The future of consolidation (6/7): Financial communication
By Allen White, Sigma Conso co-founder & Administrator
Whether for a press release, the creation of a document for the Board of Directors, the creation of an annual report or an exchange of financial data with external organisations, we have seen that these tasks still take up a disproportionate amount of time in the overall consolidation schedule.
There are reasons for this. We should note that:
- Most software creates highly accurate reports required by consolidation professionals and auditors, but neglects the “financial communication” aspect which requires a high degree of quality, synthesis and customisation.
- Although software now provides interfacing tools to avoid having to recopy information which is always risky and time-consuming, many groups don’t use them. The reason for this is that many different tools have to be juggled and integrated which requires greater technical than accounting skills. People therefore tend to avoid the task.
- In addition, the development of an automatic interface between the database containing the consolidation information and what the market more and more often calls the “financial book” is a long and difficult task. It is therefore expensive and the continuity of the book’s format isn’t assured. Another reason not to tackle it.
In the long run, however, as a result of its position on the critical consolidation schedule path, financial communication in the broadest sense must be backed by easy-to-use functionality integrated in the consolidation software.
Significant improvements by consolidation software vendors are expected in this area in the short term.
Articles in the “Future of Consolidation” series:
- The structure of the data to consolidate and processing in consolidation
- The reconciliation of intercompany balances: is there hope?
- IFRS and local GAAP
- Statutory consolidation and reporting: unified consolidation
- Group structure
- Financial communication
- Impact of future technological changes on consolidation