Despite growing pressure from shareholders and company boards, many European companies are struggling to reduce their accounts consolidation and reporting times, according to a new European research report by KPMG Consulting*. In 1999, European companies actually took two days longer to release their provisional figures to the press than in 1998, although most made small improvements in other measures of reporting speed. Inadequate figures supplied by operating companies and business units and mediocre operating systems, which are not properly linked with financial systems, seem to be two of the most significant obstacles to improvement.
The survey by KPMG Consulting of 252 listed European businesses, reveals a strong commitment to reducing reporting cycles. On average, the top 10 per cent of respondents release their final figures just 20 days after the year end. Even this seemingly impressive feat is, however, 13 days behind the average of the top 10 per cent of US companies.
Chris Bedell, principal consultant at KPMG Consulting, commented: "Despite growing external and internal pressures to accelerate reporting cycles, European companies still lag some way behind their US counterparts. What we often see is a gap between intention and implementation. As each financial year is completed, many organisations make ambitious plans to improve the consolidation and reporting processes the following year. Unfortunately, since reporting is often seen as 'an annual event' rather than a continuous process, the planned improvements are not addressed rapidly enough and reporting schedules for the next year are sent out to the subsidiaries based on historic practices. Once this has happened it is too late to instigate significant improvements for the current year."
Findings of the survey showed that:
Chris Bedell commented: "While the legally required timetable for UK businesses to publish their results is a relatively relaxed 7 months, a company that is able to publish its results shortly after the year end is seen as having its internal organisation under control. Analysts are receiving company results earlier and earlier and there is a definite air of disapproval towards those companies whose results arrive later than the rest of the pack.
A focus on the implementation of best practice - by improving processes and IT systems and creating the right cultural atmosphere to motivate employees - will go a long way to solving these problems. The top ten per cent of KPMG Consulting's survey respondents took, on average, only 20 days to publish their results in 1999. These organisations are now reaping the benefits of significant improvements in their reporting cycles."
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