Sydney, 3 July 2017 - Administrative inefficiencies, lax controls and a reliance on manual processes are resulting in more than a third (40%) of boardrooms not having a complete view of company operations, new global research has found.
That’s according to a survey of senior finance professionals which found more than half (55%) are worried their internal controls are not working effectively during their reporting period. A further 46% are concerned about unexpected errors being identified in critical spreadsheets while 40% don't believe their data is always trustworthy and accurate.
"The results are very concerning and should be a wake-up call for Australian companies," said Mark Sands, General Manager Asia Pacific, BOARD International. "If boards are being provided with incomplete or inaccurate financial information it could be compromising their ability to make key management decisions."
The research, The Future of Financial Reporting 2017, was conducted by survey company, FSN, on behalf of BOARD International. The results are based on a survey of 977 finance professionals across 23 countries including the Asia Pacific region.
When asked about the financial processes within their organisation, more than 50% of respondents admitted their reporting processes involve huge amounts of manual checking each time a change is made. The survey also found 60% feel they spend too much time cleaning and manipulating data.
"Clearly, despite significant investments in information technology, there is still a wide gulf between what is achievable and what is actually happening within many large organisations," said Sands. "Only 46% of survey respondents said they were in a position to easily accommodate changes in information requirements and just 34% said they could make changes without relying on the IT department."
The survey found many finance departments are still heavily reliant on multiple spreadsheets to create required reports for senior management. These spreadsheets are often unconnected, meaning that significant manual data manipulation is required as part of ongoing workflows.
Of the survey respondents, 71% said they depend on spreadsheets for collecting data across their majority of their business units. Worryingly, 66% admitted that, when gaps are discovered in their reporting processes, they used spreadsheets to plaster them over.
"Spreadsheets can be powerful tools, but they are not designed to be at the core of the financial reporting process," said Sands. "Such high dependence risks an organisation falling into a spreadsheet spiral which reduces efficiency and results in lower-quality reporting."
Unexpected error anxiety
Corporate reporting is not a static activity with changing regulatory requirements and an abundance of new data having an ongoing impact on the accuracy and efficacy of reports.
The survey found the vast majority (90%) of finance executives are worried about at least two financial reporting concerns. In some cases, these concerns were actually part of a larger pool of misgivings and process failures indicative of a malaise in their entire financial report system.
"We found that 62% of respondents are worried about missing reporting deadlines due to the cumbersome systems and processes they have in place," said Sands. "Of this group, 93% lack the confidence that the controls they have were working properly during the reporting period."
A unified environment
The survey clearly shows significant changes to data management and reporting processes are required within many large organisations. A unified environment needs to be created that centralises all relevant data and provides access to users in an efficient manner.
"This doesn't mean that all spreadsheets should be discarded,” said Sands. However, it does mean developing a central data repository from which reports can be generated as required.
Sands said the implementation of effective corporate performance management (CPM) tools will achieve this goal. These tools can ensure all stakeholders in the company can readily input data, establish its veracity, and generate timely reports.
"Investing in a unified processing tool will ensure the finance department is better placed to deliver the reports and insights required by senior management. The days of being stuck in a spreadsheet spiral will be over."
About BOARD International
BOARD is the #1 decision-making platform for organisations of any size. Founded in 1994, BOARD International has enabled more than 3,000 companies worldwide to rapidly deploy Business Intelligence, Enterprise Performance Management and Predictive Analytics applications on a single unified and programming-free platform. The BOARD platform allows companies to achieve a single, accurate and complete view of business information that enables full control of performance across the entire organisation, from strategic formulation down to operational execution - www.board.com