| Month-end close more time consuming |
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| Written by Adrie van der Luijt | |
| Monday, 12 May 2008 | |
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Finance departments spend an average of 7.2 days a month on balance sheet substantiation.
Month-end close procedures are proving increasingly time consuming, with balance sheet substantiation being the most time intensive activity. A survey carried out on behalf of Business Control Solutions Group plc shows that 34 per cent of finance departments spend seven to 10 days on this activity each month, 14 per cent 10 to 15 days, and 7 per cent more than 15 days. The survey also found that the typical process for substantiating the balance sheet is highly inefficient, with too much time spent on issue resolution, which takes an average of 6.8 days per month. Faster access to more meaningful data Nigel Walder, CEO of Business Control Solutions, said that too much time is being spent crunching numbers and not enough time analysing them. "By the time the senior management receive the information pack, it's already six weeks after the last ledger entry was posted. In today's economic climate, finance departments need faster access to more meaningful data," he added. According to the research, 90 per cent of respondents agreed that smarter software solutions were the best way to deal with increased complexity and time pressure. The same proportion agreed that industry regulations, such as Basel II, MiFID and Sarbanes-Oxley, have made reporting procedures more complex, with period-end reporting taking more time than ever before. Ninety-four per cent of respondents still rely on Microsoft Excel and Access for balance sheet substantiation. Almost half use third-party and in-house accounting applications, and more than 85 per cent use at least two different systems. Poor internal communications Walder warned that the tools finance departments are using lack fundamental audit, control and workflow capability. "Businesses have evolved, but the tools they use haven't. While they may have been suitable five years ago, now they simply add to the problem. With multiple systems in global institutions, even when the substantiation process is done it's not truly complete,” he said. He believes that more time needs to be spent collating and aggregating data for visibility and reporting purposes. The survey, which was carried out by an independent research company, found that almost 90 per cent of respondents were concerned about a lack of transparency and poor internal communications during period-end reporting. Furthermore, 80 per cent cited concerns about inaccuracies resulting from human errors at different stages of the reporting process. Related articles |
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