Financial close: times demand more automation.

• Author: Taylor, David
• Position: Technology

The rewards of the role of senior finance professional are increasingly difficult to realize. In February 2007, Fortune magazine summed up the position of today's finance chief: "The chief financial officer post--once a finishing school for CEOs--has become the crummiest gig in the corporate suite."

While some may believe this new CFO world is here to stay, the changes to the framework of finance are permanent and constantly evolving.

The office of Finance has been experiencing multiple changes for quite some time. The function is now hidden amid a mass of compliance, disclosures, litigation and controls.

The pace of regulatory changes also continues to increase. These increases are the result of the current economic challenges as well as on-going regulatory initiatives such as the mandate of eXtensible Business Reporting Language (XBRL) as the reporting standard format and the likely move to International Financial Reporting Standards.

The Financial Close

One of the core functions that challenges the finance function today is the financial close. While a majority of the enterprise has automated underlying functions and processes, the financial close remains one of the last bastions of manual work.

The tools are used to assemble data, improve efficiencies, aggregate and consolidate numbers--enterprise resource planning, corporate performance management and others--are sound as the arithmetic is usually right.

However, the close and financial reporting process is still similar to baking a cake by instinct, with no recipe to guide the process and no assurance that fiscally critical steps will not be forgotten.

Walk into any Finance organization during the quarter-end close and you will see a team hard at work assembling the ingredients, mixing them just so, adjusting as necessary to reflect the actual performance, until they are able to generate financial statements that are ready for public disclosure.

The tools used in the close are typically Excel, Word, document management solutions and a fair amount of hard copy. If the team was asked to systematically describe the process, it's evident that it's usually driven from a tattered piece of paper with handwritten notes describing the steps needed to close.

This informal and significantly manual approach was relevant work when companies weren't held to today's levels of precision and transparency and a requirement to maintain that same judgment for all similar situations going forward. In...