Let’s Talk About the Fiscal Close

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Portrait of Chris Doxey
Doxey

Who has time for metrics and analytics?

By Chris Doxey
Doxey Inc.

If your finance and accounting organization is bogged down by a fiscal closing process that never seems to end, it has little time to focus on enhanced reporting or analytics. Visibility to accurate financial information and underlying operating metrics are critical to your management team in any economic environment.

Many factors place the spotlight on the fiscal closing process, which is usually led by a team of individuals in the corporate finance and accounting department and managed by the corporate controller. The complexity of the process is driven by the nature of the company – private, public, nonprofit (tax-exempt or mission-based) or government – and the type of industry or industries for which the company is responsible.

The Building Blocks for Best Practices

According to Kevin Kelso in his article, “Building Blocks of a Successful Financial Close Process,” financial close systems, processes, people and their interconnectivity can be complex, but successful improvements to the process can be achieved by introducing some simple building blocks that are inexpensive to implement.

Regardless of company size or complexity, all successful financial close processes require these three key building blocks:

  • Continuous communication
  • Comprehensive documentation
  • A flexible, responsive organization

The degree to which each building block is implemented will vary based on company size, type of industry, availability of resources and management commitment. However, omitting one or two of these building blocks may result in some type of failure during a month-end close.

What Controllers Have to Say

A recent survey conducted by the Institute of Finance & Management (IOFM) with approximately 100 controllers revealed the resources that the finance and accounting team typically uses to execute this critical process are less than strategic; primarily, they tend to focus on filling technology and process gaps that include the following:

  • Multiple general ledgers and disparate transactional systems with inconsistent data structures that must be mapped to a consistent reporting format
  • A lack of visibility to the status and execution of the closing process, and the related tasks and evidence-gathering performed by finance, with the knowledge of these processes in the heads of just a few employees
  • Limited reporting capabilities that result in spreadsheet-based reports full of critical financial data, which are the company’s “corporate records”
  • Spreadsheets used to support multiple manipulations of the same data over and over to meet various reporting requirements
  • A lack of focus on the process “basics,” such as closing process checklists, reporting templates, standard operating procedures and business continuity plans
  • An absence of staffing and training plans, creating a resource gap during each closing cycle

 

Chris Doxey, CAPP, CCSA, CICA, CPS is an independent management consultant and is president of Doxey Inc. She focuses on internal controls and best practice solutions for the procure to pay (P2P) process and financial operations. She has extensive experience in accounts payable, procurement, internal auditing, internal controls, Sarbanes-Oxley compliance, payroll, logistics, financial systems strategy and financial integration at Compaq, Hewlett Packard, MCI, APEX Analytix, Verizon and Business Strategy, Inc.

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