With the whistle-blower protection, reports of financial malpractice can come from within and organisation. Isn’t it worrying that Finance Directors and CFOs are legally responsible for an accurate monthly close report, yet only 30% actually trust the reported figures?

According to the Adra Match survey of financial accounting staff, an average of 72% said they did not trust the reported figures. In fact, only 17% of front-line staff trusted the figures compared to 30% of Finance Directors (FDs) and CFOs. Such a low level of trust can only mean that financial controls are not as tight as they should be – a worrying realisation for those legally responsible for accurate financial filing.

In-depth responsibility transferred to senior executives

There has been an increased pressure on finance departments to tighten up their controls ever since the introduction of the Sarbanes-Oxley (SOX) Act in the U.S.A. in 2002, which remains one of the strictest pieces of financial regulation in the world.

Not only does SOX require businesses to comply with enhanced financial reporting standards, it also transfers responsibility for accurate filing to senior executives. They’re required to have a full oversight of the accounting process, addressing any risks quickly and decisively.

The protection for whistle blowers

With the whistleblower protection of Section 806, reports of financial malpractice can come from within and organisation – providing even more reason to have clear data trails throughout the financial process.

The challenges of governance, risk and compliance (GRC)

The introduction of SOX is a key example of the additional work finance departments have to do in order to successfully cover governance, risk and compliance (GRC) regulations. This increased workload has led to a number of challenges:

financial regulation, financial write down,

Challenge 1: The speed vs. accuracy trade-off

According to the Adra Match survey, 90% of finance staff are under pressure for a faster monthly close process. Yet new GRC regulations requiring in-depth processes for compliance have added even more pressure to the financial close. Increased pressure can lead to inaccuracies and subsequently greater risk – an unnecessary trade-off between speed and accuracy within financial reconciliation and reporting!

Challenge 2: Departmental trust is worn down

In the face of increased demands, finance departments should be working even closer together to improve the accuracy of the financial close process. Instead, there is a distinct lack of trust in the reported figures, as unveiled by the Adra Match survey of finance professionals.

The mutual distrust is put under greater pressure when it is revealed that 15.9% of finance staff either had no second approver or didn’t know who their second approver was. This goes some way in explaining why only 39% of finance staff surveyed are satisfied with the quality of their monthly close process. 

Challenge 3: Cannot rely on external auditor

Before SOX had been introduced, CFOs at least had one final backstop – their external accountant or auditor. If the auditor spotted an error in the financial reporting, CFOs could usually submit corrections. However, SOX makes these changes much more difficult, instead requiring CFOs to declare a material misstatement – a stain on any company and CFOs record.

So what can the CFO rely on to help them stay compliant?

They say a bad workman always blames his tools, however in this case the fallacy stands true. It is far too often the case that existing reconciliation software acts as a disabler rather than an enabler when enforcing GRC standards. Adra Match’s new enhanced balance sheet reconciliation software, BALANCER has the ability to live in the Cloud. This quick to implement technology provides CFOs with a dashboard from which to oversee all components in the financial close process – from the automated reconciliation to the digital archiving of documents.

In order to address the specific challenges GRC imposes on CFOs, the BALANCER balance sheet reconciliation software also is made ground up to support GRC demands. Based on customised rules dependant on the countries and regulations you need to comply with, BALANCER provides at-a-glance visibility over the whole process.

Stop making compromises between accuracy and timeliness, become fully compliant and make time for enhanced financial reporting and analysis – take a look at BALANCER balance sheet reconciliation software in action in this brief video and see how enhanced balance sheet reconciliation software dramatically improves the reconciliation process.