Cloud usage, tax and payroll outsourcing, recruiting and retention, and manual account reconciliation are just some of the topics addressed in the seventh annual Benchmarking the Accounting & Finance Function report by Robert Half and the Financial Executives Research Foundation (FERF).
“Financial leaders should be able to gain a glimpse into the successes and struggles that other accounting and finance departments are facing when it comes to aligning technology, knowledge, and human and financial resources to respond to the growing demands accounting and finance departments face,” the report states. “Areas where shortcomings appear can then be targeted for improvement.”
Robert Half and FERF based their study on more than 1,700 responses in late 2015 from financial leaders at US and Canadian companies. The majority of respondents were not CFOs and were based in the United States at private companies with revenues of less than $500 million.
Findings are presented in five sections: internal controls and compliance, workforce management, accounting operations, finance systems, and sourcing.
Here are key takeaways.
Internal Controls and Compliance
The finance function is most likely to be primarily responsible for internal-control effectiveness over financial reporting.
Sarbanes-Oxley Act compliance and similar compliance mandates are most likely handled by the financial reporting staff.
The majority (83 percent) of US and Canadian companies had 100 or fewer key internal controls over financial reporting.
More than half of US (68 percent) and Canadian (60 percent) companies expect compliance burdens to increase during the next three years. In contrast, more respondents said that compliance costs had held steady for the past three consecutive years.
The median employment-related cost (base salary, bonuses, and benefits) as a percentage of revenue held steady at 2 percent, but escalated to 5 percent at the biggest companies (revenues of $5 billion and more).
The percentage of financial staff devoted to general accounting dropped for the third consecutive year.
Financial staff assigned to accounts payable and receivable rose to 30 percent from 27 percent in last year’s survey.
Many respondents say that increases in costs related to employment are attributed to the tight job market in finance.
Accounting and finance managers in the United States typically work an average of 46 hours per week, while nonmanagers work 41 hours. In Canada, managers average 43 hours of work weekly, and nonmanagers work 40 hours.
Most respondents had 100 to 500 active general ledger accounts.
About half (52 percent) of US companies and 55 percent of Canadian companies use manual account reconciliation.
Whether using manual reconciliation or automation, companies appear to be satisfied with the timeliness of closing the books and preparing year-end financial information.
Acceptance of cloud usage at US companies increased from 51 percent in last year’s survey to 62 percent this year.
The use of on-site enterprise resource planning systems at US companies dropped to 32 percent from 53 percent in 2015 and 78 percent in 2014. Why? Likely more cloud usage.
On the other hand, less than half (47 percent) of Canadian companies use the cloud or plan to, while 53 percent don’t expect to. In the United States, 37 percent of companies said they aren’t in the cloud and don’t plan to be.
Tax and payroll continue to be the two most-often outsourced functions at US and Canadian companies.
All companies, regardless of size, report benefits of payroll outsourcing. At smaller companies, that can be due to a lack of internal staff or expertise. For larger companies, the benefit lies in payroll complexities of locations in multiple countries and tax jurisdictions.
Outsourcing also can help for companies with unique needs, such as compliance activities or processing of certain types of payments.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.