This might be you and it’s not your fault
In today’s digital economy, demand for immediate access to accurate financial data increases constantly. Internal management, parent companies, regulatory authorities, and other external stakeholders now expect almost real-time availability of accounting statements and management information.
To keep up with these changing expectations, financial reporting and accounting departments must constantly explore new technologies to improve data quality as well as refine best practices to streamline operations and improve efficiency.
However, the ability of many finance professionals to deliver effectively is often hindered at the outset by the reporting limitations of existing accounting systems in the areas of inconsistent system set up across companies, multi-ERP system consolidation challenges, currency reporting complications, divergent global accounting and reporting standards, and even local user language support.
Many ERP-vendors, wishing to excel at supporting line-of-business operations, and often challenged by these constantly evolving reporting requirements, increasingly look to specialist partner solutions to provide both global and local controllers with the tools needed to respond appropriately.
What’s the Real Issue?
In distributed corporations, global controllers must regularly consolidate data from multiple ERP-systems, navigate different chart of accounts structures, and deal with multiple currencies. They need to support the decision-making needs of internal management, while also creating GAAP-* and IFRS-compliant** consolidated financial statements for external audiences such as auditors, banks, investors, and analysts.
Individual company accountants also need to balance internal management reporting formats, with the frequently conflicting disclosure requirements of local authorities. And as national governments in a growing number of countries look to protect revenue sources and expose fraudulent activity, they have created additional burdens by requiring electronic tracking of individual transactions and almost real-time electronic report submission.
The reality is that the need to publish financial statements in different countries with different laws and regulations makes global accounting a challenge. Finance professionals must have expertise of the regulations in all markets in which their company does business and be able to navigate regulatory grey areas when needed.
These little things and your business
When systems are not seamlessly aligned or integrated, processes vital to a company’s success become overcomplicated. For example, where companies using the same ERP system do not use identical charts of accounts, collating information becomes less straightforward. Where companies use different ERP systems or have different calendar period structures aggregation becomes even more time-consuming. Where local regulatory standards differ across a distributed enterprise, adjustments often need to be made to standardize the reporting at the group level. Many-to-all of these functions are managed manually, are prone to errors, reduce the efficiency of the reporting cycle, and can even delay management’s ability to make timely operating decisions.
Relying on data entered across multiple systems or platforms, and then relying on manual effort to tie it all together is a sub-optimal approach as pressures mount to report more quickly, and in more detail than ever before.
How to Fix?
Fresh approaches, typically offered as web-based subscription services are helping customers bridge the gap from traditional reporting to today’s need for immediacy and accuracy at all levels.
Consider these best practices and reliable workflows as a fix:
- Any modern system should begin by consolidating transaction-level data – General Ledger, Accounts Payable, and Accounts Receivable – from each ERP-system, located anywhere globally, into a multi-ledger accounting repository. This makes data from every group operation available immediately on a consistent and easy-to-understand basis. Modern processing power and the availability of standard API’s (Application Programming Interfaces) means that the traditional third-party reporting approach of starting with just periodically imported balance information is now insufficient and obsolete.
- By starting with a full transaction set, the repository can then be enhanced through the ability to post auditable, double-entry transaction-level adjustments, such as currency revaluations, intercompany eliminations, and statutory reporting reallocations when these are difficult to accomplish in underlying systems. This provides a truly centralized system-of-record with complete drill down access to the transaction-level detail behind every reported balance, reducing audit risk when compared with ERP systems that require additional spreadsheet adjustments, and Business Intelligence products that produce financial reports based only on balance-level data.
- A top-quality reporting system can support not only adjustments, but also the ability to map disparate source charts of accounts to common group or regulatory standards. The reporting system can maintain its own chart structures and after an initial mapping exercise at set up time, the user is able to simply run each consolidation or statutory report to any required format, removing the traditional problem of monthly reallocation work in spreadsheets.
As the reporting solution uses a modern integration framework, the complete accounting dataset can also be utilized for broader decision support using industry-standard analytical and business intelligence tools, via standard outbound APIs, and with all reporting based on a “single source-of-truth” there is consistency in the information used across the enterprise.
If your company faces challenges in coordinating and completing consolidated financial reporting across a distributed enterprise and is seeking to remain competitive with a purpose-built reporting and compliance solution, Mondial can help.
To learn more, read our Free White Paper or contact us to schedule a free test drive using your data.