Given the wealth of information and technological possibilities available, one of the most surprising aspects of today’s reporting landscape is that we declare “mission accomplished” in our quest to achieve a “single point of truth” the moment we have secured a single version of the numbers.
“The truth does not reside in the data, it lies in the interpretation”
While there is no doubt that a single version of the data is a necessary condition for arriving at “the truth”, it’sfar from sufficient and leaves us short of achieving our objectives of driving decision-making, accountability and control.
As finance professionals we are unrelenting in our pursuit of automation, centralization, accountability and rigorous quality and process control with respect to the numbers. So why do we accept that the qualitative information (i.e. commentary) crucial to our ability to accurately interpret this data, take the most appropriate and effective action and keep everyone accountable is still managed in a disjointed, highly manual and inefficient process of separate documents that lacks many of the governance standards we apply to the data? The natural bias of our profession for “exact” (i.e. quantifiable) information certainly plays a role in stimulating this “qualitative information blind spot”.
However, the inertia in tackling this issue is greatly enforced by the continued use of generic Business Intelligence (BI) and out-dated Excel-based reporting tools where commentary is at best an afterthought. Whatever the reasons, this numbers-only approach fails on two counts:
- Insight: It fails to optimally capture the essential business insight on which accurate interpretation and optimal business decisions depend and relegates finance teams to the unenviable role of palaeontologists trying to deduce the truth from historical remains.
- Control: It lacks the formal governance, process management and audit trail essential to ensuring fast close (a process is only as fast as its slowest component) and optimal accountability (including aggravating the risk of controllers “going native” and undermining the critical interplay between strong business ownership and neutral controlling oversight).
Remedying this and ensuring truly optimized decision-making, accountability and control requires a stronger focus on interpretation and a fully balanced quantitative / qualitative approach to reporting. We refer to this as Q2 insight and it implies the full fusion of quantitative data and qualitative commentary into a single integrated financial reporting and consolidation process and system to achieve what is truly “a single point of truth”.
Fully Integrated Quantitative + Qualitative Financial Reporting
Learn about the integration of quantitative and qualitative insight in financial reporting and the types of comments and informational process management requirements your organization needs. Download the whitepaper.