Unifying statutory consolidation and management reporting: triggers and advantages
Most international groups have already undertaken the first steps in unifying statutory consolidation and reporting. However, we feel that this is becoming a priority for groups who did not yet choose for this convergence.
Why is there a desire to integrate statutory consolidation and management reporting into one system?
The biggest advantage of unifying this process is that there is a rationalization in the production of financial information, which results in quicker timeframes and a higher quality of the financial information, whilst the costs and efforts can be reduced. Unconscious, there is also another effect on the general performance of the group: a financial management that can present their results on time, keeps a certain image that the group is upfront and that processes are efficient.
Our teams intervene a lot when it comes to implementing unification projects, and we do notice that there are different kinds of triggers to start this process. See hereunder the three main situations:
- The financial director of the group is confronted with an increased request for financial and operational information, coming from the management team, operational managers, stakeholders, banks or regulatory institutions. That’s why the group needs to present more information of high quality and with always shorter deadlines. Next to the regulatory statutory reporting, groups choose more frequently for a monthly reporting because it responds more to the reactivity that is being asked from the operational teams that need to make decisions in an always changing environment.
- The financial manager needs to deliver more types of reporting: tax reporting, forecasting, cash flow, management reporting, … A non-unified process leads to more manual entries and heavy reconciliation to ensure the coherence of the data. Also, the technical architecture is becoming too complex on short notice.
- The information system in the group is not accurate anymore. The group evolved in the latest months/years and the system did not evolve with those changes. The information system is becoming a constraint for the finance teams: the system is not evolving with the group, use of different systems next to each other to deliver the required information, an architecture that is difficult to maintain (versions) and performance issues. The risk for the financial director is that he is not capable of delivering the requested information within the requested timeframe.
The above points show why groups choose for a unification of the different processes. But what are now the concrete advantages?
The ultimate goal of unifying statutory consolidation and management reporting is to increase the efficiency of the finance teams. Also the internal control will be augmented and the closing timed reduced.
See hereunder a (non-exhaustive) list of benefits that we encounter:
- The information is of better quality, because it comes from one unique and reliable source of information;
- The information is based on the same hypotheses and the same methodology: financial indicators are now more coherent;
- The information is available quickly: one unique channel to make adjustments and to produce the financial statements. This results in less validation, less intercompany transactions and all information can be found in one tool;
- It’s the opportunity to adjust the internal information and to gather different teams;
- A more unified team ensures that annual tasks are balanced and activity peaks can be avoided;
- Reduction of the efforts: unnecessary entries are replaced by one single entry and more accurate data;
- The efforts that the group requires from its entities are more streamlined and less redundant;
- Using one single IT tool reduces the costs for license and maintenance.
In terms of organization on group level, this unification will also mean a progress:
- More coherence in the request to the entities of the group: the entities have one single interlocutor to report the information;
- Once the team is unified, only one reporting needs to be done to the operational teams and management (more coherent information and simpler to analyze);
- The group benefits from one unique team for the production and analysis of the reported data;
- The role of the CFO as business partner will be reinforced.
The advantages are clear and the decision to go for one unified system is a structural choice for the group.
Contributor: Benjamin Steadman, Senior Manager, CFO Services, Deloitte Consulting