The APQC Blog

Financial Reporting Increasingly Complex

As 2012 begins to come to a close and finance departments are consumed with the year-end close-to-disclose process, it seems fitting to reflect back on how this “last mile” of finance has transformed over the past few years. The close-to-disclose process involves all activities needed to close an organization’s books, perform all necessary inter-company accounting and reconciliation steps, finalize consolidated financial statements and release earnings and publish official statements with regulators such as the U.S. Securities and Exchange Commission (SEC).

In response to the 2008 recession, regulatory bodies have increased scrutiny of the final stretch of financial statement preparation. In addition, a combination of global corporate expansions and stakeholder demands for more frequent financial disclosures with non-financial information has put—oftentimes understaffed—financial departments in an impossible situation.

"More people are taking a look at the close process because financial reporting timetables and disclosure requirements are getting more condensed and expansive simultaneously,” says William Curry, corporate controller and principal accounting officer at Waters Corp. “Over the past 10 years, the level of complexity and the amount of required disclosures have grown enormously."

Earlier this year, APQC conducted a survey on trends in financial management process improvement involving 145 senior finance executives from large U.S., European, and Asian organizations. Nearly 75 percent of respondents reported that the close-to-disclose process ranked among their top two targets for financial management improvement over the next 18 months. With the close-to-disclose process such a high priority for organizations, expect to see many organizations begin to root out best practices for financial accounting and reporting.

Excerpts from this article first appeared in Financial Executives International’s November 2012 magazine in Mary Driscoll’s article Financial Reporting: The Last Mile of Finance: Growing Scrutiny.