Finance and Accountancy Briefing
The Strategic Need to Automate: The Last Mile of Finance
At present, the Last Mile has become much tougher to traverse due to new regulatory disclosure requirements including eXtensible Business Reporting Language (XBRL) and efforts to enhance Internal Controls over Financial Reporting (ICFR).
The penalties for getting financial statements wrong or filing them late can be extremely costly. They include Security Exchange Commission (SEC) fines and technical defaults on debt and bonds, not to mention negative exposure on stock price and a higher cost of capital. Simply put, organizations have strong motivation to avoid these penalties.
The first year of XBRL filing was 2009, and about 500 public US companies were forced to take the plunge with an additional 1,000 companies doing the same in 2010. Some outsourced the job of XBRL tagging to external resources. Others bit the bullet and learned how to do it in-house, many with the help of an automated system. Regardless of the XBRL solution they chose, the first wave of XBRL filings contained thousands of errors, but companies got grace; the SEC announced a policy of forgiveness for two years from the initial XBRL filing for most unintentional errors in tagging.
Beyond delivering what the SEC requires, CFOs are increasingly expected to provide analytic insights. But they cannot lead organizational change if they are limited by outdated, inefficient processes. A holistic approach to tightening up the Last Mile - bringing it into the 21st century - is found to work well in addressing these challenges.
Automation of the Last Mile supports the growth of the CFO's mission, as it builds efficiency and integrates information throughout the enterprise. A purpose-built software solution for the Last Mile can enable finance to navigate the data to catch anomalies, drill down to check details, and map the XBRL tags just once, with automatic carryover to successive reporting periods.
Major companies that have reengineered their Last Mile say they experienced fewer ICFR incidents and that the new automation allowed them to catch errors earlier and prevent misinterpretation from building on top of bad information.
Download this whitepaper for insights into the benefits of automation and how to successfully manage implementation.
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