Forbes: No Single Close Technology is a Panacea

Writing in Forbes,  Jay Humphries notes that “The pressure for an accelerated accounting close can be relentless”.    We agree, and have seen this pressure through industry.  In addition, Humphries notes that while technology can help to overcome some challenges, by itself, it is an incomplete approach, and that “A successful, holistic approach must account for people, process, and technology.”

Again, this echoes what we have been saying for years. Our Financial Effectiveness Framework(TM) calls for  continuous improvement of People, Processes and Systems.   

At the same time, Humphries makes some statements that leave us either confused, or in disagreement.  For example, as evidence of the relentless drive to accelerate the close, he cites the $1.2B accounting scandal that hit Toshiba this spring.   But the Toshiba scandal involves “six years of overstated profits” and other irregularities.  Now, we don’t know what caused the problem. Was it simply over aggressiveness by lower level managers?  Did top management have a role to play?  Was it simply human error? Why didn’t independent auditors catch the problem earlier?  There is a lot we don’t know.  But one thing we can be pretty sure of, a faster close wouldn’t have made any difference.

Now, we understand the drive for speed.  Management needs timely numbers to make adjustments as needed. Investors want timely reporting to evaluate the true condition of the company.   But faster numbers are worthless, unless they are accurate.   The best closes are fast and accurate.   The process is visible and predictable.  There needs to be good process, backed by effective controls.

Want to learn more about how SVA’s Financial Effectiveness Framework(TM) and Lean Value Creation Framework(TM) work together to help companies optimize financial processes?  Contact us today.

 

 

 

 

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