Survey Asks Finance Departments to Identify Challenges

Automation is key. That is the finding of a study done by Ventana Research, co-sponsored by Cognos, which asked 200 companies in various industries to identify the challenges faced by finance departments.

The study found that finance departments could benefit from major changes to key financial management processes to be more effective in executing their accounting cycles and to more readily deliver the information needed to improve performance.

Companies surveyed worry about their ability to sustain their Sarbanes-Oxley Act compliance efforts. It is clear systems that were adequate pre-Section 404 fail to provide finance departments with the ability to address evolving demands for tighter and more efficient controls. These systems often involve too many manual steps and rely on inherently uncontrollable systems such as spreadsheets. Organizations need secure data environments to reduce control risks in the consolidation and reporting process.

Reducing the time it takes to complete an accounting cycle has become a bigger issue for finance departments.

“The Ventana Research study results prove what we have heard from forward thinking customers around the world. Now is the time to renew systems that form the foundation for cost effective, sustainable compliance and timely, accurate and complete performance data,” said Doug Barton, vice president, Product Marketing, Cognos. “Improving this core process lays the bedrock for more dynamic performance management and greater competitive advantage.”

The Ventana Research study, which surveyed more than 200 companies across industries, focused on two key areas: financial reporting, and closing and consolidation performance. Highlights include the following, according to a release from Cognos:

  • 80 percent of respondents indicated they were missing some critical information from periodic reports.
  • Basic information that companies have traditionally collected is abundant. However, employees are not getting useful information that would contribute to improving their performance. Leading indicators about their company's or business unit's future performance was not available to more than 50 percent of the respondents.
  • 57 percent of companies take more than five days to close the books; 73 percent believe it should be four days or less.
  • Spreadsheets are a root cause of longer closing cycles. Less than 10 percent of companies have eliminated their reliance on spreadsheets that frequently supplement the consolidation and reporting process for core activities like calculation of accruals or translation of currencies.

    About half of the companies that limited spreadsheet use were able to close in four days or less, compared to only 27 percent that used them extensively. Ventana Research estimates limiting spreadsheet use enables a 20 percent faster closing time.

  • You may like these other stories...

    For the first time in the five-year history of Vault.com’s rankings of the top 50 accounting firms to work for in North America, a firm has held the top spot as best accounting employer for two consecutive years....
    With tomorrow being Tax Day, you might see some procrastinators at your office filling out forms, printing out paperwork, or getting last-minute tax advice from their accountant so they can meet the IRS’s filing...
    You can read volumes on how to manage an accounting practice. But if you want the quick version, just read the following four points. Everything else is just commentary.  (These points come out of the 1997 book, The...

    Upcoming CPE Webinars

    Apr 22
    Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
    Apr 24
    In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
    Apr 25
    This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
    Apr 30
    During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.