The Template for Simplification: How to Simplify Global Statutory Reporting Processes
Thought leaders from some of the world’s leading organizations converged at Amplify 2021’s Global Statutory Reporting Day to discuss how to simplify global statutory reporting processes. It’s not an easy ask. These are processes used by the largest companies to report on multiple entities. There are a tonne of complexities that are difficult to unravel. Over the course of the day, new best practices emerged that will help you to de-stress your reporting and improve the way you work.
Focus on improving data governance
The volume of data handled by organizations has exploded. Exponential data growth isn’t a bad thing—knowledge is power, after all. But if data isn’t properly managed, it can quite easily present major challenges for teams tasked with producing timely, accurate, consolidated, and easy-to-digest reports, particularly if they’re dealing with data that sits across multiple legal entities.
This is the reality facing many organizations:
No common data stores
Inconsistent guidelines and definitions across subsidiaries, making it hard to create consistent reporting processes
Limited visibility of data, which makes it nearly impossible to understand where data comes from
Legacy IT infrastructure—including bolted-on ERPs and expansive technology architectures, make it incredibly difficult to achieve data consistency
Manual processes across the end-to-end process
Reams of spreadsheets and no standardization
Different GAAPs and different regulations in each country
Any of these issues, in isolation, are challenging enough. But collectively, they become unbearably complex. Still, these are complexities that teams have no choice but to navigate if they are to comply with local, as well as tax, regulations. The data needs to be correct.
Large organizations can’t afford to be anything but super confident about their statutory reporting practices. They need transparency, visibility, and certainty. Without any one of these, they struggle to scale operations, risk reputational damage, and could incur costly regulatory fines. They need standardization, consistency, and watertight data governance—and they need to simplify complex processes.
Build a risk index to improve operational resilience
These challenges sit against a backdrop of rapid and significant change over the last year. Operational resilience became a critical concern for businesses during the pandemic. While enabling their distributed workforces, businesses also had to work to increase demand, handle liquidity management, payroll changes, and navigate government support programs. Through all of this, new risk was introduced. When added to existing risk within the business, it has become clear that many businesses need to establish a better understanding of their risk profile. This can be achieved by creating a risk index.
When risk—including manual process, limited visibility of data, and others outlined above—is quantified, it’s easier to understand where to prioritize action. A risk index can be built from responses gathered from a list of multiple choice questions relevant to your business, focused on different elements of the reporting process. Respondents then have the ability to rank on a sliding scale the effectiveness of your data systems or the process itself.
However these questions are shared, and however the scoring system is decided, the end result is an understanding of the risk associated with each stage of the reporting process. This helps businesses to work toward their identified (and documented) desired future state. It also helps with the development of a business case for further digitization. By quantifying and mapping risk against the benefits or challenges associated with investing in a new solution, it becomes much easier to make the right decisions.
The risk index should also be run after any new technology has been introduced. It will enable you to see whether your risk index score has decreased. If it has, then you can work to establish how much cost has been saved and determine actual return on investment. And if it hasn’t, then you know how you should pivot.
Cut waste while increasing efficiency
Any transformation initiative needs to deliver on efficiency, prove ROI, and cut waste. For those involved in the global statutory reporting process, there’s a lot of waste to cut. Every report is made up of thousands of individual data points, spread over a mix of tables, primary statements, paragraphs of text, explanatory notes—the list goes on. The amount of time that’s wasted gathering, copying and pasting, and validating all of this data, and the risk that these manual tasks carry, are key drivers for change within many organizations.
Efficient standardization is a particular concern for organizations with multiple entities. They should be reported at the same time, go through the same external auditors, and be subject to the same levels of review as the parent organization. Here, achieving data consistency is incredibly important—not just from a perspective of increasing efficiency, but also for improving investor relations and making it far quicker for financial controllers to provide rapid feedback. When they review all entities, they don’t want to see any alarming points of difference. They, much like everyone involved in the global statutory reporting process, want consistency and simplicity.
By centralizing all reporting activities, and by linking data across all documents within a single platform, waste is cut, data is consistent and the whole process works more efficiently. Working with a platform like Workiva, it’s possible to save thousands of hours during the statutory reporting process.
Five steps to simplifying the global statutory reporting process
To simply transform global statutory reporting processes, it’s critical to find focus. During discussions at Global Statutory Reporting Day of the 2021 Amplify Event Series, panelists shared their best practices:
1. Connect to certified data
Gathering and analyzing data across multiple teams, locations, and languages gives the chance to introduce risk through human error. To address this, statutory reporting teams need to establish a single source of truth for the data, and need to create consistency of data by linking certified sources across all materials. By doing so, they no longer have to worry about multiplicity of data, nor the myriad of ways that the data will be used. Instead, they gain confidence in the data that they’re bringing into their ecosystem.
2. Prioritize collaboration
At the largest organizations, hundreds of users could be involved in the production of a report. Even in small teams, collaboration is important. At scale, it’s crucial to foster and manage collaboration at all times. With intelligent workflows, and with tools that enable effective communication, it’s possible to break down silos and make the best use of everyone’s time.
3. Work through one, single platform
The biggest enemy of the end-to-end reporting process? It’s the swarm of spreadsheets and other documents that are passed around, manually updated, and left to roam free in the wild. There’s no control. Which means that there is unnecessary pressure placed on checking and certifying data in the final report.
By centralizing all preparation, analysis, reporting, and delivery activities on one central platform, teams are able to establish a single source of truth. Additionally, if that platform lives on the cloud, then anyone, anywhere can understand that truth whenever they want and wherever they are in the world.
4. Eliminate manual work
Automating key processes will also deliver significant value. Used correctly, it eliminates a lot of manual work, frees up talent to focus on innovation that can support company growth, and speeds up the reporting process. This is time that can be used to establish what can actually be centralized and standardized in certain jurisdictions and how to further increase efficiencies.
5. Future-proof with robust change management
As more organizations bring technology into the global statutory reporting process, and as they think about how to centralize operations and redress issues with their operating models, they must establish robust change management practices. Change management is critical in allocating proper resources to planning and design—if governance and monitoring isn’t established to ensure long-term adoption, it’s all too easy to regress. Particularly when new people come in and out of the process during M&As, or through staff attrition.
We are at an inflection point with digitization of finance. None of the challenges associated with global statutory reporting are new. But, owing to the rapid acceleration of digital transformation over the last year, addressing them has become a priority.
For more insight to improve the way global statutory reporting is managed at your organization, watch the sessions from Amplify 2021 in full.