The Securities and Exchange Commission is phasing in new rules that by 2005 will require most companies to file their quarterly reports within 35 days and annual reports within 60 days after the period’s end. In 2002, most companies had 45 days to file their quarterlies and 90 days for their annual reports.
If these rules went into effect today, according to the latest PricewaterhouseCoopers Management Barometer, 40 percent of 177 executives at U.S. multinationals would be unable to meet the new deadlines.
To develop the capability to close their books more quickly, 59 percent of respondents said they plan to use their existing reporting systems more effectively; 29 percent will upgrade their reporting systems; and 8 percent will make significant investments in new information technology.
Cross-company issues — such as inconsistent closing and analytic activities, lack of consistent account definitions, and lack of common financial measures — were singled out by 29 percent of participants as their greatest concern regarding a faster closing. Nearly one-quarter of respondents added their company policies and procedures for closing the books are only somewhat standardized across business units, or not standardized at all.
The second-most-cited concern was ineffective closing and/or reporting processes (25 percent), followed by an ineffective IT infrastructure (21 percent).
Other potential problems cited in the survey: