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The Daily

CFO Confidence in Corporate Reporting Plunges

Chris Gaetano
Published Date:
Feb 18, 2016
MoneyMagnifyA survey conducted by Ernst and Young of over 1,000 CFOs across 25 countries has found that financial executives have lost faith in virtually all parts of the reporting process. 
From cost reports to regulatory filings, only 55 percent of CFOs were confident that corporate reporting had an appropriate degree of compliance, compared to 84 percent last year. There is a similar drop in confidence when considering the overall effectiveness of corporate reporting, going from 66 to 39 percent between this year and last. 
Even if the reporting is in compliance, though, CFOs are also less confident that it even matters: 48 percent believe that their reporting was effective in securing the confidence of the board, compared to 71 percent last year. 
As for why, the report cites three possible reasons. One is the growing complexity of the business world, from new regulations to higher flows of data. Another is increasing stakeholder demand for more information, increasing the amount of work companies are expected to do. The third is that, because of the first and second items, finance staffs need to do more with the same number of people, creating resource pressures. 
The findings echo the results found in another recent study, this one conducted by the CFA Institute. The survey of over 400 CFOs found that financial executives believe about 20 percent of companies manipulate their earnings figures on any given day. 
To rebuild confidence in the reporting process, the Ernst and Young report said finance leaders need to build strong and trusted relationships with their audit committee and other key stakeholders. They also challenged executives to use new technology and data analytics, as well as work on building the skills and capabilities needed to improve reporting performance.