PDF《“Beyond the 'final mile' of group》

the increasing burden of regulation and compliance the number of stakeholders shift towards real time reporting Regulation and compliance International Financial Reporting Standards (IFRS) and other regulatory requirements continue to take their toll on the group (corporate) reporting process. Sector specific, financial and non- financial information requirements have all expanded as governments respond to the public clamour for more transparency and accountability. Basel

3 has introduced new solvency requirements for the financial services sector, carbon trading and reporting schemes have produced the need to gather new information about energy use and concerns about institutional fraud and bribery have produced a whole raft of needs (Dodd-Frank Act, Foreign Corrupt Practices Act) around governance, risk and compliance. But there are significant impediments to the seamless introduction of these changes. The sheer scale of many multinationals, the number of reporting hierarchies and the varied time zones in which they operate can mean that the roll out of even the simplest changes can have serious repercussions for the organization, its processes and technology. Businesses with multi-vendor platforms and an over-reliance on the IT department and spreadsheets (see more later) are particularly exposed to implementation complexity, costly delays and loss of productivity. These difficulties are exacerbated by inconsistent accounting policies and poor '

line of sight'

between the group (corporate) finance function and local operations. Stakeholder Management Regulated industries, such as financial services and pharmaceuticals have become accustomed to responding to the specific needs of their sector, but more recent changes in the regulatory environment have expanded the number of stakeholders to which organizations are either directly or indirectly answerable. Environmental reporting, sustainability reporting and CSR (Corporate Social Responsibility) have become permanent '

fixtures'

for many organizations. Trade Unions, the public, investors, fund managers, employees, lobby groups and environmental specialists are just some of stakeholders with an interest in this aspect of reporting. Compliance reporting also touches a wide range of internal and external stakeholders, from regulatory supervisors, to audit committees, internal and external auditors. The net result is that organizations are operating in a profoundly different and more challenging stakeholder environment from

10 years ago;

namely;

Core financial and non-financial information is '

re-purposed'

many times for different stakeholders. For example;

the way that revenue information is presented to the public and employees is quite different from statutory filings such as the 10K or a CSR report. Quantitative information appears in different presentations and documents according to different stakeholder needs, raising the risk of inconsistencies in reporting and communications to the capital markets.

5 Beyond the '

final mile'

of group (corporate) financial reporting - A FSN &

Oracle White Paper What sort of architecture would work? The technologies used to deliver information are more varied;

HTML on the web;

multimedia presentations, PDF, XBRL, Adobe InDesign, Microsoft Word and PowerPoint, stretching the skills of the finance function. Real-time reporting The introduction of XBRL (Extensible Business Reporting Language) and its iXBRL variant has raised the tempo of group (corporate) reporting from the passive submission of statutory filings to the instant delivery of digital packets of information to regulators. Furthermore, in the fullness of time, users of XBRL will have the tools to make instant enquiries on XBRL databases to compare performance of companies around the world and to inform investment decisions, increasing the pressure on the group finance function. What regulation and compliance, stakeholder management and real-time reporting have in common is that they are all totally reliant on every step of the underlying group reporting process for their integrity. Yet the pace of change in the final mile has been so rapid that the response to each requirement has been reactive and isolated. For example, Organizations have applied a variety of XBRL approaches, ranging from XBRL solutions embedded in group (corporate) reporting software to standalone conversion tools and outsourced tagging services. Varied stakeholder requirements continue to be managed in process silos, limiting the opportunities for collaboration, process automation and control. New information requirements, for example, conversion to IFRS, have been implemented at the level of the group accounts because there is insufficient time, at least initially, to roll them out across the enterprise. So what sort of architecture is needed to meld the technical, process and organizational requirements of the final mile yet integrate it with the pre-consolidation phase, i.e. to regain mastery of the financial reporting process and put group finance back in the driving seat? Pre-consolidation For most organizations, ERP or financial management systems form the bedrock of their operational systems. The value of the ERP system in group reporting terms is that it captures transactions at source and imposes a high level of validation to ensure that transactions are completely and accurately recorded. So by extension, an ERP system which is tightly integrated with a group (corporate) reporting system preserves the integrity of these transactions (and hence balances) as they are propagated through the reporting supply chain to their final destination in the group (corporate) accounts. Financial data quality management tools ensure that structural changes in metadata (for example, cost centres, versions of reporting, charts of accounts, reporting currencies) are trapped so that transactions are accurately mappe........