Report Links Spreadsheets to Risk of Compliance Failure
The report, “Enterprise Systems and Revenue Recognition: The Missing Link”, was sponsored by Softrax Corp. and conducted by RevenueRecognition.com and IDC. Results were based on information collected from 685 companies. More than 75 percent of respondents were high-ranking finance executives including: chief financial officers (CFOs), controllers, and senior finance and compliance officers.
When asked to identify the single most important change they would make to improve their revenue accounting processes, the top three answers were:
- Enhance revenue recognition functionality in financial systems (22 percent)
- Establish single source of “clean” revenue data (19 percent)
- Implement business intelligence solution for analyzing revenue (18 percent)
According to the survey, more than half of all companies use spreadsheets to create their revenue accounting entries. Other spreadsheet-based tasks include revenue scheduling, allocation, and redistribution based on accounting guidelines.
Spreadsheets are widely used because key revenue recognition and reporting tasks are still not automated in Financial/ERP systems. Only 8 percent of responding companies report completing their revenue reporting processes without having to take data offline and into spreadsheets. The remaining companies participating in the survey use spreadsheets, which are prone to errors, lack audit capabilities and resist internal controls. Surprisingly, public companies with more than $200 million in revenue are substantially more reliant on spreadsheets for revenue accounting entries than the overall sample.
Even with corporate compliance at stake, there are significant obstacles to overcome in automating revenue reporting processes.
“Revenue recognition processes are dependent upon information from multiple sources and typically cannot be executed in existing systems,” Kathleen Wilhide, Director of Compliance and Business Performance Management (BPM) at IDC, a global provider of market intelligence, advisory services and events for the information technology and telecommunications industries, said in a prepared statement. “What is required is automation across this function which will yield a host of benefits, including: more accurate results, better internal controls, less reliance on uncontrolled spreadsheets, and freeing up time for performance analysis.”
Complete results are available at www.revenuerecognition.com.