Challenges in producing financial statements
Used primarily in a strategic context by corporate Finance Divisions and Boards of Directors, financial statements are key documents that must be prepared and produced with care. However, in many cases, this is a real challenge for operational teams in charge of this task because of the significant amount of information and data to be processed. On a global scale, according to a recent study, only 46% of accounting teams and management controllers considered themselves to be capable of fulfilling the requirements of their internal customers.
Ludovic Didier, Expert Manager at Viareport, provides his insight
Here are the challenges faced:
The accuracy of reports must always be checked.
On this point, we can see that spreadsheets, such as Excel, are still being used by many Finance Divisions to produce their financial statements. These tools lack a dynamic approach that can be a genuine obstacle to the generation of accurate reports. In terms of collaboration, it is also quite difficult to manage versioning. The absence of centralization and standardization is an obstacle for companies. On average, about 75% of Finance Divisions are still using this approach. There is therefore plenty of scope for improvement to minimize errors.
Manage data from diverse systems
Data quality is a central point for producing quality reports that can be used effectively in decision-making. Besides simply presenting data, the audience must understand what the figures mean and see the trends. In order to do this, significant volumes of data from diverse systems must be analyzed. It is important to centralize and restrict manipulations as much as possible, especially with regards to data aggregation. In this context, an average of almost 30% of Administration and Finance Divisions think that data collection can be improved. In the end, the objective is to unify data in a repository and improve performance, productivity and security in order to generate financial reports.
Improve collaborative measures
Generating financial reports must necessarily involve the implementation of a collaborative working strategy. All of the teams in question must work jointly to build the financial reports. The lack of collaboration among teams is a real challenge and does not allow for a detailed analysis. The lack of collaboration is also very often an obstacle to understanding and interpreting the information in reports and the discrepancies identified. It is therefore vital that Administration and Finance Divisions work hand-in-hand with managers from other business functions on shared up-to-date reports.
Adapt to a constantly evolving regulatory environment
Besides the constraints inherent to data collection and data validation, the consolidation accountant must also ensure that the latest regulatory changes required by local or international authorities are rigorously applied. A few examples include IFRS 16 in 2019 and the ESEF regulation requiring the publication of primary financial statements in XBRL format in 2020, etc. The constantly evolving rules and presentation formats require flexibility and responsiveness in order to adapt quickly to these new requirements.
It is consequently obvious that the preparation of quality financial reports requires a suitable organization and environment. In view of the past systems largely adopted in companies, we can easily understand that the challenge of producing financial reports remains a reality for professionals and this requires an in-depth review of their working methods.