With stricter regulations like Sarbanes-Oxley Act coupled with organizations today getting larger and more complex with businesses change very rapidly such as products change, structure changes, new distributions channel emerge and the need to have faster communication of additional information it is therefore vital that we need to establish an efficient reporting concept. Hence, fast, accurate financial reporting has always been a high priority

Some reasons for a “faster close” according to KPMG’s research study (2000) are:

• Faster publication for benefit of shareholders
• Board demands faster publication of internal information
• Demonstrate professionalism of reporting
• Capital market demands earlier publication
• Time gained issued for analyses that bring value added
• Competitors publish their figures earlier

However, in this same study, we see companies experienced the following challenges in achieving such speedy close and high standard of quarterly/annual reporting:

• Poor quality of figures
• Insufficient integration of data processing systems
• “Surprises” during annual close
• Large number of reporting levels
• Insufficient checks, unclear reporting process
• Auditors need to much time
• Insufficient IT support for the reporting process
• Difference in accounting principles

For the CFO, a faster close is not just a matter of automation. He or she needs to look into the business processes, analyze the root causes for the slow close. (refer earlier article on workflow concepts)

The next article deals with some initiatives that assist a faster close.

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