Regulatory requirements giving CFOs nightmares

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CFOs are struggling to keep up with the regulatory process due to information demands and a fragile reporting ecosystem. 97% of those asked by the Modern Finance Forum identified regulatory reporting as their main concern for 2017.

The most pressing concern, according to the research, was that they would not be able to reach their reporting deadlines.

“Understandably, many CFOs view self-service reporting as a panacea and way to offset the constant pressure on finance resources, but our research identifies that with so many fault lines in their regular reporting, many enterprises are simply not ready to allow users to help themselves,” says Gary Simon, CEO of FSN, which operates the forum.

“One quarter of organisations have reduced their finance headcount in the last three years, and 40% have kept headcount flat in the same period.  In these circumstances, self-service reporting would simply make matters much worse.”

Automation could be a solution to the “spreadsheet spiral” and sidestepping the creation of thousands of databases just to keep track.

Chris Gomersall, CEO of ClusterSeven, says that there are two major reasons for the spiral. “Foremost, enterprise systems are proving inadequate and restrictive for operational processes, resulting in users resorting to the use of spreadsheets to fill the gap in functionality. Spreadsheets offer flexibility, and good financial modelling and analytics capability.

Thereafter, he adds, the due diligence and controls applied to the use of enterprise systems for operational processes aren’t equally applied to spreadsheets.

“Very quickly, a large universe of uncontrolled and unmonitored spreadsheets gets created, posing a huge risk to finance departments as there isn’t an inventory of such files, or an understanding of data sources and lineages,” adds Gomersall. “Consequently, CFOs don’t have visibility of the data aggregation and manipulation that has been undertaken to arrive at figures included in finance reporting, putting them under great strain.”

The research was conducted amongst the 49,000 members of the forum on LinkedIn. 977 senior finance professionals responded to the survey covering 23 countries and 13 industry sectors.  Approximately half of the respondents were from organisations with more than 1,000 employees.