In the globalised business system almost 90 percent of the organizations still generate their financial statements manually, such as balance sheet, income statement, annual reports, quarterly and annual submission reports, bank reports, corporate proceedings and statutory reports.

There are complex challenges faced by businesses to complete their end financial reports such as:

• Factual errors due to manual procedure
• Time Protraction
• Inaccurate data
• Unintegrated systems to manage processes and information
• Unavailability of Audit Trails

Risks faced by Top Management:

The labor intensive structure of financial reporting symbolizes that external reporting system becomes more complex and more endeavor is involved in creating these reports and handle end processes as an outcome there is more involvement of employees who work on for additional hours else additional number of people has to be deployed to complete these tasks which includes handling of complex multiple excel spreadsheets, discover and rectify errors, administer compliance, and synchronize the high level authentication process which cumulatively magnifies cost which ultimately makes the job role of CFO more complicated. There are various other related risks involved which can be classified as:

• Management has to deploy more people for creation of this top level reports
• Complex processes involved at multiple level
• Process extensively linked with use of complex spreadsheets
• Risk of error which can be fatal and lead to reinterpretation
• Vital information might be leaked
• Non compliance with reporting format
• Cost pertaining to external auditor

Possible Solutions:

The best possible solution is to use automated reporting software which can perform functions smoothly and with lower risk factor, this can be performed by the reporting system in following manner:

1. The external reporting software can link source data with report data so that every data point in the final report is available without conflict and if source data points are modified then the same is implemented in final report data.
2. The external reporting software is user friendly and can easily be integrated with existing system   which is more compatible and easier to use since current user is already familiar with the legacy applications which will be integrated with new advance external reporting software.
3. Existing reports can easily be used as template for reference purposes
4. The new reports generated normally restrain the same segments as previous reports; it salvages the same data sources for e.g. net profit, expenses, etc. and restores the appearance and feel of past reports.

The Advantage:

Since the new reporting software has multi tasking ability hence it can gather data from numerous sources at single instance it increases overall efficiency of the entire system and the organization on a whole as compared to the old manual system. The benefits can easily be summarized as follows:

1. Lowering the total time duration required to prepare final reports
2. Workforce reduction with more efficient system in place
3. Employees can focus on other major functional areas
4. Expediting the entire cycle, hence increasing evaluation time
5. Focus on other key areas of the business
6. Lower internal and external cost drivers with automated controls
7. Provides a detailed audit trail which can track even minute changes in the document and makes comparability an easy task between two reports or documents
8. Lowered risk which can encompass errors like factual error, information leaks and non-compliance circumstances.
9. Reduced turnaround time, hence focus can be more towards internal system evaluation
10. Finally no manual inputs and re-application of same protocol repeatedly which boosts overall confidence and hence less review time is required.

Thus looking at so many benefits available from the automated financial reporting tool, it should be implemented ASAP within organizations so as to gain a competitive edge in the market and for long successful run.

(Written by Ashwani Chandra, Class of 2008, IBS Hyderabad) Ashwani also shares his expertise on Finacology.com)

Knowing is not enough, we must apply it. Willing is not enough, we must do it.

This maxim sums up the much required change in the MBA of the present.

We may praise institutions for churning out managers at the speed of thought every six months; we need to get present to the ground realities by taking an empathetic view of the situation.

Most of the (so called) managers that come out in huge numbers every year are not the ones the industry demands. ‘They might be reservoirs of knowledge, but then they are of no use if they do not know what to do with that or how and where to use that knowledge,’ says Surya Narain Bahadur, executive director with a Delhi based training company. He goes on to say, ’in fact when people are tagged MBA; it makes the journey harder for them because of the expectations it sets in the mind of employer – industry wants business ready people, who are self driven and do not wait for instructions’.

This book driven MBA, therefore it appears does not work well. There is a need in shifting the paradigm. We need not do a lot of analysis, the answers are there. The MBA of the future needs to be more market oriented, so much so that that the two years of education should be considered as two years of work experience. There lies the future of the MBA.

The book ‘Rethinking the MBA: Business education at crossroads’ by HBS professors Srikant M. Datar and David A. Garvin, on the future of MBA education makes references to some of the problems of the current MBA education. One of the problems they highlight is the limitation of models and markets as the rubber meets the road.

MBA education of future needs to focus on high level of self awareness and a corresponding ability to relate with others in the team and the organization. Are we talking about psychometric or spirituality here? Well that is for the industry to decide, but psychometric testing on self awareness is certainly picking up specially for filling many leadership positions.