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%).

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.

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5 responses to “CFOs Losing Confidence in Value of Reporting”

  1. Well, that either means that someone needs to design new reports in those companies, according to what the managers need to read, or that some employees need to stop writing euphemisms in their reports so managers can read the naked truth about their operations.

  2. Financial reporting is becoming a legal exercise garbled with KPI’s that are difficult to understand.
    Like the FASB, which just put financial performance reporting back on their research agenda, the IASB should take a look to integrate primary financial statements and disclosure.
    We need to focus on the main drivers of performance again: Product sale cash flows, people expenses and physical infrastructure allocations and combine relevant taxonomies to get it done.
    Technology now helps us to separate objects from valuation. Read more (in over 100 languages) at:
    http://www.ifac.org/global-knowledge-gateway/business-reporting/discussion/capital-approach-performance-reporting

  3. Reporting is necessary, whether it is corporate reporting on financial performance or detailed operational reporting, a necessary evil one could say. What is important is understanding the context of the reporting? Taking the data and information you have from analyzing internal operations and both quantitatively and qualitatively compare it to external data to provide context. I would agree with Kurt, technology can now help with this and begin to automate the reporting processes while providing the key insights and value along the way…

  4. These are some of the implications of good corporate governance. The requirements of good corporate governance have created not only increased work loads for finance professionals, but also legal and complicated weight on financial management.

  5. Financial and Management reporting are merely tools to achieve certain objectives. These objectives may be evaluating performance, identifying areas of shortcomings or excellence for decision making. Over reporting often confuses the user and the objectives are lost with the sheer volume of analysis. Each report must have a purpose and to serve certain user(s). Users need to spend less time on understanding the context of the reports and more time acting on them.

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