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Amid an increasingly demanding corporate reporting environment, CFOs are losing confidence in the effectiveness of reporting, with many complaining of reporting overload, according to a new EY survey.
The survey of 1,000 CFOs across 25 countries in organizations with revenue greater than $500 million found confidence across all key aspects of corporate reporting has fallen compared with 2014. The biggest decline was in “confidence in degree of compliance,” with only 55% of respondents saying they are fully or somewhat confident, compared with 84% in 2014.
There were other significant declines in extent of benchmarking reporting (44% today vs. 66% in 2014), clarity and relevance of messages (45% vs. 67%), and consistency in application of key performance indicators (44% vs. 65%).
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Only 39% of CFOs perceived reporting as being cost-effective, compared with 68% in 2014, and just 48% said their reporting was effective in securing the confidence of the board, a significant drop from 71% last year.
“CFOs need to step back and evaluate what they are producing and address concerns over confidence and effectiveness quickly,” Peter Wollmert, leader of EY’s Financial Accounting and Advisory Services, said in a news release. “To delay means that the timeliness and accuracy of reporting will continue to affect performance. Corporate reporting will only serve its intended purpose if the CFO is confident of its value.”
EY identified a number of reasons for the loss of confidence in reporting, including the increased complexity of reporting; growing demand, with finance leaders concerned there is a widening gap opening up between the reports that regulators demand and the reports that other stakeholders, such as investors, require; and pressure on resources.
The survey also found that CFOs are feeling the ripple effect of increased scrutiny being placed on audit committees and supervisory boards. Eighty-four percent of respondents say that audit committees and boards have increased their overall attention on reporting in the past three years, with 34% saying that the attention has increased significantly.
“Audit committees are under the spotlight for how they carry out their responsibilities, and CFOs are in turn under pressure to provide more and more information,” Wollmert said.
