Amid an increasingly complex financial reporting environment, most CFOs of large companies expect their reports will expand beyond compliance requirements to include areas such as forecasting, sustainability, and corporate social responsibility, according to a new survey.

The more strategic and forward-looking contributions of the finance function to companies are driving changes in reporting philosophies, EY said in a survey of 500 CFOs and heads of reporting. Within three years, 90% of respondents expect to report on forecasting, sustainability, and corporate social responsibility — each of which may require expanding existing reports, creating new ones or, most likely, a combination of those approaches.

“Regulatory compliance is the cornerstone of providing confidence to the capital markets, yet it is clear that CFOs are increasingly aware of the need to move beyond [compliance requirements] and provide information that will give them an edge over their competitors when attracting investors,” Peter Wollmert, leader of EY financial accounting and advisory services, said in a statement.

Other changes are likely to include a shortening of the reporting cycle and the introduction of more real-time reporting, as well as a greater focus on non-financial reporting around strategy, sustainability, and risk management, EY said.

The survey highlights the complexities of financial reporting. Three-quarters of respondents said the reporting environment has become more complex in recent years, with the pace of regulatory change increasing, and investors and capital market participants asking for a higher volume of disclosures. CFOs and controllers also face increased information demands from the board and senior management.

“Fifteen years ago, our main report was a leaflet of 30 pages, and now it is a big book of 400 pages,” Yves Pellegrino, corporate finance director at Danone, told researchers. “Even in the last few years, the number of words is increasing by around 10% per year.”

To meet the demands, three-quarters of respondents have more than five reporting systems, and a similar number must comply with more than five reporting standards.

“A diversified investor base and increasing demands for information internally already make it increasingly difficult to satisfy everyone, and firms need to strike a careful balance between speed and accuracy,” Wollmert said.

Featured image: Thinkstock

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2 responses to “The CFO’s View of Reporting: More, More and More”

  1. It’s coming like a stealthy steam train that nobody really want to accept the additional burden. Whether it’s more CSR / sustainability reports, integrated reports or even better, material inclusion in annual reports mandatory reporting will happen whether business wants it or not.

    The real trick is, of course, to see the business building opportunity and how to reduce risk and increase revenue.

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