The Challenges of Modern Financial Reporting Girish Muzumdar
Agenda
The Survey
The Essence of the Survey Financial reporting continues to be a major challenge for most finance teams for several significant reasons: The widespread adoption of narrative (text) in financial reporting. While certainly valuable, narrative contributions are notoriously difficult to manage, revise, and maintain. The need to integrate multiple data sources, and the accompanying challenges with data consistency and tracking. The need to collaborate with contributors and stakeholders throughout the reporting process while still relying on traditional communication vehicles such as email. A general lack of data, workflow and process control.
Survey Scope The Demographics of the Survey Participants
Question 1: After the books are closed, what types of reports/documents do you produce to communicate to key stakeholders? (check all that apply)
Question 2: How many of these reports/presentations in total are produced per month? Per quarter? Number of Reports/ Presentations per Month Number of Reports/ Presentations per Quarter
Question 3a: On average, how long does report/presentation production take per month?
Question 3b: On average, how long does report/presentation production take per quarter?
Question 4a: How many departments are (or should be) involved in pulling these reports together?
Question 4b: How many individuals are (or should be) involved in pulling these reports together?
Question 5: Is there an adequate workflow process in place to manage contribution, approval, submission, etc.?
Question 6: How many sources of data are involved?
Question 7: What applications are typically used to create the reports/documents? (check all that apply)
Question 8: On average, what percentage of the document is narrative vs. financial information? Question 9: What types of narrative are utilized?
Question 10: What forms of communication are used during this process to manage the collection of information? (check all that apply)
Question 11: What reporting challenges do you face? (check all that apply)
Summary The Harsh Reporting Realities based on the study 1 3 5 Reporting Eats Up Valuable Professional Time 2 Communication Is Fragmented And Untraceable 4 Narrative Is Essential for Financial Reporting Information Is Collected from Various Sources Excel Alone Isn t Enough For Modern Financial Reporting
Conclusion In order to address these reporting challenges, Finance needs to be able to: Create a wide variety of reports faster and with fewer resources Streamline and track collaboration among contributors and business owners Effectively and efficiently manage increasing volumes of narrative Collect information from multiple data sources in a way that ensures data integrity and builds in consistency Gain greater insight & control over workflows and reviews Leverage widely used tools such as Excel in a more effective way
The Modern Role of Finance
Why: Objectives of an office of Finance Modern office of Finance objectives PROCESS PRODUCTIVITY REGULATIONS & COMPLIANCE BUSINESS PARTNERING FORWARD LOOKING Fast Close / Consolidation Corporate Tax Reporting Analytics / Artificial Intelligence Rolling Forecasts & Predictive Forecasting Data Governance IFRS / ASC Profitability Analysis Budgeting Process Governance Solvency II & EBA (FINREP/COREP) Strategic Initiatives Operational Planning Data Integration Integrated Reporting Transfer Pricing Integrated Financial Planning Reconciliations XBRL Collaboration Performance Management
Strategic role of Finance Finance is actively engaged in operations IT Dept. Plant / Production CFO Sales & Marketing Plant / Production
How does your company stack up? Source : Hackett Benchmarking & Research Process Average World Class Closing Cycle 5 8 Days < 2 Days Financial Planning 4 months 1 month Level of Budget Detail 230 line items 15 line items % of time on Forecasting 20% 44% Cost of Finance 1.15% of Revenue < 0.53% of Revenue FTEs per $B Revenue 114 < 28
The Goal of Finance High Value and Reduced Cycle Time Faster Closing More time for analysis ensured accuracy More detailed management information Better, faster business decisions Improved business performance! Average 6 Days 12 Days Collect Data World Class Collect Data Close Adjust Report Close Adjust Report Analyse More time to Analyse and Forecast!
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