The numbers don’t always tell the whole story. That’s why finance departments are finding themselves spending more and more time on developing narrative analysis for financial reports. These narratives can provide the “story to tell,” as a controller from a manufacturing company writes in a survey conducted by CFO Research, in collaboration with IBM Business Analytics. The findings from the survey are discussed in Linking Numbers and Narratives: Correlating Quantitative Reports with Qualitative Analysis, which is available for download at

CFO Research surveyed finance executives from U.S. companies on the tools they use in preparing their financial statements and on how they are incorporating narrative elements into both internal and external reporting. These narratives can include, for example, disclosure statements, management discussion and analysis (MD&A), footnotes, or variance analysis.

Survey respondents largely agree that financial statements, annual reports, and management reports can–and should–do more than just collect and display a company’s numbers. A large majority of respondents (85%) say that their own management benefits from the analysis and insights developed from the close and reporting process. In addition, 69% say that narrative analysis is just as useful (43%) or even more useful (26%) for management than it is for investors, shareholders, and analysts.

But to get the most out of their numbers, finance staff members need to spend “less time checking, more time analyzing,” writes the VP of finance at a telecommunications company. Nearly nine out of ten respondents say that their companies spend either a moderate or a substantial amount of staff time and management time in preparing narrative portions of financial reports.

If the goal of narrative discussions is to establish a “clear relation between financial data and substance (non-financial information),” what’s needed most to enhance the value of financial reporting is “more automation, more variance analysis/explanations, and less keying of information into spreadsheets,” says a VP of finance at a manufacturing company. However, nearly two-thirds of executives say their companies still must manually update narrative portions of their reports if any data point changes.

“It’s really a straightforward equation,” comments David Owens, Director of Research at CFO Research. “As one of our respondents told us in the survey, less time in preparation equals more value for the company.” Automating such tasks as collecting and checking the data that underlies narrative discussions, Mr. Owens notes, delivers value beyond simply time savings. It also provides greater confidence in the accuracy of the numbers and allows managers to focus on understanding what those numbers mean for the success of the business.

About CFO Research:

CFO Research is the sponsored research group of CFO Publishing LLC. CFO Publishing LLC, a portfolio company of Seguin Partners, is the leading business-to-business media brand focused on the information needs of senior finance executives. The business consists of CFO magazine,, CFO Research, and CFO Conferences. CFO Publishing’s award-winning editorial content and loyal, influential audience make it a valued resource for its readers as well as an effective marketing partner for a wide range of blue-chip companies. CFO Publishing has long-standing relationships with more than 500,000 finance executives.


David Owens
CFO Publishing LLC
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Boston, MA 02210
[email protected]