At the end of the fiscal year, many companies are confronted with the same nightmare scenario – Excel files as far as the eye can see and labour-intensive processes still carried out by hand. Never-ending rounds of clarification ensue about the company’s financial information. This so-called “Last Mile of Finance” can be a cause for headaches in the finance department. The result? Errors seep into the preparation of the annual financial report of a company, which increases the risk for potential regulatory penalties.
But a functioning disclosure management process doesn’t just have to be wishful thinking. In this article, we’re going to take a deep dive into what disclosure management and a disclosure management solution mean. What challenges lurk beneath the surface when it comes to preparing annual reports? How can a software solution help you to prepare your annual reports and monitor your financial performance more easily? And why are annual reports important?
What is disclosure management?
The term disclosure management is generally used to describe the fulfilment of external and internal financial reporting obligations. In particular, answering what is an annual report and explaining the process of how to prepare an annual report. Internal reporting serves to inform management and other stakeholders to help develop strategic business opportunities, track the financial position of the company, make investment decisions and to maximise profitability. Meanwhile the aim of external reporting is to meet regulatory disclosure requirements. High quality standards must therefore be observed, with external annual reports, because regulatory penalties may arise if these standards are not met.
What challenges does the disclosure management process present?
To guarantee your organisation implements a successful disclosure management process, you should familiarise yourself with the challenges you may face when preparing your annual reports. We have summarised the most common problems encountered in the preparation of annual reports.
1. Too many manual processes
Despite digitisation bringing even more automation to once time-consuming manual processes, many companies still rely on MS Excel for the preparation of their annual reports. Excel spreadsheets can be prone to mistakes when they get edited by every member of the finance team, complicating the disclosure management process further.
2. A lack of data transparency and data quality
The moment you use more than one system to produce the annual report, the results become all the more opaque. Extracting data from various source systems can also lead to errors creeping into the results when preparing the annual report.
3. Heterogeneous data
ERP source systems, CRM systems, or completely different tools: company data can be found in any number of forms and structures. Heterogeneous data that are spread out over different systems require software for annual report preparation to consolidate the data and process it further.
4. Coordination that lacks efficiency
Constant rounds of clarification are a daily occurrence in many finance teams. In order to avoid delays and bottlenecks in the preparation of your company annual reports, you should rely on professional software with integrated task management.
How can professional software help me during my own disclosure management process?
To avoid serious consequences for your company down the line, a high-quality standard for your reporting should be ensured, especially when it comes to your annual reports. A convenient option is to use professional disclosure management software. Such a solution for the preparation of annual reports includes:
- Preparing and centrally managing unstructured data from various source systems, such as MS Excel, source systems for financial accounting, and OLAP
- Allowing for internal validation options
- Creating closing documents in various formats, such as Word, InDesign, or electronic reporting formats. The electronic version of the German Federal Gazette or ESEF are good examples of these.
This flowchart shows you how to prepare comprehensive reports efficiently, letting you gain the upper hand in your disclosure management process:
Fig. 1: Process flowchart for annual report preparation
LucaNet software helps you to prepare your financial statements with ease. With our SmartNotes tool, the preparation of your annual reports, cash flows, and balance sheets will become that much more straight-forward. Click here to read more about disclosure management and ESEF Reporting.
A professional software tool for disclosure management serves as the ideal solution for creating reports directly from your data for financial statement preparation.
These advantages ease the load when preparing an annual report of a company:
- Optimal workflow support
- Sophisticated permission concept
- Validation and consistency checks
- Full MS Office integration
- Updating and pre-completion of reports at the press of a button
- Integrated XBRL processor
- Print-ready annual reports
Are you looking for further information and assistance to help you prepare your annual reports? Our latest e-book shows you how preparing your annual reports can be child's play!
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