Benchmarking rapid closure financial reporting in Maltese listed entities

Abstract

Purpose: The study analysed various factors affecting the time lag and quality of financial reporting, which were then used to set up a benchmark outlining which systems and procedures result in the most efficient, quality and timely financial close. The study also attempts to gauge the changes in the finance department due to the implementation of rapid closure methodologies. Design: A qualitative research design was used to achieve the objectives stated in the study. Twelve Listed entities were interviewed, with the questions asked being formed on basis of the literature review. Findings: The factors affecting the timeliness and quality of financial information presented were presented in the findings chapters. These aspects included the level of automation present in the company, the level of integration between the company’s subsidiaries and departments, the centralisation of the finance department and the level of communication with internal and external parties. From these findings, a benchmark was outlined through analysing the responses of High and Low Performers, which was presented in the conclusion chapter. The changes in the finance department through adopting fast close methodologies were discussed, where the finance department could be able to achieve a more forward-looking role and able to increase the value of the company through further analysis. Conclusion: A benchmark outlining aspects which impact a company’s ability to have an efficient, quality and timely close was created. Although Maltese listed entities are conscious about the benefits of a rapid reporting system, it is seen as being more beneficial for the company rather than the general public, probably due to the limitations present in the local stock market in terms of liquidity and issuers. The finance department could however be able to provide more value to the company by using the time released from undertaking mundane repetitive tasks now done through automation and devote that time to e.g. increasing operational efficiency and acting as better advisors to the company. Value: The findings enabled the creation of a benchmark to be used by companies in evaluating their own financial reporting system and which aspects are likely to provide a high impact on the timeliness and quality of financial reporting. Several recommendations were also put forward in the chapter 5.