Most organizations continue to invest a significant number of hours every month in a particular set of activities related to calculating, manipulating and validating critical financial reporting data using spreadsheets. Organizations should be asking whether this level of effort represents incremental value to the financial reporting process and whether this actually does needs to be done in spreadsheets.
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It seems like everybody is wearing a lot more hats these days and finance leaders are no exception. Of course, this means that they are finding it increasingly difficult to balance the multitude of responsibilities and non-routine initiatives facing the finance function.
A fast, close-the-books process provides multiple benefits for the finance function and for the company. First, a fast close process creates more time for finance professionals to focus on strategic activities for the company, such as identifying warnings in financial data and providing the corporation's financial direction. It also reduces the cost of the finance function, since fewer hours are needed to close the books. And it demonstrates that the company's controls and systems are well organized; the company sends the message to its competitors and to the investment community that it is expert at performing business processes.
This extensive list of questions can be asked during an interview for an inventory audit.
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Electronic discovery (eDiscovery) refers to the process of searching, locating and securing electronic data for the purpose of using it as evidence in a legal case.
Performance is defined as the throughput of business transactions compared to user needs, expectations or requirements. IT performance risk is the risk that a company’s IT infrastructure will be unable to perform at required levels due to inferior internal operating practices, technology and/or external relationships that threaten the demand for the organization's products or services.
Leading companies have taken advantage of recent innovations in technology and process design to ease the burden imposed by the financial close and reporting process. Regrettably, many companies continue to rely on inefficient processes plagued by decentralization, aging technology and over reliance on manual activities. The end result includes an extensive close cycle time, inadequate analysis of results, high turnover and costly errors in reporting. Migration to the next plateau of maturity – “closing the books” completely and efficiently – is typically not an easy leap. This is understandable in high-growth scenarios, where already–scarce time is focused on increasing revenues, expanding operations and integrating new business units.
Reluctance to resolve these issues is generally attributed to one or more common culprits – budgetary constraints, cultural adversity to change, and lack of resources. Often left unaddressed – “we’ll focus on the close process after the IPO…” – these issues are heightened with the increasing scrutiny and reporting requirements that come with being a public company. It can easily be carried over into the public environment, escalating the severity of the risks and limiting the ability of finance to focus its time on value-adding activities.
Our experience shows that significant risk mitigation can be achieved by building (and managing against) a detailed close activity checklist. Pre-IPO and newly public companies have the most to gain, as they can least afford to have a bumpy ride on the road to their first filings.
International Financial Reporting Standards (IFRS) are accounting standards and interpretations adopted by the International Accounting Standards Board (IASB). They include IFRS issued by the IASB since its formation on July 1, 2000, and International Accounting Standards (IAS) previously issued by the International Accounting Standards Committee (IASC) and adopted by the IASB upon its formation.
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