Financial reporting has long been a vital part of any business, and on-time, accurate results are of the utmost importance. This highly pressurised, deadline driven environment has always been a pain point for financial executives, and it has only become more complicated over the years, with annual reports and board books compounded by statutory and regulatory reports, and recently the need to conduct sustainability and Corporate Social Responsibility (CSR) reporting as well.
This 'last mile' of reporting has traditionally been dominated by manual processes, tight deadlines and stressful conditions, and has always been time consuming and inefficient. Reporting needs to integrate data from multiple sources, both structured and unstructured, from across the enterprise. This requires collaboration from a variety of contributors, who have different areas of responsibility, and access to different data. This process also requires reports to be built, edited, reviewed, approved and published, all using different manual processes.
The manual process and the variety of different parties involved, along with the number of iterations before final sign off such as Word and Excel files being shared via e-mail, last minute changes, lack of workflow control, lack of access control and lack of audit trail have all led to multiple challenges including inaccuracies as well as legal issues as there is no evidence of compliance.
Some of the problems that are experienced across all the different sectors include errors in data collection from multiple locations, a lack of accuracy resulting from re-keying similar information multiple reports, low productivity due to linear workflow with multiple bottlenecks, limited version control and integrity issues. These issues all present risk elements including error, fraud, incorrect interpretation, lack of enterprise interoperability, lack of accuracy and failure to comply with regulation, with the potential to cause financial loss, legal challenges, loss of stock value, loss of reputation, fines and penalties.
Added to this, the proliferation of eXtensible Business Reporting Language (XBRL), which aims to provide a global standard for reporting, is fast gaining ground in South Africa. All companies listed on the Johannesburg Stock Exchange (JSE) that are dual listed on an international exchange are expected to begin using XBRL already, and this requirement is only set to expand. And existing inefficiencies are only compounded by the need to start all over again from scratch for the next period.
Technology provides the means to not only improve efficiency and shorten reporting cycles, but also reduce risk and enable the vast data gained from reporting to be used for analysis, allowing for better future business operations.
Automated last mile reporting provides a single, secure platform to automate and enhance controls over all management, statutory and regulatory reports.
This helps organisations to resolve the difficulties they face when it comes to preparing and filing external as well as internal financial documents, by eliminating manual processes and supporting collaboration, validation, access, workflow and version control as well as meeting XBRL mandates from stock exchanges such as the JSE and regulators.
By aggregating and consolidating financial and non-financial data automatically and using intelligent software with integrated XBRL functionality, organisations gain access to a collaborative solution that delivers a single version of the truth, with a complete audit trail, version and workflow control, integrated business rules and compliance checking as well as editable variables in the text, which can deliver reports automatically in a variety of outputs, from Microsoft Word and PowerPoint to PDF and even formats specifically for the various stock exchange requirements.
This reduces risk across multiple areas: risk of error is reduced, through a single version of the truth resulting in finance managers responsible for accuracy spending less time reviewing or handling last minute changes and spending more time analysing the results; the risk of late filing is reduced, since the reports are generated automatically from the aggregated data and can therefore be reviewed far sooner; the risk of insider leaks is minimised because access can be strictly controlled; and the risk of non-compliance can be addressed by building in compliance checks and audit trails, which increase confidence in the final report.
Research shows that more efficient report building via automation reduces overtime cost and even printing cost with up to 50%. The expected return on investment is between 3months to 1 year.
Integrated XBRL reporting has several advantages, allowing for the tagging of all numeric and textual data through standard XBRL tagging, reading and viewing, along with secure taxonomy storage, controlled user access and workflow, the ability to track taxonomy changes and create an audit trail, automatic XBRL update which enables tagged data to be automatically amended, and the ability to tag data once, which will then be automatically flowed to future periods, eliminating the need to start from scratch on each new report.
Automated last mile reporting prevents late submission and material errors in regulatory and statutory filings, prevents insider leaks and enhances weak internal controls and financial governance frameworks, reducing risk.
It eliminates manual data collection and consolidation as well as the need to re-key information, providing a secure environment for review and approval with automated error checking, reducing costs. It eliminates bottlenecks, complex time-consuming processes and manual updating of report data, which reduces the reporting cycle time. Finally, it offers enhanced consistency and integrity of reports, ensuring a single version of the truth and allowing for optimised analysis through intelligent, secure collaboration, improving business insight.
In addition to improving efficiency and reducing risk, automated last mile reporting ensures that companies will comply with some recommendations made by the new King III corporate governance code. One such example in the code is that the audit committee should consider the use of technology to improve efficiency and audit coverage and that the CIO and ultimately the CFO should understand the impact that ICT has on finance and more importantly on risk.
With the reporting process only becoming more onerous as the years pass, and the need for accurate financial and non-financial data crucial to the success of the modern business, manual reporting has become an increasingly outdated model. By automating this process organisations can not only save time and money, they can improve efficiency, reduce risk and gain access to reports that deliver real business insights that enable better outcomes and smarter decision making ability.