Financial Reporting

How to Get Fast, Accurate, and Value-Generating Finance Reports

CFOs need their reports done quickly and efficiently. The following content will put your organization's process effectiveness in perspective.
Kerry MarunaApril 11, 2016
How to Get Fast, Accurate, and Value-Generating Finance Reports

Finance executives are always looking for ways to improve their financial reporting process. Efficiency and timeliness are top priorities. So what’s the best way to get fast and accurate reports? CFO offers the following articles to gauge how confident you are in your current processes, whether or not they are on pace with the fastest companies, and if they are value-generating.

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How Confident are You in Your Reporting Process?

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%).

Read: “CFOs Losing Confidence in Value of Reporting”

 

Are You Keeping Up with the Fastest Companies?

When a large public company produces a quarterly financial report, anything less than 100% accuracy can spell disaster. As Gabe Zubizarreta, chief executive of Silicon Valley Accountants, an accounting and consulting firm, says, “Getting your close 96% right is not an ‘A’ or an ‘A+.’ Rather, 96% is an ‘F.’”

The end-to-end financial reporting process involves multiple steps, from closing the books on legal entities, to reconciliation, consolidation of results, analysis of trends, and release of results. An error at any point on the timeline – no matter how small – can result in a material weakness designation, intensified auditor scrutiny, and nagging concerns among investors.

For large, global companies, this high-stakes task is akin to climbing Everest each quarter. The complexity involved and precision required stems from the need to reconcile financial data from hundreds of business entities all over the world. Many operate with disparate systems, in different time zones, in different currencies, and sometimes with different definitions of basic concepts such as “revenue” versus “net sales.”

Read: “Metric of the Month: Close-to-Disclose Cycle Time”

 

Financial Reporting as a Value-Generating Activity

As companies strive to preempt competitors, reduce risks, and make better-informed decisions, CFOs are now taking a hard look at their financial planning and analysis  (FP&A) teams.

Similar to the kinds of changes being made in other areas of finance, the FP&A organization needs to embark on an ambitious transformation, trading in an emphasis on historical data to focus on predictive analytics while also exchanging data manipulation for higher-value analytical activities. A company’s decision makers rely on the group to deliver top-quality information and cutting-edge analysis at an ever-accelerating speed. But in a recent global survey, most finance leaders say that their FP&A teams have further to go to develop the capabilities required to bolster top-line growth by supplying better and faster management information.

The survey, conducted by CFO Research and sponsored by SAP, the maker of enterprise software, drew on responses of 335 senior finance executives around the world, at companies with more than $500 million in annual revenue. Without the tools, methodologies, and other resources they need to deliver high-value planning and analysis to upper management, FP&A practices can’t be optimally prepared to meet the intensifying pressure the finance function now faces, respondents say. (The full report,The Future of Financial Planning and Analysis, is available for download.)

Read: “Line of Insight”