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News < Back Sarbanes Oxley : Finance : Sarbanes Oxley Refreshing Financial Reporting and Consolidation
Similarly, finance organizations used their IT investments of the 1990s in ERP and consolidation systems to make considerable progress in speeding up the accounting cycle. Yet more than half believe they can accelerate their close by at least 1-2 days. Better software or better use of existing software is part of a comprehensive approach to a fast, clean close. Ventana Research asserts the changes in processes and systems needed to effect a timelier close also can make Sarbanes-Oxley compliance more efficient. View Ventana Research recently completed its Financial Reporting and Consolidation Study. The published research reflects the responses of 207 participants from companies from a wide variety of industries with over 1,000 employees or $100-million in annual revenues (about two-thirds were US public companies and almost all were headquartered in North America). About half (49%) of the participants had finance titles, 31% had IT titles or were business analysts and the remaining 20% were executives or managers with line-of-business titles. We assert organizations must take a fresh look at their capabilities and objectives in financial and management reporting as well as accelerating their accounting cycle. Although we believe most companies have achieved a significant return on the investments they made in their reporting and consolidation IT systems over the past ten years, our study shows that almost all have more to do. A large majority of companies have addressed the reporting issues of the 1990s. Study participants said they are receiving about the right amount of financial information about their company?s financial and operational results, and the results of their business unit. Most are receiving it on a timely basis and believe the information is accurate. Yet, most also stated their reporting systems are not doing a good job of addressing the needs of the 21st century. They do not do a good enough job providing people with information about their individual performance, or the performance of their business unit toward its objective. Many corporations must continue to focus on achieving a faster, cleaner accounting close. Steady progress was made through most of the 1990s as a result of software-enabled automation, but improvements appear to have been limited since then. Our research found more than half of the companies that participated wanted to accelerate their monthly and quarterly accounting close by at least 1-2 days, and most regarded this objective as very important or important. Participants believed errors, lack of automation, and data consistency issues (i.e., one version of the truth) play a part in making the close longer than it should be. We also found companies that described themselves as heavy users of spreadsheets in their closing process took longer to complete the process than those that described their use as limited. While 49% of the companies describing themselves as limited users completed their monthly close in 4 days or less, only 27% of the heavy users were able to finish in this period. Ventana Research believes companies can speed their closing process by, among other things, eliminating manual entries and spreadsheet use in the closing process. These introduce errors and take longer to accomplish than if these steps were automated. Assessment Ventana Research believes it is time for all companies to reassess financial and managerial reporting processes and the systems that support them. Moreover, organizations that continue to lag the pack must make improvements just to remain on par with the benchmark. Companies that have addressed the basic reporting requirements must focus on providing employees with a wider set of performance related data, leading indicators and information about the world outside the corporation. To accelerate the accounting cycle, companies should assess both their process and the tools. Reducing complexity and using better software (or using the same software more effectively) are the most common steps in that direction. Compliance with regulations such as Sarbanes-Oxley and new IFRS standards involve many of the same steps needed to accelerate closing and reporting more effectively. Investments made for these purposes are likely to have a positive impact on the cost of regulatory compliance as well. Ventana Research is the preeminent research and advisory services firm helping our clients maximize stakeholder value with Performance Management throughout their organizations. Putting research in a business and IT context we provide insight and education on the best practices, methodologies and technologies that enable our clients to leverage assets to understand, optimize, and align strategies and processes to meet their goals and objectives. 
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