FINANCIAL CLOSING ISSUES VS. REGULATORY COMPLIANCE

During the last two decades, a large number of new accounting rules have been introduced, and reporting deadlines have been shortened, requiring a more rapid closing process. Complying with the Sarbanes-Oxley Act of 2002 (SOX) has further served to exacerbate these challenges. The increased regulato...

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Bibliographic Details
Published in:Internal Auditing 2011-11, Vol.26 (6), p.9
Main Authors: Karim, Khondkar E, Holder, Anthony D
Format: Article
Language:English
Subjects:
Accounting
Audit committees
Automation
Compliance
Cost reduction
Enterprise resource planning
Financial reporting
Financial restatements
Financial statements
Guidelines
Integrated approach
Internal controls
Performance management
Public Company Accounting Reform & Investor Protection Act 2002-US
Revenue recognition
Trends
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Summary:During the last two decades, a large number of new accounting rules have been introduced, and reporting deadlines have been shortened, requiring a more rapid closing process. Complying with the Sarbanes-Oxley Act of 2002 (SOX) has further served to exacerbate these challenges. The increased regulatory scrutiny has resulted in materiality thresholds so low that even relatively small errors in financial statements may lead to material weakness disclosures or financial restatements. In this paper the authors address these problems and suggest that companies use technology to transform their "last mile of finance." The last mile of finance is the series of steps involved in the close, from consolidation to the company's public disclosure of its financial results, including filings with the Securities and Exchange Commission (SEC). As most financial professionals have experienced, the process of preparing financial statements is fraught with risks, costs, complexities, and inefficiencies.
ISSN:0897-0378