What separates a good finance department from a truly great one? In a word: confidence. Confidence in the accuracy of reported numbers. Confidence that you could withstand any audit. Confidence that you can close in five days or less. “Five days?!” you ask. Yes. That’s the benchmark for top-performing companies. And many are even faster. So if you’re already doing it, congratulations. If not, it’s time to put the right structures in place to get there.

If yours is a mature organization, you’ve probably already adopted a well-defined internal control framework. But when did you last revise it? And how well does your staff truly understand the financial impact of each potential risk area?

Assess your control framework

To keep your processes effective and updated, it’s crucial to regularly revise internal control risk assessments – starting with the risk for significant financial statement errors, and working down through all related transaction processes – at least once a year. These assessments should always address the following parameters:

  • Policies and guidelines: Are they clearly defined, communicated and enforced throughout the finance department?
  • Standardized operating procedures: Are they complete, well integrated and transparent throughout the organization?
  • IT systems: Are yours up-to-date and capable of monitoring recurring risks with a full audit trail?
  • Transparency and overview: Does your IT system support informed decision-making where everyone is aware of their responsibilities and their importance?
  • Company culture: Are high ethical and legal standards self-evident, or have grey areas started to emerge? It’s always helpful to reemphasize company guidelines and procedures.

What do high-performing companies do differently?

According to a recent EY study of 146 Nordic companies, “high performers” achieve a superior level of closing efficiency in part by thoroughly addressing all of the above parameters. All of the most successful finance departments in the study had implemented group-wide materiality thresholds and adopted a risk-based approach to the financial close process. In addition to a higher degree of automated processes, they also had high levels of system integration, with one standard chart of accounts in place. As a result, these high performers were able to complete their monthly close in an average of five days or less — significantly faster than the industry average.

What can you do to improve today?

Fortunately, a more responsive model for control, compliance and reporting doesn’t have to take months of analyses to achieve, explains Per-Oyvind Borge-Hansen, Partner at EY, Norway. “Done properly,” he says, “you can come a long way in assessing your status in just a couple of weeks.” Here are a few of his tips:

  1. Make a rapid assessment: Identify the most time-consuming areas and those where errors often occur. Focus on the things that really matter first.
  2. Create a project plan: Tackle the most manageable risks first, assigning specific process owners and others responsible for identifying critical issues and developing solutions.
  3. Develop an execution plan: Interview process owners to develop a detailed understanding of current processes. Prioritize opportunities for improvement. Focus initially on eliminating redundant tasks, implementing materiality thresholds, and making the best use of the existing IT setup.
  4. Implement improvements: Finally, prepare an implementation plan with clearly assigned tasks, responsibilities and deadlines. Continuously monitor progress and adjust as necessary.

Ready to take control?

Are you ready to take total control of your risks? Looking for more best practices to implement in your own control framework? Find out more by downloading our new e-guide: A guide to increase Control & Compliance at the Finance Department