10 Jan, 2020


There is a reason why annual reports are considered as essential pieces of internal business communication.

From a guide to annual report design, we know how professional annual report designers create impactful reports. This post will look at the different types of reports and some important pointers to keep in mind.

We already know that an annual report is an organizational document that is prepared for a specific audience. One can deliver summaries to an annual report orally, but the actual report must be a written document.

A business report needs to be objective-based and must have a presentation of facts that are used in a decision-making process. It is a written document of processes and situations, that govern company-related decisions and determine further actions.

Types of Reports

Reports are generally classified into at least 7 categories. These are:

1. Long or Short Report

A single page report is a short report. A long report would be one that is more than 5 pages in length. The longer a reports length, it tends to fall into the category of a formal report.

2. Analytical or Informational Report

Analytical reports are data-driven reports that try to solve a problem. Examples of these are feasibility reports, real-estate appraisals & scientific research papers.

Informational reports carry objective-based information from one organizational area to another. Examples of these are financial reports, attendance reports or company annual reports.

3. Informal or Formal Report

Informal reports are short messages written in casual language. Memorandum notices or letters can be considered as an informal report.

Formal reports are prepared in a structured manner. They are detail-oriented with a focus on objectivity. Personal matters are omitted here.

4. External & Internal Report

External reports are circulated to shareholders outside of an organization. Internal reports, on the other hand, are for shareholders within the organization.

5. Proposals

A proposal is prepared with an objective to inform the reader about an organization’s ability to meet the needs of another organization, through a service or product.

6. Periodic Report

A periodic report is released on pre-defined dates. Periodic reports are usually directed upwards, for management usage. These reports are generated via the system or through pre-printed forms.

7. Lateral or Vertical Report

Lateral reports are prepared for coordination between the same levels in an organization. For example, a lateral report can be circulated between the production and finance departments within an organization.

A vertical report travels vertically within an organization. The upward or downward direction determines where the information is flowing, as per management control.

Report Formats

Reports can also be classified based on their format type. A preprinted, ‘fill-in-the-blank’ report consists of a few pages. A report like this is used to fill-in routine numerical information.

A letter format is adopted for sending information to outsiders. A report based on a letter format contains figures, footnotes, tables, and headings.

Also known as a memo report, a memo-based format is commonly used for short informal reports that are circulated within the organization. The format comprises ‘date’, ‘to’, ‘from’, ‘subject’ and ‘body’ fields. Visual aids are also used within a memo.

Finally, a manuscript format is common for reports that run a few pages. Manuscripts are formal. As the length of the report increases, more visual elements are added to match up with the text.

Annual Report Basics

An annual report is not only a great document for disclosing financial statements, but are also a way for management to communicate with company shareholders.

An annual report’s introduction section includes a company overview, purpose, mission statement and brief company history.

An annual report will certainly include a letter from either the CEO or the Chairman of the Board. The management will also provide a detailed financial summary to go with the letter. The summary contains information related to operating expenses, net income, revenue growth, and asset sales.

Also included within an annual report is the balance sheet, which gives a snapshot of company liabilities and assets.

Notes on financial statements provide added information about each financial statement. The notes on income statement provide information about the type of sale that is made. Balance sheet notes provide added information about capitalized leases and debt issuances.

Financial statements are gauged by management, creditors, and lenders to evaluate the organization’s progress.

The audience plays a key role when deciding to prepare a report. This includes deciding on what elements to add and what to remove. A public company’s audience includes creditors and shareholders.

For such an audience, the bulk of the report will contain financial information in a structured format. A private or non-profit company will prepare a report comprising of information that benefits the general public. This is accomplished through a goodwill section towards the end of the report.

Companies that present fewer financial reporting information usually devote the majority of their annual report to “goodwill”. Companies highlight their foundation priorities here. This section includes visuals related to the company’s involvement within the community. A call-to-action is included which announces continued involvement in community-based activities.