President Trump’s recent tweet suggesting the SEC rethink the requirement for public companies to report their results quarterly has ignited a debate about this topic.
In speaking with some of the world’s top business leaders I asked what it is that would make business (jobs) even better in the U.S. “Stop quarterly reporting & go to a six month system,” said one. That would allow greater flexibility & save money. I have asked the SEC to study!
— Donald J. Trump (@realDonaldTrump) August 17, 2018
On one side are the investors and regulators who are demanding increasing transparency from publicly traded companies to track performance, gauge the return on their investments and prevent fraud. On the other side are companies who cite the increasing cost of compliance, and the focus that quarterly reporting puts on short-term profits rather than on long-term investments.
Others in this group cite the number of companies delaying IPOs or going private due to the costs and scrutiny placed on public companies. The most recent example of this is Tesla’s Elon Musk tweeting that he was considering taking his company private due to the costs and scrutiny Tesla faces as a public company (although he later reversed course and decided to keep Tesla public). Another point made by this camp is that reporting requirements for publicly listed companies in Europe is less stringent than for U.S. companies, with the requirement to report results semi-annually instead of quarterly.
Regardless of which side of this debate you are on, the reality is that most companies collect, consolidate and review financial and operating results at least monthly, for reporting to management. Modern performance management and analytics software applications make this process easier than ever with key features such as:
• Direct integration with ERP, general ledger, data warehouses and other source systems;
• Automatic data validations, audit trails and drill-through to transaction details;
• The ability to automate complex global consolidations including currency translation, intercompany eliminations and partial ownerships;
• The integration and comparison of actual results to budgets, plans and forecasts;
• Predictive modeling and forecasting, and the use of machine learning and artificial intelligence to forecast demand and revenue;
• Reporting in many formats for internal/external purposes:
o Automated generation of financial statements;
o Excel-based access and analysis;
o Interactive dashboards and mobile information delivery.
When it comes to integrating financial statements, tables, charts, and textual information, many modern performance management solutions provide seamless integration with Microsoft Word and PowerPoint for creation of board books, board presentations and regulatory filings — with automatic updates as data changes, which eliminates copying and pasting.
For publicly held companies who need to file 10Qs and 10Ks with the SEC, there are many XBRL tagging tools and services that can automate the filing process, at a fairly low cost.
In summary, with the volatility of today’s markets, companies have been moving towards providing more detailed and timely information to management — monthly, weekly, daily, sometimes hourly. The good news is that modern performance management and analytics software solutions allow managers to gain near real-time access to data, and to easily package information for internal and external stakeholders. Regardless of what the SEC decides, companies still need to monitor performance on a regular basis and today’s modern software makes that faster, easier and more cost effective than ever.
