creditor looks at position and prospects. Whatever the purpose, show profitability, efficiency, short-term solvency and long-term solvency, because you can judge financial health only after reviewing all of them.

The financial statements are the statement of financial position, the statement of comprehensive income, the cash flow statement, the statement of changes in equity and the notes.

Follow these guidelines:

1. Determine the purpose, use and user of the report, because they decide the content.
2. Work out the user’s information needs, which tells you which ratios to include.
3. Use a clear framework and do not mix ratios. Deal with profitability first, then efficiency, then position (short-term and long-term solvency), then future prospects.
4. Review the background of the business so the analysis connects to its operations and to the source of its problems.
5. Consider the company’s industry, national and international setting and compare it with the industry.
6. End with conclusions and recommendations.

Your conclusions should say whether profitability is improving or declining and whether it is above or below the industry average. They should say whether assets are used well, whether the company can meet its day-to-day commitments, whether it is highly or lowly geared and what that means, and whether its future looks bright or its existence is under threat.

Your recommendations should state what management should do to ensure survival and future profit.

A financial data analysis report

This varies with the examiner’s requirement and the data supplied. Work out the type of data, its purpose and the decision management wants to make. Then use the analytical skills from earlier subjects, such as Performance Management and Strategic Financial Management, to choose the right analysis. The result is the basis for your conclusions and for the action management should take.

The structure of the report

Case Study papers usually have two requirements. Build your main headings around the two requirements, and use subheadings for the structure of your discussion under each. Headings should be directional, descriptive, parallel and sequential, so they guide the reader through the report. Your conclusion must touch the specific point of each requirement.

If requirement 1 asks you to appraise financial health, the conclusion must assess short-term and long-term solvency and what that means for the company’s future. The exam layout, which places conclusions and recommendations inside each requirement, is set out in a later topic.

Worked example: planning the headings

The November 2015 case asked for two things. Requirement 1 was an analysis of strategic performance using the balanced scorecard, and requirement 2 was a product mix that maximises the margin of a call centre. Before drafting, plan the headings so that each requirement has its own section.

1. Introduction: terms of reference, scope, limits and background on the company.
2. Requirement 1: performance using the balanced scorecard
   • Financial perspective
   • Customer perspective
   • Internal processes perspective
   • Learning and growth perspective
   • Conclusions and recommendations
3. Requirement 2: the call centre product mix
   • Contribution per unit of the limiting factor
   • The recommended mix and total margin
   • Staffing and other business factors
   • Conclusions and recommendations
4. Appendices: ratios, the scorecard figures and the contribution analysis.

Notice that the headings are parallel, descriptive and in the order the reader needs. Each main heading answers one requirement.

Checking the report before you finish

Leave the last minutes of the paper for a short review. Read your headings against the requirements and confirm that each requirement has its own section. Check that every figure in the body matches the appendix and that the appendix is referred to by its label. Make sure the executive summary agrees with the final conclusions, because it is written last and often drifts.

Look for acronyms that are not spelled out, numbers with no label and recommendations that do not follow from the analysis. A report that is complete and consistent earns more than one with an extra page of analysis that contradicts itself.

Common mistakes

• Writing a memo when the reader is a client, or a letter when the reader is your boss.
• Leaving the disclaimer off an external report.
• Mixing profitability, solvency and efficiency ratios in the same paragraph.
• Headings that repeat the case rather than guide the reader.
• A conclusion that ignores one of the two requirements.
• Putting every calculation in the body instead of the appendices.

Quick revision

• Internal report: memo to your boss or board. External report: letter to the client, with a disclaimer.
• Financial statements analysis: profitability, efficiency, short-term and long-term solvency, prospects.
• Financial data analysis: identify the decision, choose the analysis, conclude and recommend.
• Business analysis: strengths, weaknesses, opportunities and threats.
• Structure: summary, introduction, body, conclusion, recommendation, appendices.
• Conclusion: four to six sentences that touch each requirement.

Practice questions

These are original questions in the style of the Institute of Chartered Accountants of Nigeria exam. Try each one before you open the answer.

Model answer

The next topic covers the executive summary: what it contains, how to write it and mistakes to avoid.

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