New York (March 11, 2004) -- Four in 10 U.S. multinational companies won't be able to meet the Securities and Exchange Commission's accelerated corporate reporting requirements without significant internal changes in procedure, according to a survey by PricewaterhouseCoopers.
The SEC has been pushing for accelerated filings as a way to improve investor confidence in the wake of corporate and accounting scandals. The new rules, to be phased in over the next two fiscal years, ultimately require companies' quarterly reports to be filed 35 days after a quarter's end, and annual reports to be filed 60 days after year-end. Currently, companies are allowed 45 days for the quarterly 10-Q reports and 90 days for the annual 10-K.
To meet the new regulations, 59 percent of companies surveyed by PwC say they will use their existing reporting systems more effectively; 29 percent will upgrade their reporting systems; and 8 percent will make significant investments in new information technology.
Nearly half of the 177 surveyed executives (46 percent) expect their company to encounter challenges in meeting the requirements, while 42 percent foresee no problems. The greatest concerns are: cross-company issues (net), cited by 29 percent; ineffective closing and/or reporting processes, cited by 25 percent; and ineffective IT infrastructure, cited by 21 percent. Other concerns included inconsistent closing and analytic activities (19 percent); lack of consistent account definitions (12 percent); and lack of common financial measures (8 percent).
Respondents also cited several potential roadblocks to the conversion process, including a lack of standardization of company-wide policies and procedures for closing the books in all business units; lack of an enterprise-wide training program for all employees responsible for financial reporting; lack of automation of their closing and reporting process and lack of timeliness in receiving financial information.
Still, executives cited an upside to improving their closing and reporting processes. Among the potential benefits, two-thirds cited more time for analysis and review of reported information, while 55 percent expect increased quality of financials, and 48 percent expect a more timely and accurate decision-making process. More than a third (35 percent) expect better information from existing systems, while 24 percent expect process alignment and improvement.
-- WebCPA staff
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