CFOs under investor pressure globally to provide better information
London, 2 February 2015
CFOs, operating globally across multiple markets, say it is increasingly harder to satisfy investor demands for information alongside increasing regulatory requirements. This is according to a new report by EY’s Financial Accounting and Advisory Services (FAAS), which found that 70% of CFOs found balancing the needs between external stakeholders and corporate reporting challenging. The report also found that 74% of respondents said their company reporting needs to move beyond compliance and provide information that is useful to current and potential investors on areas such as strategy and forecasting.
- 70% of CFOs say it is challenging to satisfy external stakeholder needs with corporate reporting
- 97% of CFOs recognize need to adapt but cite internal challenges preventing change
- Connected reporting is seen by CFOs as a way to meet internal and external demands
Connected Reporting: responding to complexity and rising stakeholder demands, a survey of 500 CFOs or heads of reporting of organizations with greater than US$1b in revenue, saw that there is a greater focus by CFOs on how company reporting is being used by investors to gain a strategic understanding of the vision of the company, with just 20% of all respondents thinking that their current corporate reporting is highly effective in meeting external stakeholder needs.
Peter Wollmert, EY’s Global and EMEIA FAAS Leader, says:
“Regulatory compliance is the cornerstone of providing confidence to the capital markets, yet it is clear that CFOs are increasingly aware of the need to move beyond this and provide information that will give them an edge over their competitors when attracting investors. At the same time, they have to improve the range of data they provide internally to satisfy management, board and audit committee demands.”
Overwhelmingly, 97% of respondents face challenges to improve reporting including time to produce reports and the cost. However, in response to changing stakeholder demands, 78% believe they can introduce efficiencies into their reporting process and believe that reporting will become more wide ranging in the near term.
Within three years, 90% of respondents are expecting to report on forecasting, sustainability reporting, integrated reporting and CSR reporting. Other changes are likely to be a shortening of the reporting cycle and the introduction of more real-time reporting, as well as a greater focus on non-financial reporting around strategy, sustainability and how risk is managed.
When broken down by county and sector, the survey found that companies across the board are facing similar challenges. Survey results showed that 93% of respondents based in China felt that they must do more about improving the information provided to stakeholders, followed by respondents in the UK, US and Brazil, which were all at 80%. By sector, respondents from technology and telecommunications were most concerned about the need to improve the information provided. Survey findings also found that 86% of UK respondents were most concerned about balancing stakeholder needs with corporate reporting requirements.
Wollmert says: “The changes to corporate reporting CFOs are likely to face are not without challenge — a diversified investor base and increasing demands for information internally already make it increasingly difficult to satisfy everyone, and firms need to strike a careful balance between speed and accuracy. Yet by utilizing connected reporting effectively to provide stakeholders with the granularity they require, they will support investor confidence and provide firms with the better ability to link external drivers with strategy and forecast.”
Notes to Editors
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About the survey and report
We surveyed 500 CFOs or heads of reporting of organizations with greater than US$1b in revenue. Half of respondents were CFOs and half were group, divisional or regional financial controllers. Respondents were split evenly across Americas, Europe, Middle East, India and Africa (EMEIA), and Asia-Pacific/Japan, and covered 16 main industry sectors.
The surveys were supplemented by in-depth interviews with 20 CFOs, heads of reporting organizations and subject-matter professionals from EY, to add texture and deeper insight to the findings.
The report looks at the challenges companies face in their reporting, assesses the current state of corporate reporting, and examines the internal and external challenges to improving reporting. It also identifies a solution to increasing demands and complexity through connected reporting, which brings together financial and non-financial information and combines internal and external reporting, resulting in greater efficiency and consistency.