CORPORATE REPORTING is failing to keep pace with technology advances resulting in a growing expectation gap between what boards expect from reports and what CFOs can deliver, a new study has found.
Two-thirds of chief financial officers worldwide say that the increasing volume and pace of data is affecting their ability to provide meaningful insights to boards, according to EY financial accounting and advisory services (FAAS).
Almost a third of 1,000 CFOs surveyed around the world rate their reporting operating model as “average”, with 56% making an update of their reporting model a priority, the study found.
By transforming their model, CFOs hope to achieve increased accuracy and effectiveness of reporting, improved data analytics and a more flexible and agile reporting function.
“Many [CFOs] are encumbered by legacy systems that do not allow reporting teams to extract forward-looking insight from large, fast-changing data sets,” said Peter Wollmert, EY global and EMEIA FAAS leader.
“Until reporting catches up with technological advancements it will continue to be compromised,” Wollmert said.
More and more CFOs are expected to consider decentralising control of reporting from head office and hand greater control to local market, EY said. More than a quarter of respondents see this as the future model, with just 24% operating this model currently.
“Unless decisive action is taken quickly to define a bold strategy and vision for advancing the reporting process, they will continue to fall behind the pace of technology. For CFOs contemplating this journey, the mantras for their reporting function needs to be responsive and streamlined.”
External reporting has been under the microscope in recent weeks, with a number of reports suggesting it as an area needing wide improvement – even at the highest end of the market.
The accounting watchdog FRC raised “substantive” queries in a third of 200 FTSE 350 annual reports reviewed, while Lincoln Pensions said most top listed corporates fail to disclose their pension deficit relative to the funding target.
Country-by-country reporting of tax declarations are set to be implemented by EU countries, while a report by annual reports designer Radley Yeldar found a reluctance among businesses to square off how their business model, versus market conditions, creates a case for future investment.