Controllers should close company books ‘better’, not just faster: Gartner

Diving brief:

  • Nine out of 10 (94%) controllers devote a lot of energy and resources to closing the company’s books, but could reduce the pressure of deadlines and the risk of error by reorganizing the structure, operations and behaviors under underlying how their team closes, Gartner found in a survey. .
  • “We’re not just doing what we’ve always done, but accelerating it,” said Hilary Richards, vice president, consulting, Gartner. Instead, “we’re trying to do it better, which means we have to think about doing it differently.”
  • A controller can streamline close by reducing the frequency of “low-risk work” and subjecting steps in the close process to “materiality thresholds” that remove tasks altogether, Richards said Tuesday in a presentation to Gartner CFO. and Finance Executive Conference at National Harbor. , Maryland.

Overview of the dive:

A “high-effort” close imposes costs beyond stressed and overworked staff, including missed deadlines, excessive revisions to ensure accuracy, and an inability to undertake unexpected work without missing deadlines or risking losses. mistakes, Richards said.

“It’s a pretty universal problem,” she said. “Closing activities always take us longer than expected and again, we sometimes schedule long hours during the quarterly close.”

Controllers and their staff aiming to eliminate unnecessary work must overcome a “compliance bias,” Richards said, while acknowledging that the benefits of eliminating certain tasks are unclear.

“There’s this inherent hurdle that a lot of us jump over when we think about the types of regulatory activities that are compliance-driven and timeliness-driven,” she said. “We believe that almost all activities are necessary, that some of these compliance activities are essential for strong controls, so they are essential – they cannot be eliminated.”

Teams involved in closing the books also need to take a step back and consider different ways of doing the job, she said. “We just think it’s easier to keep doing it the way we always have, but the reality is that our inherited processes and biases can mask opportunities to change and improve the process,” said she declared.

When preparing for a close, controllers primarily focus on the total volume of work, the extent of manual work and the complexity of process design, Richards said.

Still, in order to streamline a shutdown, controllers would have to focus more on their staff’s willingness and ability to innovate, any fragmentation of technology, and the total time available, she said.

“We are comfortable with the current process even though it is driving us crazy,” she said. “I know it’s going to take me ‘X’ hours – let’s go and move on.”

Such dead weight exists in the mind, not in the hardware or software of the computer, Richards said. “Even if you’re buying the shiniest, fanciest new technology, some of these behavioral factors may still be holding your process back.”