Despite all the sophisticated tools at their disposal, CFOs and other finance executives still rely on spreadsheets when it matters— at financial-reporting time. More than 70% of the 1,100 global executives interviewed in a survey by Oracle and Accenture said they used spreadsheets to track and manage financial reporting on a daily basis.
The findings of the survey, released this week, differed by country. In the United States, 76% of executives responding used spreadsheets daily, while in the United Kingdom, 86% of the respondents relied on them. The next three regions or countries with the highest usage were the Middle East (76%), Russia (74%), and Italy (55%).
“Companies rely heavily on spreadsheets even in the financial-reporting process,” says John O’Rourke, a vice president of product marketing at Oracle. “We see a lot of spreadsheets being used in the budgeting, planning, and forecasting area. That’s an area that’s ripe for spreadsheets, but it did surprise us that with financial reporting we saw 72% [of executives] using spreadsheets in some way.”
Finance executives often use a dedicated application to consolidate data, but tend to use spreadsheets to extract specific information or collect data across disparate financial systems. They also use spreadsheets to generate their actual financial statements. But this hybrid approach does not give executives a comprehensive, clear view of all of the numbers generated by their financial-reporting processes. Within the C-suite, it’s a pressing concern. Almost 40% of the C- and VP-level respondents to the survey said their effectiveness was impaired by limited visibility into financial-reporting data.
“They don’t have all the dimensional analytics that they need to be able to go on the earnings call and say, yes, margins were up here, and here are the product lines or customer segments or geographies that drove that,” says Scott Brennan, executive director of Accenture’s finance and enterprise performance consulting group.
If a company looks at the financial-reporting function a bit more holistically, it will be better prepared, says Brennan. “Too many companies are taking a piecemeal approach to investing in systems for the closing, reporting, and regulatory filing processes,” he says. Coming out of the downturn, he notes, companies realize they need to ensure their financial data ties to their management and performance data, so they can do a “root-cause analysis” into why a quarter ended the way it did.
That piecemeal approach to financial reporting was also evident in the way companies publicized results. Indeed, more than half of the respondents in the survey did not know the total cost of managing and publicizing financial results. The Benelux countries (Belgium, The Netherlands, and Luxembourg) and France had the highest percentages of respondents who could not correctly pinpoint this cost, while some of the lowest percentages came from the Middle East and South Africa.
But that is expected to change. A majority of the survey’s participants said that during the next five years, they plan to make a “significant investment” in financial-reporting systems. Almost half said they were due to overhaul all three phases of financial reporting.
Sixty-four percent of Russian companies have already made a substantial investment in this area in the past 12 months. After Russia, the largest percentage of companies that said they made changes to financial reporting the past year were in the United Kingdom and Spain.