Statutory reporting consumes a significant amount of time, effort and cost. The statutory reporting function is constantly evolving as organizations look to further streamline their finance function through technology transformation and other cost-cutting initiatives. Manually prepared reports present challenges around data inaccuracy, inconsistency, lack of audit trail. They are time consuming and subject to significant operational risk. If consolidation is involved, there are a whole new set of challenges to deal with – standardisation of account grouping, forex translation, elimination, minority interests etc. Incorrect reporting due to manual errors and omissions can be quite costly. Hundreds of companies are routinely investigated and penalised each year for violating disclosure norms. Organizations are looking at technology solutions to ease out and streamline the regulatory reporting function. Digital technologies and cloud-based solutions have the capability to change the fundamental premise of how reporting is accomplished. Automation of statutory financial reporting can help create efficiency and consistency in the reporting process.
As a growing number of businesses are switching from a manual preparation of financial statements to financial reporting solutions that automate the process, let us take a look at the benefits. Automated reporting saves time and money, reduces risks, improves efficiency, increases regulatory compliance, prepares businesses for audits, reduces turnaround time and is user-friendly and cost – effective! Apart from these, there is much more to automated financial reporting –
- Increased visibility into the statutory audit support leading to the opportunity to assess statutory audit fees
- New levels of transparency and insights enabled by technology
- Continuous improvements in consistency of publicly available statutory disclosures
- Leverage of company’s investments in technology and centralization
- Comparisons with similar-sized global corporations
- Consistent global approach and structure
Automation in statutory reporting has tended to focus on two key areas: improvements within the actual process itself and software solutions to automate the overall production of deliverables. Within the statutory reporting process, there has been a greater focus on identifying areas where recurring transactions or adjustments can be automated.
And when it comes to automation in statutory production, the growing trend is now for organizations to supplement their ERP systems with EPM systems (Enterprise Performance Management systems) to consolidate accounts and produce the statutory financial statements. This has resulted in the creation of dedicated and knowledgeable statutory reporting teams while ensuring that the financial statements are maintained in a robust security environment.
Deploying automated financial reporting systems require some groundwork. There are three key aspects that need to be taken care of;
- The source data present in an enterprise’s ERP system should be complete, accurate, and reliable
- All possible reporting scenarios must be captured
- The underlying algorithms should be minimally hard-coded so they are flexible enough to adapt to changing business realities
High-quality input data and data sufficiency are important for an automated reporting system to deliver its promise.
As we go into the future, the ultimate objective of cognitive automation will be to build a financial reporting system that works on a self-learning mode, where over time the reports become self-driven and smarter with minimal manual intervention required only for reviews, approvals and exception management.