This blog originally appeared as Part 16 of the continuous accounting blog series in SAP’s D!gitalist Magazine.

Improving the core financial reporting disclosure process remains under the spotlight for most organizations. A recent survey by Financial Executive Research Foundation (FERF) of 120 finance, accounting, and reporting executives found that 74% are still focused on improving their disclosure processes, and the majority of annual 10-K and quarterly 10-Q financial reports and filings.

Many of them are taking a fresh look at opportunities to improve the presentation of their financials by moving to a more visual approach and reducing narrative. Others are improving communication around eliminating immaterial information and reducing redundancies.

Leaders, Laggards, and the Last Mile

However, the time and cost of producing financial reports remain a challenge. And there’s a big difference between the leaders and laggards when it comes to executing “the last mile of finance.” APQC found that top performers average 15 and 19 days respectively after producing consolidated results internally, while the bottom-quartile took more than twice as long on average. There’s also a significant resourcing difference. For example, a $5-billion top-performing organization averages about six full-time equivalents (FTEs) to get the job done, while a similarly-sized laggard can require dozens of employees in the process.

Companies upgrading their disclosure process to best-in-class can achieve meaningful benefits quickly, with FERF noting that 78% see process improvement gains, and 54% cut four or more days from their process.

How Many Is Too Many Reporting Systems?

Why is it so hard? Well, according to EY, they found that nearly three-quarters of enterprises they surveyed relied on more than six reporting systems. And a fifth said they had more than 15! Clearly, a hairball of different systems of record plays a big role.

Collecting disparate data is time-consuming across disparate data sources and locations, with often a substantial amount of manual cut-and-paste involved for spreadsheets and narrative. Manipulating data manually increases cost, often slowed by complex regulations in different jurisdictions, multinational groups across continents and time zones, and multiple document instances and versions. The same data in different documents raises the risk of effort, with financials in several formats such as XLS, PDF, CSV, and XBRL; multiple account standards; and last-minute adjustments that can cause inconsistencies between documents.

5 Financial Reporting Improvement Opportunities

The good news, however, is financial reporting is one of the most addressable efficiency areas in the close-to-disclose process. The opportunities to improve fall into five core areas:

  1. Standardize and organize. In the process of preparing financial statements, less is more. Use common centralized reporting templates for both the numbers and the narrative, and strive for fewer versions of the same data (ideally by connecting spreadsheets and reporting software directly and dynamically to a single source). Financial data and reporting should always be connected, so if a single change happens upstream, it flows through to all reporting output.
  2. Manage XBRL effectively. Modern financial reporting systems can work directly with their upstream consolidation counterparts by creating standardized financial reports directly from the XBRL tagged accounts in the financial consolidation app. This removes the need to manually convert financial reports into XBRL docs ready for filing, requiring technical training. This removes additional steps, administrative costs, and risk of error.
  3. Automate more. Financial reporting automation technology is one of the most mature technologies in the finance tech stack. With report scheduling, parameterized reporting, and centralized templates, financial reporting software can create and publish auditable, reliable financial and regulatory statements in just a few clicks.
  4. Collaborate. Ensure that there’s assigned responsibility of disclosure processes to distributed teams across organizational units, and create defined workflows to teams can provide centralized feedback, using a single standardized always current set of documents, as well as putting strong sign-off processes in place. Most modern disclosure management packages provide workflow processes that coordinate signoffs, offering more robust and accountable process than email.
  5. Run once. Publish many. Where financial reporting can break down is the combination of formats and standards. Look to scale by using one reporting source to support multiple types of financial and regulatory reporting statements in a wide range of publication formats for narrative reports, dashboards, or report packages, whether GAAP to IFRS or including local accounting standards.

Learn More about Continuous Accounting

To learn more about how continuous accounting drives strategic transformation, read this Ventana Research paper.

This blog originally appeared as part 14 of the continuous accounting blog series in SAP’s D!gitalist Magazine and has been republished with permission.  Read the rest in the series: