Financial Close

If account reconciliations were a game, Marc Ursick would be the guy who always plays to win. A CPA and consultant, Ursick published an article in the Journal of Accountancy this past November that tried to achieve the seemingly impossible: make account reconciliation sound like a fun challenge rather than a complex chore. While all of his tips were solid — prioritizing the balance sheet, defining a standard operation and so on – they specially stood out because he used sports analogies with each one. Some were about golf, others about football, but this one in particular stood out: In bowling, it’s unlikely that every roll will be a strike. Similarly, not every reconciliation will be able to be reconciled to the penny. A common “quick win” improvement is to set tolerances and materiality thresholds across the organization. Rather than wasting time attempting to reconcile low dollar values, team members should work on other accounts or activities. Common thresholds that organizations set include unreconciled differences and required adjustments.  While perfection may be unattainable, however, many finance departments have to do whatever they can to ensure account reconciliation is as accurate as possible. As Ursick might put it, no one wants to see their reputation go trailing into the gutters. Utopia, Here We Come? What doesn’t help matters is the largely manual way it’s done in many month-end close processes today, as AccountingWeb and others have noted. This is not a new issue. In fact, consultants at Deloitte posted a great presentation on SlideShare a few years ago that highlighted the benefits of automating account reconciliation as part of financial close management. Their recommendation? Build a four-pronged strategy based not only on technology but people, process and governance. “By implementing the appropriate tools and adopting a comprehensive approach and framework, you can transform your financial close and reconciliation management processes to realize clear and substantial cost reduction and risk management benefits,” the authors conclude. Yet, Deloitte sounds entirely different than Ursick, referring to the concept of a “utopian close.” That may sound out-of-reach for many firms, just as they might not want to think of their account reconciliation process as less than perfect. Maybe, as finance teams start using the right tools and optimizing their approach, we can all agree that the best goal is to make your month-end close the best it can possibly be.

Originally published on the Certent Insider blog. In a recent poll, Certent surveyed a cross section of public and private company webinar attendees to find out what participants felt was their biggest challenge associated with year-end close. Over a quarter of all attendees agreed that the time crunch makes navigating year-end close significantly more challenging.  In order to beat the year-end squeeze, there are a few activities that you and your team can plan ahead of time: Find out what each department (e.g., payroll, tax) needs from you and what the deadlines are for gathering that information. Develop a spreadsheet to reference and use year after year. Process dispositions and transfers frequently (i.e., monthly or quarterly) throughout the year. Don’t let these tasks pile up. Schedule a reminder in your Outlook calendar. Send disposition surveys at least twice per year so you don’t find yourself entering all the data in December. Keep on top of rolling tasks. Start thinking about 6039 requirements and what things you can get done early. For example, if the final ESPP purchase of 2015 is prior to December, try to complete 6039 requirement earlier in the year. Make sure the data input in your system for Forms 3921 and 3922 is correct. If you have a 12/31 purchase, make an effort to get that purchase approved and processed as quickly as possible in order to tee up data for your 6039 reporting. Think about outsourcing the most time consuming tasks. You may find it to be more economical than you think based on time savings. Be sure to request disclosures from your auditors well in advance so you can be prepared. Be proactive and discuss what they might need ahead of time. Maintain clean data! The better the data, the more accurate your reports will be. By implementing these few best practices, you can eliminate some of the time consuming tasks that take up precious time during year-end. Be sure to download Certent’s equity plan year-end checklist to stay on track while you’re in the midst of the crunch. Also, watch Certent’s on-demand webinar, Preparing Your Equity Plan for Year-End Close for more tips on how to be ready ahead of time. About the author Marissa Ruffles is the Marketing Programs Manager at Certent. She’s also a Level 2 CEP and marketing communications specialist.

Consider this post a belated but heartfelt ‘Happy Spreadsheet Day’ to all those working in finance departments who have come to appreciate the power of Microsoft Excel. For those who aren’t familiar with this non-statutory “holiday,” Spreadsheet Day fell on Oct. 17 this year, and is the fifth annual celebration of the day the first predecessors to Excel emerged in 1979. One of the suggested ways to mark this occasion is to reflect on how ubiquitous spreadsheets are in modern life. That’s a good idea because, even as other vendors try to steer CFOs and their teams towards more complex tools that require difficult integration with enterprise systems, it’s worth thinking about the long-term approach you want to take to handle things like financial close management as efficiently as possible. With that in mind, here are but a handful of reasons Excel won’t – and need not – be going anywhere. Not now, and maybe not ever: 1. Excel is tried, tested, true…and adored Just a few weeks ago PC World magazine did a comparative analysis between Excel and Google Sheets, which is just one of the many alternatives available on the market. Its conclusion? “For many spreadsheet jocks, there is no substitute,” citing Excel’s ability to process data, the potential for customization and data visualization features, among other things. PC World suggested it would be next to impossible to make finance departments give up on the investments in Microsoft’s product that they’ve already made: “For those who live, breathe, and even do word processing in Microsoft Excel, you will have to pry it from their cold, dead hands,” it said. 2. Finance leaders need to focus on business insights, not technology decisions Financial close is critical to business operations, but technology decisions can get in the way of doing the best possible job. A survey by Robert Half Technology of more than 2,200 CFOs, for example, said keeping up with changing IT is their No. 1 pressure. Excel can do what finance teams need today, and when combined with a centralized database, workflow, business rules, audit trail and cloud delivery, it can do even more. 3. You can trust what Excel delivers  Recently Microsoft marked 30 years since Excel 1.0 made its debut. Financial consulting firm Operis recognized this achievement with an eBook that explores how Excel has built up credibility among large companies since 1985. “A lot of money was going to be riding on Excel’s accuracy in the years ahead. Just how much money they could never have imagined,” it says. “The availability of Excel has coincided in the last 25 years with the number of listed shares going up by 62% and their value rising eleven fold from almost $6 trillion to over $66 trillion.” 4. The value of Excel scales alongside the business and its data Lots of entrepreneurs started their businesses with little more than a desktop, Microsoft Excel and big ambitions. Though companies change a lot over time, what hasn’t changed is Excel’s place in everyday operations. That’s because, as Programmable Web recently noted, Excel can be used not only in financial close management but in making all kinds of other applications that can be used by large numbers of users and managing untold volumes of data. “Let’s face it, Excel is everywhere, and we depend on it more than we realize or like to acknowledge,” the site said. 5. Excel rewards those who develop their skill sets There’s a reason why Time magazine recently published ‘Excel Secrets That Will Make Your Boss Think You’re A Pro.’ Unlike programs that become more difficult to use as they get older, Excel tends to become something where shortcuts and other features make it easier to tie into products that automate more manual or error-prone work in finance departments. “For the experienced and uninitiated alike, Excel is a deep program with a variety of capabilities,” Time said. And even that’s an understatement. In fact, next year it might be time to ditch Spreadsheet Day and just start wishing your colleagues Happy Excel Day instead. (Check out The Ultimate Guide to Financial Close to help you verify your company’s true financial position.)