Research from Oracle and Accenture reveals that the majority of companies worldwide have made substantial investments in financial reporting systems intended to improve their close, reporting and filing processes. However, the investments had been made ad hoc, leaving businesses with ineffective solutions and a lack of visibility, quality and confidence in their financial data.
The research report, “Challenges of Corporate Financial Reporting,” highlights that businesses are unable to fully understand the cost of their financial reporting, with 60-percent of finance professionals unable to identify the total cost.
The report suggests that businesses need to change their investment strategies in order to avoid the increased costs, ineffective financial reporting and missed key internal and external deadlines.
Conducted by Dynamic Markets, the report surveyed 1,123 finance professionals in mid-size and large organisations in 12 countries, including the UK, USA, France, Germany, Russia and Spain.
Research highlights:
- Seeking change: Businesses have recognised the need to invest in new financial reporting systems to address efficiency challenges. 82-percent of surveyed companies have made changes over the last three years to their close, filing and reporting processes. Meanwhile, 47-percent have invested substantially in at least one of these three areas over the past 12 months.
- Ineffective investments: 12-percent of businesses in the survey have invested in just one of the three financial reporting phases (close, reporting and filings); 10-percent have invested in two of them; 25-percent have invested in all three. Despite these investments, spreadsheets (72-percent) and emails (68-percent) are still being used to track and manage reporting on a daily basis, suggesting that new investments are falling short of expectations.
- Increased costs and uncertainty: 21-percent of finance teams have seen their costs rise across the financial close, reporting and filing processes. Importantly, the situation is so opaque that managers across the finance function are unable to fully understand the financial impact/cost implications of managing and publicising their company’s financial results, with 60-percent of respondents admitting they did not know the total cost of managing and publicising financial results.
- Persistent challenges: Due to inadequate reporting systems, the majority of businesses reported that they still face significant problems with financial reporting. 68-percent of respondents admitted that they have inadequate visibility of reporting processes, while 84-percent of finance managers reported that they find it difficult to control the quality of financial data across the course of their reporting, highlighting that additional attention should be paid to performance management.
- Decreased effectiveness: Unreliable and opaque data is presenting finance teams with significant challenges, not least of which is around how effectively finance professionals can do their jobs. 71-percent of finance managers feel their effectiveness is limited in some way by data analysis-related issues.
- Missed deadlines: The inability to effectively gather and analyse data is also having an impact on the wider business. Due to late changes to the chart of accounts, 15-percent of global businesses have missed statutory filings, putting their companies at risk of financial penalties and potentially impacting share value.
- Addressing the challenge: Businesses are continuing to take steps to improve financial reporting methods, with 86-percent of companies likely to make a significant investment over the next five years. 46-percent of businesses are due to overhaul all three phases of reporting, an approach which may address many of the challenges they currently face, and bring their reporting processes into line with their performance expectations.
