Dear CIO,
I bet you never thought this day would come…me writing with good news that my team in Finance will be submitting fewer IT requests. Go figure (pun intended).
Turns out there’s a new way for my staff to manage more of the data, processes and workflows that your team has been handling for us from the finance and BI systems. No more resources needed to manually code and manage this. We can automate most of it while working within the security and data integrity parameters that IT has in place.
Let’s discuss two action items:
- Cancel next week’s sales meeting with our ERP vendor. The allure of standardizing on one supplier is no longer appealing. We’ll save a bundle using the systems we’ve already got and sticking with a best-of-breed approach for financial data management.
- Let’s schedule a roundtable for the IT and Finance teams to strategize on the initiatives we’ve been tasked with by the CEO: Expense and Revenue Management, Performance Management and our adoption of International Financial Reporting Standards (IFRS).
Gotta run - my weekly 1-1 meeting with the CEO.
Regards,
The CFO
Showing posts with label IFRS. Show all posts
Showing posts with label IFRS. Show all posts
Monday, April 6, 2009
Monday, September 22, 2008
Achieving Management Excellence in the face of IFRS
It was interesting to note that at Oracle OpenWorld, John Kopcke (SVP Oracle Enterprise Performance Management Global Business Unit), in his address entitled, “Extending Operational Excellence to Management Excellence – Oracle’s Vision for EPM,” mentioned that the only process that had been fully adopted consistently in the paradigm shift to Operational Excellence was the reporting component at the end of the transition. The reality of this adoption had more to do with Sarbanes-Oxley (SOX) than any management need to solve a reporting challenge. He further cited that the “World-Class” organizations had kept their cost containment programs in check as they passed through the hurdle of Sarbanes-Oxley adoption, while the peer group still struggles with the costs to support the new financial reporting standards eclipsing any innovation that might take place in their Finance department.
If the end result of the SOX paradigm shift was a regulation-induced reporting structure that streamlined reporting, then that raises questions about the next wave of reporting changes to take place over the next 24 months. IFRS, the International Financial Reporting Standards which will cause yet another upheaval in all US-based global company’s current reporting introduces a mandate to move to XBRL as well as to a “principal-based” set of standards - as opposed to our current dictated structure under US GAAP. The basic effect of that may be chaotic as it is in fact more interpretive than our current reporting standards and will require some restructuring of the consolidation process and most of the standards reports.
In a fragile economy such as we are experiencing, the idea of mandating such a dramatic change is almost incomprehensible. Most financial reporting structures are manually created in the data extracts and consolidation hierarchies that are the underlying foundation of the applications devoted to creating the book of reports that drives company profitability and fiscal responsibility. By mandating change and removing the strict principles of reporting, the interpretive nature means that costs internal to Finance will increase as companies will seek outside guidance to determine the best course of action. As costs increase in the Finance area, the gains attributed to best practices will be eroded and Finance will yet again be in turmoil and budget-constrained.
To be innovative in Finance you have to have the insight as to how to achieve Management Excellence as John Kopcke stated, from the Operational Excellence which was the previous goal. If, as a Financial Executive I spend the majority of my time trying to determine how to meet the needs of a moving target of regulated financial reporting, I have to wonder how I can be fiscally responsible. It seems that I need an army of consultants available at my beck and call to deliver the reports to which I am held responsible. What I really need is a flexible system that allows me to see my data from multiple perspectives, a cadre of internal experts with whom I can consult, and a book of reports that will meet my internal and external needs. The mandates of how the reports are to be formatted and how I do my consolidations and eliminations should be the easy part. I want to be innovative in my business, not in how I report my profitability and certainly not with additional expense likely in the adoption of IFRS.
If the end result of the SOX paradigm shift was a regulation-induced reporting structure that streamlined reporting, then that raises questions about the next wave of reporting changes to take place over the next 24 months. IFRS, the International Financial Reporting Standards which will cause yet another upheaval in all US-based global company’s current reporting introduces a mandate to move to XBRL as well as to a “principal-based” set of standards - as opposed to our current dictated structure under US GAAP. The basic effect of that may be chaotic as it is in fact more interpretive than our current reporting standards and will require some restructuring of the consolidation process and most of the standards reports.
In a fragile economy such as we are experiencing, the idea of mandating such a dramatic change is almost incomprehensible. Most financial reporting structures are manually created in the data extracts and consolidation hierarchies that are the underlying foundation of the applications devoted to creating the book of reports that drives company profitability and fiscal responsibility. By mandating change and removing the strict principles of reporting, the interpretive nature means that costs internal to Finance will increase as companies will seek outside guidance to determine the best course of action. As costs increase in the Finance area, the gains attributed to best practices will be eroded and Finance will yet again be in turmoil and budget-constrained.
To be innovative in Finance you have to have the insight as to how to achieve Management Excellence as John Kopcke stated, from the Operational Excellence which was the previous goal. If, as a Financial Executive I spend the majority of my time trying to determine how to meet the needs of a moving target of regulated financial reporting, I have to wonder how I can be fiscally responsible. It seems that I need an army of consultants available at my beck and call to deliver the reports to which I am held responsible. What I really need is a flexible system that allows me to see my data from multiple perspectives, a cadre of internal experts with whom I can consult, and a book of reports that will meet my internal and external needs. The mandates of how the reports are to be formatted and how I do my consolidations and eliminations should be the easy part. I want to be innovative in my business, not in how I report my profitability and certainly not with additional expense likely in the adoption of IFRS.
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