It’s that time of year. Another quarter has ended, and it’s time for Finance to close the books, analyze the results, and do quarterly financial reporting for management and external stakeholders.
Given the timing, this headline caught my eye recently: “CFOs Losing Sleep Over Financial Reporting.” Upon further investigation, I learned that this conclusion was based on a survey done by FSN and our partner Workiva, polling 977 international CFOs and senior Finance professionals across more than 23 industries, globally. Here’s what’s behind the headline.
What Are CFOs Worried About?
The results of the survey indicated that 97% of CFOs were losing sleep over financial reporting and that only 3% of the survey respondents slept soundly. Their main worries included a variety of reporting obligations – looming deadlines, lack of adequate internal controls, the prospect of unanswered questions in the boardroom, and the fear of an unexpected error being discovered in a critical spreadsheet.
Here are some key findings about the survey, according to an Accounting Today article:
- 66% of companies are filling reporting gaps with spreadsheets, and 43% don’t know how many spreadsheets are in use
- 64% of companies can’t make reporting changes without relying on IT
- 60% of companies spend too much time on data cleaning and manipulation
- 54% of companies are battling fragmented systems
- 54% of companies can’t accommodate changes in information
Accounting Today also reported that 55% of the survey respondents said they’re concerned about whether their internal controls were working during the reporting period. This raises questions about the integrity of the data they’re using.
What’s the Solution?
While the numbers seem high, the 97% of CFOs losing sleep over financial reporting is not surprising. I think every CFO’s worst nightmare is having to issue a restatement of financial results. Signing off on the financials each quarter is a huge responsibility. In a publicly held company, misrepresentation of the financial results can result in penalties for the company and personal liability for the CFO.
So how does an organization go about mitigating some of the issues highlighted? Here are some of the recommendations from the same report:
- Reduce reliance on spreadsheet and manual processes – relying on Excel spreadsheets and email to manage a corporate process such as financial reporting is very risky. The chance of errors occurring is high. There’s also a lack of security and audit trails.
- Standardize ERP or CPM systems – standardizing on a single ERP system can help address data manipulation and cleaning issues. And implementing a standard corporate performance management (CPM – a.k.a. EPM) solution like Planful provides a unified environment to integrate and consolidate financial and operational data for financial reporting, planning, forecasting, and scenario modeling.
- Leverage cloud-based solutions to reduce reliance on IT and improve agility – cloud-based CPM solutions are the preferred deployment method in today’s market. They provide Finance with complete control over processes, reduced reliance on IT, and faster ability to respond to changes.
- Implement self-service reporting for management – with a unified environment in place for financial and management reporting, Finance can empower managers with self-service reporting capabilities and focus resources on performing value-added analysis.
- Implement a collaborative work management platform to streamline disclosure management – Workiva Wdesk is particularly powerful in performance reporting and generating disclosures for external stakeholders, such as the board and regulators, that require the coordinated integration of multiple documents and data types, from multiple contributors.
The steps highlighted in the report will surely move CFOs down the path to improved confidence in their financial reporting and fewer sleepless nights. And if you’re a CFO looking for cloud-based platforms to replace spreadsheets and email, or legacy applications currently in use, be aware that Planful and Workiva are partners who are working together to help organizations streamline the last mile of Finance.
Even better, Planful and Workiva are both recognized as leaders in the 2017 Gartner Magic Quadrant for Cloud Financial CPM solutions. Together, we provide complementary solutions for the last mile of Finance, including financial consolidation, close management, financial and performance reporting, and disclosure management. Download the Gartner report to learn more.
Download the Research Reports
You can also learn more about the survey and the recommendations above by downloading the Future of Financial Reporting study from Workiva.