Regulatory agencies continue to enforce greater oversight on all financial operations and functions of leading financial institutions and publicly-traded companies in an attempt to increase transparency and improve accuracy in financial reporting.
As a result, financial executives and chief information officers are beginning to re-evaluate their financial reporting practices.
In fact, according to Aberdeen's Financial Executive survey conducted in January 2012, 69 per cent of the respondents cited better financial information and data visibility as one of the top financial management priorities for the year ahead.
Organisations are approaching the dynamic regulatory and economic environment by focusing on, and investing in, the technologies to manage process, knowledge, and organisational performance to improve financial insight, management, and transparency.
Best-in-Class companies lead the way in terms of implementation of these technologies, and consequently command greater control over their financial position.
For instance, as will be addressed in Aberdeen's March 2012 Cloud-XBRL and Cloud-Financial disclosure management study, leading companies are more than three times as likely as Laggards to standardise financial reporting procedures (65 per cent vs. 20 per cent, respectively) and 1.55 times as likely to standardise financial data management processes.
Best-in-Class companies understand that technology implementation is only one of the many steps before a company can actually realize a return on the investment.
It is equally important to obtain new solutions that integrate different systems and processes, document procedures for standardization, train and educate employees to facilitate transition, and dedicate resources for post-implementation maintenance.
And, to truly evaluate the performance of a new initiative, organisations must have capabilities in place to track the impact of these investments on the organisation.
Leading companies understand that it is important to have metrics in place against which the solution/system performance can be evaluated.
Consequently, Best-in-Class companies tend to implement more performance capabilities compared to their peers.
According to the Cloud-XBRL and Cloud-Financial disclosure management study, Best-in-class companies are nearly two times as likely as Laggards to assess and track financial reporting accuracy, with 73 per cent vs. 38 per cent, respectively. See Figure 1.
The ability to assess financial accuracy enables organisations to identify areas in need of improvement, take note of and replicate favourable events and outcomes.