The challenges of modern financial reporting

There’s a rumor afoot. The proverbial “they” say that Finance is still largely using manual processes to collaborate
during the reporting process. What’s more? “They” also say Finance is still using piece-meal, siloed systems that
cannot talk to one another. Together these fragmented approaches force critical communications and functions to
be completed outside of auditable functions.
We wanted to find out if “they” were right.
So, in order to get objective insight into the larger market trends – and the issues shaping them – we conducted a
survey of finance executives and professionals from more than 200 companies worldwide. The answers came from
myriad industries, including financial services, retail, technology, media, healthcare, energy and utilities, professional
services, construction and more. What did the survey reveal? “They” might be right.
The results confirmed our assumption. Financial reporting continues to be a major challenge for most finance
teams for several significant reasons:
• The widespread adoption of narrative (text) in financial reporting. While certainly valuable, narrative
contributions are notoriously difficult to manage, revise, and maintain.
• The need to integrate multiple data sources, and the accompanying challenges with data consistency and
tracking.
• The need to collaborate with contributors and stakeholders throughout the reporting process while still relying
on traditional communication vehicles such as email.
• A general lack of data, workflow and process control.
In this research report, we’ll share with you the detailed survey findings so you can compare them to your own
reporting experiences. Along the way, we’ll analyze the story behind the numbers, detail the innovative ways finance
organizations are staying ahead of the curve, and conclude with key takeaways and recommendations for evolving
the reporting process to meet today’s business requirements and expectations.
PURPOSE
OF THE SURVEY
SURVEY SCOPE
2%
Media
3%
Construction
22%
Other
18%
Manufacturing20%
Finance
9% Retail
8%
Technology
6%
Energy and
utilities
7%
Professional
services
4%
Healthcare
79
0 – 299 M
59
300 M
– 999 M
49
1 B – 10 B
15
>10 B
131
Finance
36
Other
6
Risk
29
Compliance/External
Reporting
INDUSTRIES ANNUAL REVENUE
(ML)
JOB TITLE OF
RESPONDENT
THE CHALLENGES OF MODERN FINANCIAL REPORTING - How well do your reports meet stakeholder needs?
Copyright 2016 | Tagetik | All Rights Reserved www.tagetik.com

QUESTION
After the books are closed, what types of reports/
documents do you produce to communicate to key
stakeholders? (check all that apply)
Financial statements (i.e., 10Q, 10K) 78 %
Board presentations 69 %
Annual reports 58 %
Business performance-to-plan review documents 58 %
Earnings releases / presentations 32 %
Sustainability reports 12 %
Industry compliance reports (i.e., Proxy Statements,CCAR, Call Reporting, EIOPA) 24 %
Other (please specify) 9 %
BEHIND
THE NUMBERS:
Today, finance is responsible for producing a
wide variety of reports.
Many of these, such as annual reports and
board presentations, are comprehensive.
In order to present a holistic view of the
organization’s financial and strategic reality,
they require data from multiple sources
and contributions from business owners
throughout the enterprise.
STAYING AHEAD
OF THE CURVE:
Finance organizations should consider using
a centralized database, which will allow for
data consistency and integrity across large
numbers of reports.

QUESTION
How many of these reports/presentations in total are
produced per month? Per quarter?
NUMBER OF
REPORTS/
PRESENTATIONS
PER MONTH
NUMBER OF
REPORTS/
PRESENTATIONS
PER QUARTER
61% 1-5
15% 16+
14% 6-10
10% 10-15 42% 1-5
21% 6-10
24% 16+
13% 10-15
QUESTION
On average, how long does report/presentation
production take per month? Per quarter?
Monthly Reporting
Production Time Responses
1-5 Days 65%
6-10 Days 26%
11-14 Days 5%
14 + Days 4%

Quarterly Reporting
Production Time Responses
1-5 Days 36%
6-10 Days 31%
11-14 Days 14%
20 + Days
15-20 Days
10%
8%
BEHIND
THE NUMBERS :
Nearly two-thirds (63%) of finance teams
are spending at least a week preparing
monthly and quarter-end reports. Consider
that in both cases, one third (35% and 32%,
respectively) are allocating a minimum of
TWO weeks in report preparation.
To put that in perspective, in any given
quarter, finance teams are spending at
least HALF their time producing reports,
eating up valuable time that could be sent
on analysis and other strategic activities.
STAYING AHEAD
OF THE CURVE:
A collaborative approach to financial reporting
is becoming the way of the future.
Finance organizations should set out to:
1. Increasing data consistency, auditability
and controls
2. Significantly decreasing the time
commitment when creating monthly and
quarterly reports.

QUESTION
How many departments are (or should be) involved
in pulling these reports together? And how many
individuals?
Numbers of
Departments Responses
1-3 69%
4-7 24%
8-10 4%
11 or more 3%
DEPARTMENTS
Numbers of
Individuals Responses
10 or less 70%
11-14 17%
25-49 6%
50 or more 7%
INDIVIDUALS

37% NO
63% YES
QUESTION
Is there an adequate workflow process in place to
manage contribution, approval, submission, etc.?
BEHIND
THE NUMBERS:
In some cases, more than 50 people
are working together to create reports.
That can mean finance is dealing with
50 different opinions, 50 contributors to
monitor, and many versions of any given
document – all without a centralized or
automated management solution. The
risk of bottlenecks, data, input errors
or collaborative versioning issues is
consequently extremely high. It’s no
wonder a third of those surveyed are not
confident about their workflow processes.
STAYING AHEAD
OF THE CURVE:
With so many different contributors with
varying agendas, reporting obligations and
deadlines, it’s easy to see how lines can get
crossed, blurred or erased entirely.
The challenge to finance teams is to find
a way for multiple contributors to work
simultaneously on the same document,
without risking overlap and while keeping a
log of all changes made. In addition, they must
find a way to promote security and workflow
governance of those documents.
Remember, each person in the Office of
Finance consumes data differently – by
preference and responsibility – so having
flexible options for consumption will pay
dividends in the long- run.

QUESTION
How many sources of data are involved?
Number
of Sources
Response
Percent
1-5 68 %
6-10 22 %
10+ 10 %
BEHIND
THE NUMBERS:
Data collection is an incredibly sensitive
and accuracy-driven task, one that
becomes infinitely more complex and
error-prone when multiple sources are
used. With every additional source,
data integrity and consistency becomes
more difficult to manage and maintain –
especially when detailed data collections
are required.
STAYING AHEAD
OF THE CURVE:
When it comes to financial reporting, nothing
can make life easier than a single source of
data. Thus, it’s more efficient and assuring to
produce financial and management reports,
board books and earnings presentations from
a single, centralized source. This way, data is
uniform and controlled, not copy and pasted
from email chains, old sources or otherwise
miskeyed causing error.

QUESTION
What applications are typically used to create the
reports/documents? (check all that apply)
BEHIND
THE NUMBERS:
Working exclusively out of Microsoft
Office has been a tried and true method
of financial reporting for decades. Yet
undeniably, it’s a vehicle that lacks
collaborative functionality and control.
Even with proven automated reporting
solutions available, it appears that the
Office of Finance will not move away from
the comfort of Excel, Word and PowerPoint.
STAYING AHEAD
OF THE CURVE:
Microsoft Office is the mainstay of today’s
finance team. It’s comfortable and familiar.
The key to modernizing the use of it?
Power Microsoft Office tools with financial
intelligence, automation, collaboration tools
and process workflow. Only then will Microsoft
Office come into its full reporting potential.
Application
Response
Count
Excel 95%
PowerPoint 65%
Word
Adobe
InDesign
48%
5%

On average, what
percentage of the
document is narrative vs.
financial information?
QUESTION
Mostly Narrative (70%)
7%
Partly Narrative (60%)
11%
Evenly Distributed (50/50)
29%
Slightly Narrative (40%)
25%
Nominally Narrative (30%)
28%
What types of narrative
are utilized?
(check all that apply)
QUESTION
Explanation of
results 84%
Management and
discussion analysis
69%
Notes to the
accounts
59%
Risk identification
and mitigation plans 37%
Strategic
assumptions
34%
Message to the
stakeholders
30%
Legal disclaimers 12%
Other (please
specify)
5%
BEHIND
THE NUMBERS:
Explaining the numbers is becoming
fundamental as reporting requirements
increase. Finance is charged with explaining the
meaning of more and more data and providing
insight for decision makers, executives and
investors alike. Narrative is the next reporting
frontier. And yet, operationally speaking, when
last-minute changes come through, updating
the narrative is a manual process where one
small data change can result in rewriting the
associated interpretation and explanation.
STAYING AHEAD
OF THE CURVE:
Everyone knows the benefits of data consistency.
But what about narrative consistency? Narrative
implicitly involves discussion, which often means
various contributors. Thus, managing the creation
of narrative with communication and collaboration
tools, like version control, is important. In addition,
because reports are increasingly automated, the
ability to automatically update narrative is also a
capability the Office of Finance should look out for.

MODERN FINANCIAL REPORTING CHALLENGES SURVEY - How well do your reports meet stakeholder needs
What forms of communication are used during this
process to manage the collection of information?
(check all that apply)
QUESTION
Emails 96%
In-person meetings 69%
Phone / video
conferences
55%
Messaging (i.e., Skype,
chat, Slack)
23%
BEHIND
THE NUMBERS:
The results for this question indicate
that most communications related to
the reporting process are outside of a
centralized, auditable system. Phone
and even in-person communications are
record-less and leave plenty of room
for misunderstanding. Messaging and
email communications are not easily
traced, requiring report creators to
verify responses by manually searching
through massive emails and other online
communications.
STAYING AHEAD
OF THE CURVE:
Again, a centralized reporting solution comes
into play. “Is the number that was disclosed in
that email the truest, most updated version?
Or had it been updated? Axe the mishmash
of email and video conference. Interaction
between power users, admins and end users
alike should be housed in a centralized system,
where detailed communication records are
kept, a single version of data ensured, and
vetting and verification is automatic. This
includes the ability to assign tasks, approve
changes, leave notes for others and set a
workflow approval process.

Not automated 60%
Takes too long 59%
Integration with data
sources
46%
Last minute changes
not reflected in reports
34%
Lack of full control 33%
Data / rounding / formatting
not consistent across reports
31%
No audit trail 27%
Data not accurate /
complete
25%
Other (please specify) 9%
Answer Options
Response
Count
QUESTION
What applications are typically used to create the
reports/documents? (check all that apply)
BEHIND
THE NUMBERS:
Not surprisingly, reporting challenges
are numerous and far-reaching. These
numbers reveal that there are significant
holes and inefficiencies in the report
creation process.
STAYING AHEAD
OF THE CURVE:
The pathway to success is pretty clear:
automation, shorter reporting times, data
integration and complete control would result
in reports that are more accurate, meaningful,
and credible.

According to survey results, it takes a week or more for 35% of organizations to produce monthly reports and at least two
weeks for 33% of organizations to produce quarterly reports, with some nearing the three-week mark. It’s no wonder that 60%
of respondents indicated that the length of time it takes to create reports is a key issue.
1. REPORTING EATS UP VALUABLE PROFESSIONAL TIME
Excel – or Excel-like tools – aren’t viable options for modern financial reporting. While 95% of those surveyed use Microsoft
Excel, 60% of respondents express that their main concern in the reporting process is lack of automation and 46% of
respondents report concerns related to a lack of integration with data sources.
These survey results make it clear that on their own, Excel, Word and PowerPoint are not enough to effectively meet
current disclosure requirements and internal reporting expectations. However, when combined with a comprehensive and
automated reporting solution, the Microsoft Office suite can be a powerful and familiar complement for business users and
contributors.
3. EXCEL ALONE ISN’T ADEQUATE FOR MODERN FINANCIAL REPORTING
Almost a third of respondents said they need to collect information from, on average, at least five departments, 12 individuals,
and six sources of data for reports. When data collection and narrative contributions are handled with manual tools and email-
driven processes, the potential for error is very high and the ability to manage changes is severely compromised. With issues
like this prevailing throughout finance teams, it’s not surprising that 33% cited lack of full control compromised the reporting
process.
2. INFORMATION IS SILOED
Communication in the reporting process is broken. The survey found that 70% of communication used in the collection of
information is managed through in-person meetings, while 23% of the communication process happens over messaging
apps. When communication between reporting stakeholders occurs outside of a central report management process, not
only is the process fraught with risks - such as versioning overlap, missed updates, or simple mistakes not caught through
review - but the audit trail of that communication is also fragmented, making effective auditing difficult if not impossible.
4. COMMUNICATION IS FRAGMENTED AND UNTRACEABLE
SUMMARY:
Companies are producing very high numbers of monthly and quarterly reports; 25% of respondents to this survey said their
organizations produced 15 or more reports per month and 37% of respondents said they produced 15 or more reports per
quarter.
We know compliance demands are at an all-time high, so there’s more and more information required for external and internal
reports -- which means more data to collect, review, consolidate, and analyze.
This survey shines a light on several harsh reporting realities:
Narrative is critical in modern financial reporting. Not only does it add color to a very black and white picture of the financial
state of a company, but it also serves to provide critical analysis and explanation related to financial disclosures. With 47% of
reports having at least a 50/50 distribution of narrative and financial information, the ability to efficiently produce and maintain
collaborative and thoughtful discussion of results is critical.
5. NARRATIVE IS AN ESSENTIAL COMPONENT OF FINANCIAL REPORTING

CONCLUSIONS:
“They” were right: when it comes to financial reporting, the Office of Finance is indeed facing a breaking point.
Despite increasingly complex compliance requirements and a heightened expectation for more insightful, detailed internal
reports, finance teams are still heavily relying on manual, fragmented reporting processes. Concerns about lengthy
processes, the lack of automation, integration issues, and difficulty managing changes results in a proliferating distrust
around current financial processes.
Clearly, the results of this survey show that in order to address reporting challenges, Finance needs the ability to:
• Create a wide variety of reports faster and with fewer resources
• Collect information from multiple data sources in a way that ensures data integrity and builds in consistency
• Leverage widely used tools such as Excel in a more effective way
• Streamline and track collaboration among contributors and business owners
• Effectively and efficiently manage increasing volumes of narrative
• Gain greater insight and control over workflows and reviews
Automating report production is the only way finance teams can gain the upper hand in meeting reporting demands.
Certainly, any reporting solution must have the comprehensive financial functionality to prepare specialized regulatory
reports, as well as reports specific and relevant to the executive team, business owners, and stakeholders.
Secondly, a reporting solution must have the ability to integrate data from a variety of sources in a way that ensures data
consistency, integrity, and accuracy across all reports.
Finally, a truly modern solution must also have the capability to automate collaboration, narrative commentary, and
workflows. Often missing in reporting solutions, such functionality helps to improve audit readiness, minimizes risk,
encourages meaningful collaboration, ensures transparency, and elevates report credibility. These capabilities will become
increasingly important as reporting requirements continue to grow in complexity and require ever-increasing amounts of
detail, analysis, and explanation.
In short, finance needs a fully enabled collaborative solution. One that connects a single data source to reports, and a single
reporting system to contributors. It is only through the development of effective, fully collaborative reporting processes,
complete with automation and process control, that Finance will have the trust that their undo efforts to create reports that
result in the most accurate disclosures of those hard earned figures.
Want to know more about your peers’ experiences? Hear how John Hancock took a collaborative, automated approach to
financial reporting.
www.tagetik.com/resources/videos/video?vid=from-data-to-discovery-webinar

The challenges of modern financial reporting

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