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Global CFOs struggle to satisfy investor demands, EY report reveals

CFOs with a global mandate are finding it increasingly tough to satisfy investor demands for information while juggling snowballing regulatory requirements.

That’s the message to emerge from a new EY survey – Connected Reporting: responding to complexity and rising stakeholder demands – of 500 CFOs or their equivalent in organisations with a $1bn-plus (£664m) revenue.

The research was undertaken by the Big Four firm’s financial accounting and advisory services (FAAS) team, and found that 70% of CFOs found balancing the needs between external stakeholders and corporate reporting challenging.

And almost three-quarters (74%) said their company reporting needed to move beyond compliance and provide information that is useful to current and potential investors on areas such as strategy and forecasting.

The report also found that there is a greater focus by CFOs on how company reporting is being used by investors to gain a strategic understanding of a company’s vision, with just 20% of respondents believing their current reporting framework could be described as “highly effective” in meeting external stakeholder needs.

Peter Wollmert, EY’s Global and EMEIA FAAS chief, said: “Regulatory compliance is the cornerstone of providing confidence to the capital markets, yet it is clear that CFOs are increasingly aware of the need to move beyond this and provide information that will give them an edge over their competitors when attracting investors. At the same time, they have to improve the range of data they provide internally to satisfy management, board and audit committee demands.”

Some 97% of respondents said they faced challenges to improve reporting including time to produce reports and the cost. But, in response to changing stakeholder demands, nearly eight out ten (78%) thought they could introduce efficiencies into their reporting process and believe such reporting will become more wide ranging.

Within three years, nine out of ten (90%) surveyed CFOs said they expected to report on forecasting, sustainability reporting, integrated reporting and CSR reporting. Other key changes include a shortening of the reporting cycle and the introduction of more real-time reporting, as well as a greater focus on non-financial reporting themes around strategy, sustainability and how risk is managed.

Some 93% of China-based said they felt that they must do more to improve the information provided to stakeholders, followed by respondents in the UK, US and Brazil, all tied at 80%.

On a sectoral basis, technology and telecommunications firm chiefs said they were most concerned about the need to improve the information provided, while 86% of UK respondents said their primary concern was centred on balancing stakeholder needs with corporate reporting requirements.

Wollmert believes that changes to corporate reporting made it increasingly difficult to satisfy everyone, and firms need to strike a careful balance between speed and accuracy.

“Yet by utilising connected reporting effectively,” he continued “to provide stakeholders with the granularity they require, they will support investor confidence and provide firms with the better ability to link external drivers with strategy and forecast.”

 

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