The pandemic helped to heighten the focus on financial resilience, thus affirming the reality that without financial resilience – commercial and operational resilience cannot be maintained
Doreen Remmen, CFO at Institute of Management Accountants (IMA)
Earlier last month, the United Nations raised its forecast for global economic growth in 2021 as governments step up Covid-19 vaccination programmes and keep fiscal and monetary stimulus measures in place following the loss of more than a quarter of a billion jobs due to the pandemic.
Global gross product is likely to grow by 4.7 percent, following an estimated contraction of 4.3 percent in 2020, the United Nations Conference on Trade and Development (UNCTAD) said in its report. The International Labour Organization estimates that the crisis resulted in the loss of 255 million jobs worldwide.
All sizes of companies bore the brunt of the pandemic and continue to do so in countries across the Middle East, India and many parts of Africa where the pandemic continues to rage. Companies were affected on both the supply side and the demand side of the economy, creating a vicious cycle.
On the supply side, quarantines and illnesses reduced the amount of labour resources available to enterprises. The supply chain was disrupted, causing shortages of raw materials, parts, and goods needed for production.
On the demand side, consumer spending decreased, resulting in a sudden and drastic decrease in revenue for these enterprises, hindering their ability to meet financial obligations or qualify for new debt to maintain liquidity.
The pandemic helped to heighten the focus on financial resilience, thus affirming the reality that without financial resilience – commercial and operational resilience cannot be maintained.
Keeping this pillar strong requires firms of all sizes to adapt from existing financial frameworks to a more volatile environment in which access to finance and liquidity are of paramount importance. Critical cash flow and risk management decisions must be made daily.
The arrival of the pandemic in late 2019 to early 2020 and new surges in 2021 coincided with the production of annual external financial reports. This brought new attention to the processes that deliver accounting information from corporate entities to external users.
The pandemic helped to heighten the focus on financial resilience
The conditions are also driving new attention toward the allocation of budgets for technology-based solutions, as virtual collaboration will remain the new normal after the pandemic ends.
At the same time, many financial reporting teams are working with dated technology that leaves them less agile in responding to constantly changing regulations, standards, and economic conditions.
This can be particularly burdensome to global entities that must report in accordance with the requirements of multiple jurisdictions. Companies are reassessing technology-based solutions to support professional expertise.
Implementing the right processes can help financial reporting teams meet departmental objectives and establish greater operational resilience. For example, the new virtual workspaces and workflow require cloud-based data and systems to provide greater support to customers and employees.
The question becomes whether the pandemic has revealed or accelerated an organization’s need to adopt new technology. One thing is certain: The pandemic revealed financial reporting challenges with the potential for technology-based solutions. These can be categorized into three areas: processing information that relies, at least in part, on expectations and future conditions; implementing internal controls and oversight procedures; and documenting management review and judgment areas.
Estimates of future conditions
The balance sheet or statement of financial position is based, in significant part, on expectations of future conditions that such as the collectability of receivables the market value of investment securities, and the resale value of inventory. Forward-looking assessments also affect changes in earnings forecasts.
The pandemic represents a new era of unprecedented, fast-changing conditions. Responding quickly requires software that can accumulate data from new sources and prepare new types of analyses for the first time. In short, reporting teams need to reconsider all of the assumptions and processes built into long-used spreadsheets.
Internal control and oversight
As the pandemic conditions accelerated virtual collaboration for accounting teams, new attention was placed on the planning and execution of controls over financial reporting. Although the powerful transaction systems have significant, automated control features, the processes around the last steps – gathering data from different streams and spreadsheets – lack the same level of inherent, automatic oversight systems.
Cloud-based platforms can help remote teams design well-controlled workflow, assign oversight, and monitor these last steps to deliver external reports in a more effective way.
Documentation of management review and judgment areas
As teams work remotely, analytical procedures, and the supporting documentation of their execution, cannot depend on a patchwork of emails and storage in individuals’ computer files. The right solutions may allow quicker access to accurate data, well-documented, timely analyses, and effective control over sophisticated assessments.
Investment in secure and effective technology-based solutions can preserve documentation of compliance around the most sensitive decision-making processes and facilitate the release of financial information to regulators and the market.
The pandemic revealed financial reporting challenges with the potential for technology-based solutions
Further, technology can allow a corporate accounting and reporting team to work collaboratively on overlapping financial reporting, management reporting, statutory reporting, regulatory filings, and enterprise risk activities.
Working together to assess needs and identify priorities around data and processes can enhance our approach to the fast-changing conditions that will continue to arise even post-pandemic.
Technology solutions can free financial reporting professionals from the mundane tasks of accumulating data and allow them to apply their expertise where it is direly needed in a disruptive crisis:
Conducting insightful analysis to drive accelerated and informed decision making that matches the pace of fluctuating conditions. The right balance of tools supports financial resilience.
Doreen Remmen, CFO at Institute of Management Accountants (IMA)
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Financial resilience lessons from Covid-19
The pandemic helped to heighten the focus on financial resilience, thus affirming the reality that without financial resilience – commercial and operational resilience cannot be maintained
Doreen Remmen, CFO at Institute of Management Accountants (IMA)
Earlier last month, the United Nations raised its forecast for global economic growth in 2021 as governments step up Covid-19 vaccination programmes and keep fiscal and monetary stimulus measures in place following the loss of more than a quarter of a billion jobs due to the pandemic.
Global gross product is likely to grow by 4.7 percent, following an estimated contraction of 4.3 percent in 2020, the United Nations Conference on Trade and Development (UNCTAD) said in its report. The International Labour Organization estimates that the crisis resulted in the loss of 255 million jobs worldwide.
All sizes of companies bore the brunt of the pandemic and continue to do so in countries across the Middle East, India and many parts of Africa where the pandemic continues to rage. Companies were affected on both the supply side and the demand side of the economy, creating a vicious cycle.
On the supply side, quarantines and illnesses reduced the amount of labour resources available to enterprises. The supply chain was disrupted, causing shortages of raw materials, parts, and goods needed for production.
On the demand side, consumer spending decreased, resulting in a sudden and drastic decrease in revenue for these enterprises, hindering their ability to meet financial obligations or qualify for new debt to maintain liquidity.
The pandemic helped to heighten the focus on financial resilience, thus affirming the reality that without financial resilience – commercial and operational resilience cannot be maintained.
Keeping this pillar strong requires firms of all sizes to adapt from existing financial frameworks to a more volatile environment in which access to finance and liquidity are of paramount importance. Critical cash flow and risk management decisions must be made daily.
The arrival of the pandemic in late 2019 to early 2020 and new surges in 2021 coincided with the production of annual external financial reports. This brought new attention to the processes that deliver accounting information from corporate entities to external users.
The conditions are also driving new attention toward the allocation of budgets for technology-based solutions, as virtual collaboration will remain the new normal after the pandemic ends.
At the same time, many financial reporting teams are working with dated technology that leaves them less agile in responding to constantly changing regulations, standards, and economic conditions.
This can be particularly burdensome to global entities that must report in accordance with the requirements of multiple jurisdictions. Companies are reassessing technology-based solutions to support professional expertise.
Implementing the right processes can help financial reporting teams meet departmental objectives and establish greater operational resilience. For example, the new virtual workspaces and workflow require cloud-based data and systems to provide greater support to customers and employees.
The question becomes whether the pandemic has revealed or accelerated an organization’s need to adopt new technology. One thing is certain: The pandemic revealed financial reporting challenges with the potential for technology-based solutions. These can be categorized into three areas: processing information that relies, at least in part, on expectations and future conditions; implementing internal controls and oversight procedures; and documenting management review and judgment areas.
Estimates of future conditions
The balance sheet or statement of financial position is based, in significant part, on expectations of future conditions that such as the collectability of receivables the market value of investment securities, and the resale value of inventory. Forward-looking assessments also affect changes in earnings forecasts.
The pandemic represents a new era of unprecedented, fast-changing conditions. Responding quickly requires software that can accumulate data from new sources and prepare new types of analyses for the first time. In short, reporting teams need to reconsider all of the assumptions and processes built into long-used spreadsheets.
Internal control and oversight
As the pandemic conditions accelerated virtual collaboration for accounting teams, new attention was placed on the planning and execution of controls over financial reporting. Although the powerful transaction systems have significant, automated control features, the processes around the last steps – gathering data from different streams and spreadsheets – lack the same level of inherent, automatic oversight systems.
Cloud-based platforms can help remote teams design well-controlled workflow, assign oversight, and monitor these last steps to deliver external reports in a more effective way.
Documentation of management review and judgment areas
As teams work remotely, analytical procedures, and the supporting documentation of their execution, cannot depend on a patchwork of emails and storage in individuals’ computer files. The right solutions may allow quicker access to accurate data, well-documented, timely analyses, and effective control over sophisticated assessments.
Investment in secure and effective technology-based solutions can preserve documentation of compliance around the most sensitive decision-making processes and facilitate the release of financial information to regulators and the market.
Further, technology can allow a corporate accounting and reporting team to work collaboratively on overlapping financial reporting, management reporting, statutory reporting, regulatory filings, and enterprise risk activities.
Working together to assess needs and identify priorities around data and processes can enhance our approach to the fast-changing conditions that will continue to arise even post-pandemic.
Technology solutions can free financial reporting professionals from the mundane tasks of accumulating data and allow them to apply their expertise where it is direly needed in a disruptive crisis:
Conducting insightful analysis to drive accelerated and informed decision making that matches the pace of fluctuating conditions. The right balance of tools supports financial resilience.
Doreen Remmen, CFO at Institute of Management Accountants (IMA)
Follow us on
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