Associate Principal Linda Copeland and Associate Principal Brian Willson discuss the needs and objectives for financial reporting and financial planning and analysis (FP&A), and how technology can be used to improve the efficiency and effectiveness of both functions.
Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Gary Baker, Group Global Communications director at The Hackett Group. His guests today are Linda Copland, associate principal with The Hackett Group who focuses on financial planning and analysis (FP&A), and Brian Willson, associate principal with The Hackett Group who focuses on accounting.
In this episode, Gary, Brian, and Linda have a discussion on the differing reporting needs of accounting and FP&A. The discussion begins as Linda and Brian explain the principles that define where financial reporting occurs. Examples are given that display the necessity of timeliness in reporting and the varying needs for reporting within an organization. Brian highlights that the particular needs between accounting and FP&A have different functions.
First, the primary objectives of the FP&A function are explained and contrasted with the primary objectives of accounting. Whereas accounting reports are produced to satisfy potential investors, build investor confidence and provide snapshot information which makes sense, FP&A is focused on the bigger picture. The FP&A perspective understands there is an allotment of money they have to use, and they must employ capital appropriately. FP&A helps business partners know when to invest or divest. Linda proceeds to give a number of examples such as strategic planning and the annual budgeting process.
Secondly, the types of reporting are compared. Linda highlights the three types of reporting FP&A requires and materials produced such as a budget binder, which is often hundreds of pages in length. These reports detail necessary steps to meet annual goals being distinguished in its depth of reporting. Additionally, FP&A may report on actual versus planned results in detailed levels. From an accounting perspective, however, the reporting is much more general. Accounting is intentionally routine and designed to produce a snapshot of an organization at any given time. These snapshots reflect the actual financial standing of a business at that moment. Their reports are additionally often used in audits. Accounting, therefore, is not concerned with providing insights into operations or how companies may look in the future.
As the episode concludes, technology solutions for both accounting and FP&A are additionally compared. Even though the two groups reside within the financial function of a company, their needs are very different. For this reason, the technology they need is different. FP&A requires technology, which can handle a lot more information than accounting. The technology must be agile and create results fast. Examples are given such as which technology allows for changes to be made or a database designed to allow for the addition of a new business. Creative solutions are highlighted that tackle one challenge: the need to produce good summary information. While some workers in the field spend all day developing a PowerPoint presentation in order to display the data, learn how some companies now offer technology that both collect data and automatically produce the summary reports.
In contrast, technology solutions that can improve reporting for accounting is much more narrow, yet the opportunities for assistance are similar. In a similar way, automated reporting is a feature among many new technologies for accounting. Technology can automate “closing the books” and produce reports – reporting journal entries according to specific timelines and reports that display how the organization is performing. At the end of the day, the goal is to generate financial statements with confidence, and technology can help.
- 1:00 – Gary Baker introduces Linda Copeland and Brian Willson.
- 4:30 – An accounting perspective on reporting needs.
- 5:45 – The primary objectives of the FP&A function.
- 11:00 – The primary objectives of the accounting function and how it differs from FP&A.
- 14:20 – Types of reporting that FP&A requires.
- 19:50 – Types of reporting from an accounting perspective.
- 23:20 – Technology solutions that can improve reporting for FP&A.
- 26:05 – Technology solutions that can improve reporting for accounting.