Shagun, an ex-Fortune 100 auditor and CEO of SkyStem, has developed ART, a month-end close solution to help accountants streamline their processes. Month-end close can be challenging for midsized companies that have limited resources and need to balance manual tasks with more strategic work. Achieving an accurate month-end close is crucial for maintaining trust with investors and stakeholders, while errors can have serious consequences, including financial misrepresentation and noncompliance with regulatory requirements.
One major concern during the month-end close process is the risk of errors slipping through the cracks, particularly in balance sheet reconciliations. Inaccuracies in financial statements can lead to a loss of confidence from investors and stakeholders, as well as potential negative stock consequences. Implementing a standardized and rigorous reconciliation process is essential for identifying discrepancies before they become larger issues and ensuring compliance with regulatory bodies, ultimately safeguarding businesses against adverse outcomes.
Inefficiencies can also arise in companies that lack standard processes or perform low-quality balance sheet reconciliations during the month-end close. Without clear guidelines, the process can become chaotic and time-consuming, impacting not only the finance and accounting teams but also other departments waiting for financial data for decision-making. Through automation, companies can reduce time spent on repetitive tasks and enhance communication among departments, allowing accountants to focus on more strategic tasks and fostering a more efficient and productive work environment.
The lack of standard processes can also increase the risk of fraudulent activities within an organization, such as embezzlement or financial statement manipulation. Automated financial systems leveraging AI and ML algorithms can help detect fraud more easily by establishing baselines for typical economic activities and providing regular updates on financial transactions. Establishing standard procedures and practices, embracing automation and technology, and fostering a culture of accountability are crucial steps for companies to achieve accurate financial reporting, boost efficiency, and reduce the risk of fraud during the month-end close.
In conclusion, the repercussions of not having standard processes or performing low-quality balance sheet reconciliations during the month-end close can be detrimental to a company’s financial health and reputation. It is essential for companies to prioritize accuracy in financial reporting, implement robust reconciliation procedures, and leverage technology to streamline processes. Consulting with licensed professionals for advice concerning specific financial situations is recommended. The Forbes Finance Council provides a platform for executives in accounting, financial planning, and wealth management firms to connect and share expertise.
