Joseph Hughes - Consultant
A very bizarre thing happens in the monthly/quarterly/annual financial reporting cycle; allow me to divulge…
Amongst the Finance Teams I have visited as a Finance and IT consultant, a pattern has begun to emerge. Terrific energies are being spent on ensuring that the Consolidation, Budgeting & Forecasting and Planning stages of the cycle are performed with tremendous accuracy. Umpteen Pounds/Euros/Dollars are spent making sure that the numbers filtering through to the financial statements show a true and fair view, that financial statements are free from material misstatement and faithfully represent the financial performance and position of an entity, and rightly so, but then… Disclosure.
Disclosure is where it all breaks down, countless Microsoft Word & Excel documents are manually put together, multiple versions of the same document exist, if a last minute change to the statements needs to be made, and it often does, the document will need to be painstakingly read through for instances of the amendment.
Let us think this through with an example, say the Annual Report, ‘The Biggie’. Assume that there is a last minute change to the Cash figure in the Financial Statements. What happens next? Where do amendments need to be made in the Annual Report? Well, you are going to have to change the ‘Balance Sheet’, and the ‘Cash Flow Statement’. Anything else? You probably have a ‘Cash Note’ too I am guessing. Anywhere else? Yep, I think it may have been included in the ‘Financial Review’ narrative. Did the ‘Chief Exec’s Statement or ‘Chairman’s Statement‘ include the Cash figure in the narrative? err… I cannot remember. Maybe best review the entire document.
That is fine, you can review the entire document, but do you know how long the average annual report is? No, me neither, but I can tell you there is a 140 page Annual Report on my desk as I ramble on at this very moment. Oh, how long is that going to take to review? Good question imaginary secondary protagonist, the answer is… a very long time indeed.
This frustrates me because it means that talented Office of Finance staff end up completing rather remedial checking activities past 8pm on a Friday when really they should be at home with their families, shouting at Little Jimmy for putting a jam sandwich in the VCR [N.B. change reference, no one has a VCR anymore]. The good news is there is a solution to this age-old disclosure debacle.
Analogy Time – Pea Soup Cloche
Imagine you are in a restaurant with your significant other, you have had a wonderful day, you’ve been to the Natural History Museum in the morning, then the Lyceum to catch the matinee performance of The Lion King, and now a lovely meal.
You order pea soup as a starter, not the usual but it has taken your fancy in the moment. Before the pea soup is delivered to you, a number of processes are undertaken in order to ensure your meal is supplied to you in a manner that meets health & safety requirements. The chef washes his hands, wipes down the kitchen surfaces, washes up the bowl and spoon, wears a hair net, refrigerates the soup before re-heating etc. The chef prepares the piping hot soup and hands it to the waiter, the waiter strides confidently over to the table and just before he places the pea soup on to the place mat… sneezes in the bowl.
This analogy illustrates the current problem in disclosure for the financial performance management reporting cycle Regardless of control procedures in the preparation of the Annual Report/pea soup, if there is no control over the final stage that delivers to the end consumer, the integrity of the Annual Report/pea soup is compromised.
IBM Cognos Disclosure Management acts like a cloche over the pea soup, ensuring the integrity of delivery to the end consumer.
All a bit general so far, here are a handful of (the many) quality features inside Cognos Disclosure Management (CDM).
Links back to underlying databases
CDM dynamically links the numbers in your reports back to underlying databases, regardless of whether those numbers come from an Excel file, or are contained within the narrative of a Word document. This means that if a number changes in the database, it will also change in the report.
Databases include Excel workbooks, relational databases, and OLAP databases.
CDM allows users to enter variables in a report as opposed to actual figures or text. This means if you make an amendment in one place in the report, that figure/text updates at every instance in the report. For example, you could create a ‘Date’ variable that would be useful when rolling over the report to a new period. Update the date in one place and it updates throughout the entire report.
Dashboards allow the document manager to view workflow for every section of the document. This is powerful as it allows the document manager to have a visual representation of how the report is progressing. With a quick scan of the dashboard, the document manager knows which sections are un-started, under review, complete etc. In addition, see which users are responsible for that section of the document. Now Bernice, the document manager, can see Maud has completed her nine sections, whilst Brendan has eight still to complete. This empowers Bernice to re-delegate the workloads for maximum efficiency… or lets Bernice know she needs to give lazy Brendan a rap on the knuckles.
Cognos Disclosure Management has an audit trail feature that records every submission to the database, along with the user name and date of submission. It is used to view all status changes to every section in the report. You can use the Track Changes feature of Microsoft Excel and Microsoft Word to perform comparisons between a current and previous version of a section.
Workflows are used to track the progress of a report section towards completion in CDM. The workflow states define what needs to be done at each point in the approval process. You have permission to view and work with sections that are associated to your assigned workflow state.
You can create a customized workflow process for each section, and then copy the workflow process to another section. You can also advance or reject a section through all of the statuses configured for that section. A user can only advance the status to the next status in the approval chain, or reject and revert a section to its previous status.
To sum up
IBM Cognos Disclosure Management provides the tools necessary to solve the problems in disclosure. CDM acts like a wrapper around an organisation’s reporting documents and links it back to the entity’s underlying databases, providing security and reliability to the final consumers of reports.
With IBM Cognos Disclosure Management, Finance teams will have the confidence that the most imperative financial information is automatically updated across multiple locations in any document.
The Finance team is a key player in any organisation’s Techno-structure and as such has a duty and responsibility to ensure the standardisation of processes wherever possible. Particularly if the resultant information produced from those processes are the basis for major stakeholder decision making. IBM Cognos Disclosure Management enables a Finance Team to fulfil this primary responsibility, adding credibility to reporting information.
I would like to think this little blog has exposed ‘An absurdity in disclosure’ as if it were a philandering politician, but more importantly, the aim is to light a beacon toward an appropriate solution for your disclosure needs.
We at Aramar like a chat, so feel free to get in contact and we will talk through any disclosure issues your business may face.
Thanks for reading.
Joseph Hughes, Consultant at Aramar Solutions