Only 16% of companies have fully automated compliance reporting

Over the past few months, I’ve been sharing my conversations with experts about the benefits of automation in finance. One area that may need an automation boost is global statutory reporting. 

At a time when environmental, social, and governance (ESG) reporting is a priority for multinational companies, and they face a global minimum tax of 15% endorsed by the G20 leaders, rethinking approaches to compliance-based reporting is becoming a necessity. The Global Statutory Reporting and Automation Trends Report 2021, released by Deloitte and Workiva, a software-as-a-service company, found only 16% of companies surveyed have fully automated statutory reporting processes end-to-end. The data is based on a survey of 682 CFOs, controllers, chief administrative officers, finance directors, and other finance and tax leaders in countries including the U.S., U.K., France, and Netherlands, who work at companies with more than 10 legal entities. 

Some factors driving companies towards an automated statutory reporting process include meeting regulatory compliance standards, passing audits more seamlessly, and increasing opportunities for deeper insights, says Conor O’Kelly, senior director of statutory accounting at Workiva. Also, “the prospect that [ESG] reporting is now becoming mandatory and subject to audit is forcing companies to evaluate their reporting systems,” O’Kelly says. 

Many of the companies that are fully automated when it comes to statutory reporting are tech-savvy or already in the cloud, he explains. More traditional brick and mortar sectors or highly regulated industries, like banks, weren’t as well prepared or possibly didn’t have access to immediate resources, O’Kelly says. “This will most likely change in the near future as statutory financial reporting, corporate governance frameworks, and ESG are becoming more interconnected, broadening the stakeholder group and requiring new reporting assessments,” he says.

Nearly 50% of companies surveyed have statutory reporting partially automated. But the traditional “hub-and-spoke” model is counterproductive. “Each spoke may have partial automation, which can create some efficiencies, but data wrangling and localized corporate governance have likely been driving inconsistency,” according to the report.

For the most part, the statutory record-to-report process still remains locally performed and within the realm of the in-country controller, the research found. But if automation is applied holistically from a global vantage point, it can create a shared reporting narrative, Workiva and Deloitte noted. 

Within the first year, companies that achieved automation using statutory software experienced 30% to 40% efficiency gains and a “strong in-year return on investment,” according to the report. If end-to-end automation is key, then what is holding some companies back from complete implementation? “Every country believes its reporting process has special considerations that fall outside of possible automation implementation,” O’Kelly says. In addition, 43% of respondents have not changed their budget for regulatory reporting even while experiencing difficulty in submitting statutory reports, the research found.

Another upside to automation is attracting top talent, O’Kelly says. “Companies with technology shortfalls are left behind, as younger generations choose to do business with competitors that are digitally native,” he explains. Advice for organizations needing an upgrade? “When choosing automation technologies, invest in a solution that has flexibility, and that can be integrated across your entire reporting architecture,” he says.

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See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

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