Nearly 70% of global business leaders and finance professionals claim their organization has made a significant business decision based on inaccurate financial data. And over 55% are not completely confident they can identify financial errors before reporting results.
These findings are from a global survey of over 1,100 C-suite executives and finance professionals, commissioned by BlackLine to gauge confidence levels in financial data and the perceived impact of errors on the business.
Maintaining trust is important at all levels of an organization. But, trust in finance – in the numbers – is the first step toward a healthy, trustworthy company. And that is exactly why this issue keeps so many C-suite executives awake at night, wondering whether the numbers are right.
Our global survey explores how the C-suite feels about their own numbers: whether they have adequate visibility into potential inaccuracies, how prevalent inaccuracies are within their own organization, and the perceived implications of getting it wrong.
You can get your copy of the full report, but here are a few of the key results.
Betting your business on inaccurate financial data
Executives are tasked with making the best decisions for the business every day, and they rely on financial data to inform many of those decisions. It’s alarming to discover that nearly seven of every 10 respondents believe their organization has made significant business decisions based on inaccurate data.
It’s also concerning that so many organizations are not confident in their ability to identify errors and ensure accurate reporting. The high-profile misreporting scandals we see in the news could be just the tip of a larger financial-inaccuracy iceberg.
Not only are reporting errors prevalent, but many of these inaccuracies remain hidden below the surface. In fact, 26% of survey respondents stated concern over errors they know must exist but have no visibility over.
Counting the cost of hidden inaccuracies
Nearly all of the C-level respondents agreed that if inaccuracies in financial data were not identified prior to reporting, the impact would be negative. This impact includes significant reputational damage, potential inability to secure additional investment, and increasing debt levels, with almost a third fearing fines and jail time.
Additionally, many large organizations are constantly fixing financial errors in their accounts. Almost 22% of C-suite respondents said it takes up to 10 days per month for their organization to identify errors and make adjustments, potentially wasting as many as 114 days each year.
“What’s interesting about this research is that it highlights a real desire for more accountability across the industry,” says Wendy Shapiro, senior vice president, finance transformation, at Teladoc Heath.
“Finance professionals are tired of unacceptably high margins of error and are becoming far more aware of the risks associated with incorrect reporting. Clearly it is time for a culture change, one that sees every level of an organization become more transparent and accountable.”
The value of accounting automation
CFOs agree that accounting automation is essential to head off these high margins of error, particularly now that the business world is generating more data and greater business complexity than ever before. An integrated automation platform helps maintain the integrity of numbers and processes in several ways.
For one, it keeps a centralized database of all accounting information, updated in real time for use by various accounting functions. Reports are consistent in content and style, and accompanying documentation is available to all users.
Finance automation also enforces accountability by maintaining complete audit trails for transactions. It bolsters integrity through segregation-of-duties controls, so a single user can’t perform both the preparer and reviewer function on the same account reconciliation, for example.
“Unlocking the value of information and financial data is much more important than routine reporting, and if done well, a key competitive advantage,” says Tony Klimas, principal, global performance improvement finance leader, at EY. “Yet many companies still haven’t implemented technology to enable this capability, despite the many advances in automation and cloud-based solutions, which reduce the required investment and time to implement. It is time for businesses to treat their financial data like an asset and invest in the technology, tools, and people to turn information and data into strategic insights.”
Get your copy of the full survey report to go deeper into what our research revealed. You’ll also learn how new technologies can enable continuous visibility and accuracy of your financial data.
This article originally appeared on BlackLine.com and is republished by permission.