Financial Reporting Challenges with Diverse Group Calendars

Group Companies on different operating calendars is nothing new. A lack of insight and confidence in the data amongst CFOs and finance organizations  isn’t also new. This challenge often holds back organizational decision-making. Many businesses are held back by inefficiencies in routine processes within the period-end financial close and reporting process. This makes it difficult to progress to value-added research and decision support.

These limitations can be exacerbated in group situations where different companies in the group have different operating calendars or financial years. Consequently, this makes it challenging to present data in a way that allows useful comparison or analysis. 

What Type of Differences Occur?

Financial Years:

financial year represents an overall time period for reporting or tax calculation. 

In an ideal situation every group company would operate on the same financial year. Example, beginning, say, on January 1 and ending on December 31. However, this is not always possible. In some countries legal requirements determine that companies operating there must base their financial reporting on a non-calendar year basis. An example of this would be April 1 through March 31. 

When this occurs, the group finance team has to find ways to adhere to these local requirements. They also  must report in line with the corporate financial year as companies on different operating calendars

Many accounting systems are built to reset the profit and loss account calculations to zero at the beginning of each financial year. They do this by creating journals to transfer the prior-year trading figures to a retained earnings account on the balance sheet. An unintended consequence of this behavior is that when the finance team comes to consolidate data across companies. They find one has a different year-end. This reset of data in that company can significantly skew the results unless somehow it can be omitted.  

Calendar Periods:

Depending on the type of industry which a company operates, a business may report internally on periods of different lengths. Most business operate monthly, simply following the traditional calendar.  These companies treat each month as a separate financial period. This means though that periods are of different lengths as the number of days in each month varies. In some industries, to help the business report in a consistent manner and in a way that invites easier comparison and analysis, the accounting system is set up with periods of more standard length. 

In retail for example it is very common to set reporting periods up so that a financial year comprises of 13 x 4-week periods.  Sometimes it’s quarters made up of 4, 4, and 5-weeks respectively. In high volume, low margin businesses particularly, it is often vital that the businesses are able to view data on a consistent basis. This means same number of days, same number of weekends.  Additionally, same number of operating hours so that trends in sales and other operating metrics can be completely understood.  

This however, also creates a challenge when a company tries to consolidate the information across all companies.  We see that  various operating entities are not using consistent calendar periods across the group.  

What Is the Financial Impact? 

Minor accounting errors may not affect the final figures in the financial statements. Or it can skew the total significantly. Clearly when manual effort is required to remediate the calendar differences, errors can definitely arise.

Finding and fixing this kind of error takes a lot of time and resources. 

Most Internal Auditors found that one in three data errors results in a financial loss for the company.  

IBM put the annual cost of data quality issues in the United States alone at $3.1 trillion. An  article for the MIT Sloan Management Review, states that correcting data errors and dealing with the impact caused by bad data costs companies 15% to 25% of their annual revenue.

What Can Be Done About It?

Improved Processes: 

It is crucial to ensure that sufficient time and resources are allocated to the financial reporting process. While there are standard processes that can be identified and documented, financial reporting is a skill in its own right. Internal decision-making as well as external tax and audit reporting require the importance of getting the data right. Companies should invest in resources specifically knowledgeable on the topic and not treat it as just “another task” within the accounting department. 

Automate the Manual:

When data needs to be recast and reported across time-periods differently from the way it is held in the core accounting system, specialist software is required. There are cloud-based systems available today which can import all accounting transactions for each group accounting system – even when the ERP systems are different – and store it in a central repository. 

These systems can also create multiple accounting periods upon which to report the data, and even identify transactions – such as the year-end adjustment transactions – which should not be included in certain reports. 

This allows the financial reporting specialist within a company to build the required reports.  This uses a single system with the needed reporting periods, without requiring the company to spend a fortune on replacing its core operating systems just to improve its reporting.  


Companies continue to face difficulties when different group operations use mis-aligned financial years and calendar periods. The erstwhile methodology of manually manipulating data to produce consistent reports is tedious and can lead to many errors. 

The use of modern, cloud technology to homogenize data and the use of specialist financial reporting human resources can produce huge savings for companies, as the enhanced accuracy of the data provides a foundation for improved decision-making and higher profitability. 

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