Significant issues with the year-end closing process

Year-end closing process

In addition to human error, technical limitations or inefficiencies in the financial statement process can cause a lot of problems.

4 tips to simplify and accelerate the consolidated financial statements

A global IMA report, "process automation in accounting and finance," shows that only 20% of cfos surveyed are very satisfied with their year-end process. Only 28% are fully confident in the accuracy of their financial reporting data.

Some aspects that can be useful in the preparation of financial statements are the following:

Up to what point?

The financial consolidation and graduation process must be completed within a certain period of time. This is determined by the CFO. Which depends on the company's business or organizational environment, especially today's VUCA environment (volatility, uncertainty, complexity and ambiguity).

However, the complexity of financial management often leads to delays of sometimes months.

Common problems in the year-end closing process

However, improving turnaround time should not come at the expense of the quality of the financial statements.

Accounting and consolidation managers are able to avoid some common problems, such as.B.:

  1. Depreciation over the whole year. Not according to the date of commissioning of fixed assets. Alternatively, no depreciation at all if the date is a few days away from that of the financial statements. Similarly, assets that are temporarily idle should not be depreciated.
  2. Failure to adjust customer and supplier balances against reserves and record them as fiscal year expenses. Not deducting an allowance for delinquent customers on a prudent basis, but deferring until tax requirements are met.
  3. Failure to record accrued interest on intercompany loans as related-party transactions at fair value.
  4. Failure to record as income purchases whose invoices have not yet been received or processed, or the corresponding portion of subsidies received.

Unidentifiable benefits

When accounting for share-based payment transactions, the identifiable consideration received may be less than the fair value of the equity instruments granted or liability incurred.

This usually indicates that further consideration has been received in the form of unidentifiable goods or services. IFRS 2 is applied to measure unidentifiable goods or services received as the difference between the fair value of share-based payment. The identifiable goods and services received are valued at the time they are granted. For cash-settled transactions, the liability is reassessed at the end of each fiscal year until it is canceled.

The manual versus the technological process

The difference between using semi-automated processes and using the talentia solution is measured by results. The CFO achieves a financial close that is significantly better in terms of speed and efficiency of the process and quality of information.

Talentia's financial management software is certified and complies with local and international standards for financial statements and consolidation.

It helps the CFO and the teams involved to face the financial closing and consolidation processes with absolute confidence. Data can be collected securely from heterogeneous sources and consolidation, controlling and auditing processes are accelerated and automated.