2016 BENCHMARKING - Abacuslearn.abacus.com/rs/082-WJU-260/images/Robert-Half...As in our past benchmarking studies, this year’s findings show that larger companies — especially

BENCHMARKING THE ACCOUNTING & FINANCE FUNCTION2016

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TABLE OF CONTENTS

Workforce Management

Accounting Operations

Financial Systems

Sourcing

Acknowledgments

Putting the Data to Work

About the Authors

Internal Controls and Compliance

About Robert Half and Financial Executives Research Foundation

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As a financial executive, you no doubt see value in knowing how your organization stacks up against others. Benchmarking your accounting and finance practices with those of other companies can help you determine whether your organization is keeping pace in an environment where change comes faster than ever.

But you also know that benchmarking your team’s functions — from closing the books to implementing new technology systems to managing compliance — can be costly and time-consuming, and it’s difficult to obtain good data on your own.

That’s why Robert Half has teamed with the Financial Executives Research Foundation (FERF) for the seventh year to produce Benchmarking the Accounting & Finance Function: 2016, a report based on responses from more than 1,700 financial leaders at public and private organizations in the U.S. and Canada.

The practice of benchmarking is especially important as the requirements facing accounting and finance departments continue to expand.

When senior-level financial executives who participated in this year’s survey were asked about the challenges their departments face, certain themes resurfaced. A key theme is one of resources — how to put in place and keep the talent needed for an accounting and finance function that is truly forward-looking. For that reason, we discuss workplace management early in the report to give you insight into how others are addressing the perennial challenge, “How do we do more with the same level of resources?” With this backdrop, we then discuss details of how companies are handling the critical everyday workings of the accounting and finance function.

We hope you find the experiences of your peers enlightening from both a data and practical perspective.

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Introduction Report HighlightsSome of the report’s key findings include:

• Accounting and finance management staff in the U.S. typically work 46 hours per week on average, while nonmanagement personnel work 41 hours. In Canada, management staff work 43 hours per week, on average, while nonmanagement personnel work 40 hours.

• Companies reported spending more money in recent months to recruit and hire professionals with sought-after skills.

• More than half of respondents surveyed continue to reconcile accounts manually — 52 percent of U.S. firms and 55 percent of Canadian companies — a steady decrease for U.S. companies, compared to 54 percent in 2015 and 59 percent in 2014.

• More than half (53 percent) of Canadian companies reported that they don’t currently use cloud-based solutions and do not plan to in the future. In the U.S., slightly more than a third (37 percent) reported the same.

• As in past years, tax and payroll are the two most commonly outsourced functions for both U.S. and Canadian companies.

• For the third consecutive year, more than half of U.S. and Canadian companies overall reported that costs associated with compliance requirements remained steady.

Key ThemesSenior-level financial executives on the challenges their departments face:

“Trying to modernize systems to allow existing workers and resources to do more with less.”

“Trying to make sure I am strategically helping to guide the business to growth and not just focusing on the administrative issues the company faces, which can bog you down.”

“Facing pressure to do it all with limited staff. I’m trying to evolve our department to meet ever-changing accounting needs.”

“Trying to meet the challenges of harvesting data and creating efficiencies with technology.”

“Trying to transition finance to be a subject matter expert and away from a traditional accounting and planning role.”

“Helping the key decision makers to really see things coming in advance.”



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How to Use This ReportBenchmarking the Accounting & Finance Function: 2016 is divided into five sections representing key functional categories:

• Workforce Management

• Accounting Operations

• Financial Systems

• Sourcing

• Internal Controls and Compliance

Within each category are:

• Key Data Findings: An overview of trends identified in the survey and in follow-up interviews with executives

• Discussion and Analysis: Summaries of survey results, accompanied by charts and tables

• Points of View: Real examples taken from interviews with executives

• Takeaways: Insights from executives

This report continues our practice of making comparisons with the results of studies done in previous years. Look for these references throughout the report.

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Workforce ManagementKey Data Findings• The percentage of financial staff devoted to accounts

payable (A/P) and accounts receivable (A/R) rose to 30 percent from 27 percent last year.

• For the third consecutive year, the percentage of financial staff resources devoted to general accounting decreased.

• The median employment-related cost — defined as base salary, bonuses and benefits — as a percentage of revenue held steady overall, at 2 percent, but rose to 5 percent at the largest companies (revenue of $5 billion and over).

• Many financial executives attribute employment-related cost increases to the tight market for financial talent.

Discussion and AnalysisTo get a better picture of how companies allocate personnel resources, we asked respondents what percentage of their staff is assigned to various functional areas (see Figure 1). A/P, general accounting, A/R and financial reporting represent the highest allocation of staff resources, at 17 percent, 16 percent, 13 percent and 11 percent, respectively. For the third year in a row, the percentage of financial staff resources devoted to general accounting declined — down to 16 percent this year from 23 percent in 2015 and 21 percent in 2014.

Reductions in general accounting may be attributable to the technology-related improvements that many respondents mentioned in interviews. Another factor may be that accounting and finance departments are reducing the number of generalists in favor of professionals with more specialized skills. This trend appears to be supported by percentage increases in the number of staff dedicated to other areas of the finance function, including A/P, A/R, budgets and analysis, cost accounting, finance, and payroll.

WORKFORCE MANAGEMENT

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16% General accounting

9% Budgets and analysis

11% Financial reporting

13% A/R2% Treasury

17% A/P

1% International accounting

1% Internal controls

3% Other

3% Tax

4% Credit and collections

5% Cost accounting

7% Finance 8% Payroll

FIGURE 1: ALLOCATION OF ACCOUNTING AND FINANCE STAFF

As expected, the median number of internal financial employees, up to and including the CFO, varies widely based on company size (see Figure 2). On the low end, the median number of staff at the smallest companies (less than $25 million in annual revenue) is four, compared to a median of 236 at the largest companies ($5 billion and over). Nevertheless, even among the largest companies, the number of internal staff can vary significantly.


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FIGURE 2: Number of Internal Accounting and Finance Function Staff, by Company Size and Location (by quartile)

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over

United States Canada

Bottom quartile 2 5 9 25 30 26 3 4

Median 4 7 17 32 84 236 6 7

Top quartile 6 11 25 61 150 687 15 18

The median employment-related cost — defined as base salary, bonuses and benefits — of internal financial staff as a percentage of revenue is 2 percent overall in 2016 in both the U.S. and Canada (see Figure 3), unchanged from last year for both countries. The median employment-related costs by company size tell a different story, however. Costs rose sharply this year at the largest companies ($5 billion and over in revenue) to 5 percent, compared to 1.1 percent in 2015. Based on interviews with financial executives, cost increases at some companies are likely a reflection of a tight market for financial talent. Companies reported spending more money to recruit and hire professionals with sought-after skills this year versus last year. Rising healthcare costs have also been a factor.

Businesses are also engaging highly skilled interim professionals to offset the increased salary costs of full-time staff who are in high demand. In some cases, efficiencies fueled by technology are helping to offset employment-related costs. One CFO noted, for example, that, although the cost of the accounting and finance function is always rising, leveraging technology has allowed the relative cost for producing a unit of activity to remain largely flat and, in some cases, it has even gone down slightly. Another executive said his department is operating more efficiently as a result of better integration through technology of various finance processes, such as treasury, procurement, payroll and accounts payable.


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Just over one-quarter (28 percent) of U.S. companies report that they use temporary or project professionals to assist with their accounting and finance functions. The percentage of Canadian companies using temporary professionals is 24 percent (see Figure 4). Increasingly, these include interim subject matter experts with specialized skills.

As in our past benchmarking studies, this year’s findings show that larger companies — especially those with $500 million or more in annual revenue — tend to rely more heavily on the use of temporary or project professionals than do smaller firms, although the percentage of the workforce represented by interim professionals is highest at the smallest companies (see Figure 6).

FIGURE 3: Cost of Internal Accounting and Finance Function Staff as a Percentage of Revenue, by Company Size and Location (by quartile)

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Bottom quartile 2.00% 0.90% 0.50% 0.50% 0.50% 2.25% 1.00% 1.00%

Median 3.00% 1.40% 1.00% 0.90% 1.32% 5.00% 2.00% 2.00%

Top quartile 7.00% 3.00% 2.15% 1.40% 3.00% 5.50% 4.65% 3.85%

Also of note, 63 percent of both U.S. and Canadian companies indicated that their use of temporary or project-based staff fluctuates based on the amount of work to be done (see Figure 5) — an increase for Canadian firms from 52 percent in 2015. But companies aren’t turning to interim employees just to augment staff during peak periods. Respondents also reported a continuing and steady reliance on temporary or project professionals to fill in for absent employees and to supply short-term expertise, regardless of workload. In addition, many businesses reported a preference for using temporary-to-hire arrangements to evaluate potential hires or further assess whether the workload requires additional full-time hires.

FIGURE 4: Use of Temporary or Project Professionals

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Yes 20% 26% 33% 59% 59% 45% 28% 24%

No 80% 74% 67% 41% 41% 55% 72% 76%


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The percentage of the accounting and finance workforce at U.S. companies consisting of temporary or project professionals decreased slightly in this year’s survey (see Figure 6); the median is 7 percent of the workforce, compared to 8 percent last year. In Canadian firms, the number of financial professionals who are temporary or contract workers also decreased slightly, to 5 percent, down from 6 percent last year. The percentage of temporary, contract or project professionals is highest at the smallest companies.

Today, temporary professionals and project consultants are increasingly found throughout accounting and finance organizations. They are helping out during workload peaks in areas such as payroll, tax, cash management and regulatory reporting, but they also serve these functions and many more when a company finds it needs external specialized assistance for a limited period.

FIGURE 5: Change in Use of Interim Professionals Based on Workload, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Changes 52% 64% 67% 73% 71% 60% 63% 63%

Does not change 48% 36% 33% 27% 29% 40% 37% 37%

U.S. accounting and finance managers work an average of 46 hours per week (see Figure 7), and nonmanagement staff work 41 hours per week (see Figure 8); both figures decreased slightly from last year. In Canada, work hours also decreased slightly for management: Managers work 43 hours per week, on average, down from 44 hours; while nonmanagement staff work 40 hours, the same as last year.


FIGURE 6: Percentage of Accounting and Finance Function Staff Who Are Temporary, Contract or Project Professionals, by Company Size and Location (by quartile)

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Bottom quartile 5% 5% 3% 2% 3% 5% 2% 5%

Median 10% 8% 5% 5% 5% 8% 7% 5%

Top quartile 20% 10% 11% 10% 7% 10% 15% 10%

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40

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medianaverage

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Canada

FIGURE 7: STANDARD WEEKLY HOURS WORKEDBY MANAGEMENT

404543

46

Average Median

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medianaverage

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FIGURE 8: STANDARD WEEKLY HOURS WORKEDBY NONMANAGEMENT

40404041

Average Median


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Points of View: Adding and Recruiting Staff Is More Challenging Financial executives said it’s difficult to recruit and retain professionals with specialized skills, especially individuals with a good balance of financial and systems knowledge. Said one executive, a director of financial planning and analysis at an information services firm in the mid-Atlantic U.S., “We would like to upgrade our staff with more analytical, technical, higher-paid individuals in order to extract more data, do more technical things and allow the systems to do more, so we’re seeking professionals with a systems-driven understanding.”

For now, the company is relying on a new enterprise performance management (EPM) system in order to do more with less, including churning out planning and forecasting information faster and with greater flexibility, even though financial headcount has not increased. “The real trend that I’ve seen in finance and accounting is that you’re seeing the lower-level positions getting eaten up by technology automation,” he added.

The scarcity of in-demand talent has prompted more and more businesses to take advantage of project-based professionals to access senior-level expertise for initiatives that are critical but of limited duration.

Here are some other strategies companies are using to do more with less and find and retain the people they need:

ENHANCED COMPENSATION

Although the Greater Boston Food Bank is a nonprofit, CFO David Noymer acknowledged that the organization has to be competitive with compensation and benefits —

and not just with other nonprofits. “We work very hard at being competitive,” he said. “We do a compensation study every other year, and we’ll periodically perform a market survey on a new position or a changed position just to validate where we should be. Beyond financial compensation, we’ve done some simple things like permitting people to wear jeans to work as long as it’s ‘situation appropriate.’ So it’s a combination of hard factors and soft factors.

“But maintaining compensation at a fair level without it being excessive is an ongoing challenge, especially in a high cost-of-living area and with high-quality competitors,” he added, referring to his organization’s location in Boston.


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Like Noymer, Robert Laverdure — who is the director of finance and operations at Cambridge School of Weston, a private school in Massachusetts — said offering competitive compensation can be a challenge when it comes to recruiting and retaining talent. He created an entry-level finance position to help bring talent into his organization, but he said staff members often get recruited away as their skills evolve. “It’s hard, because money is a big motivator, especially if you’re fresh out of college and this is your first job,” he said.

A corporate controller with a private manufacturing company in Canada said her company has likewise been focused on improving compensation.

TRAINING AND DEVELOPMENT

Along with improving compensation, companies are emphasizing training and development opportunities to attract strong candidates.

“We’re trying to invest in the right people through training, as well as lots of coaching,” noted the Canadian controller. “We’ve had to focus on helping people build their skills to be able to really retain them, because we can’t compete with some of our large industry competitors when it comes to compensation. For example, I have a candidate who is temporarily helping me out, and she’s potentially willing to stay long term, even though the position’s at a lower level than she’s had in the past. She likes the fact that she gets a lot of one-on-one coaching and likes the people in the organization.”

Laverdure said, “I do a lot of mentoring and helping people grow in ways that are not necessarily tied to more money and create opportunities to expose people to different work.” Laverdure also tries to emphasize the quality-of-life aspect of working for a nonprofit, but acknowledges the importance of compensation. “At some point, you have to put money behind employee retention.”

“One of the things we’re doing to try to attract the right talent is not just raising the profile of the position but also increasing the compensation plan for it. We’re realizing that we need that specialized person.”

— Corporate Controller Private Manufacturing Company Canada


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A controller at a small supply company in the Midwestern U.S. that relies heavily on skilled manufacturing workers said his company has become increasingly receptive to hiring less experienced employees and helping them develop the skills they need. “We’re doing our best to find good people and develop them, but sometimes it’s even hard to find those people. We’ve been working with colleges in the area, and even high schools, to create a pool of people who know about our company. But we have a couple of skilled positions we need to hire for right now, and it’s very challenging.”

ENTICING OPPORTUNITIES

Keith Randall, CFO of Playtime, a private manufacturing company in Colorado, noted that the low unemployment rate for accounting and finance professionals adds to the recruiting challenge, especially in the Denver area where his company is based.

“To be able to recruit, you need to be able to, number one, make sure you have a good story to tell about the company so you attract talent who are willing to leave where they are currently,” he said. Number two, you have to be able to offer an opportunity for people that is going to be different from what other companies are offering.” As an example, Randall explained that he lets recruits know that he doesn’t expect the hours that some area competitors require. “We tell them, ‘We’re not going to expect you to work 12-hour days for three weeks out of four. We’re going to put things in front of you that are logical and make you a part of the process.’ And so, I think that’s key.”

TECHNOLOGY AS A TEMPORARY BUFFER FOR RISING EMPLOYMENT COSTS AND STAFF SHORTAGES

Some respondents said their workforce challenges go beyond today’s recruiting difficulty to include an inability to add resources at all. One respondent said, “There’s more demand being put on accounting and finance to deliver, despite not having additional resources. And the more you put out better reporting, greater results, more detailed analysis, the greater the need for it becomes. And yet our resources aren’t expanding.”

As mentioned earlier, efficiencies fueled by technology are helping to offset rising employment-related costs and the inability, in some cases, to add staff.

Although technology is helping accounting and finance departments compensate for not having additional resources, technology alone cannot be the final solution, of course. Companies must continually capitalize on growth opportunities and launch new revenue-generating initiatives. And that requires having the right people in place. The need for staff representing a full spectrum of skills is more critical as CFOs and other finance leaders take on additional responsibilities and become increasingly involved in the operational aspects of the business. To attract standout professionals, executives must come up with creative recruitment strategies and seek help when they need it.


https://www.roberthalf.com/accountemps/employers/hiring-tips/how-to-hire-an-employee

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Takeaways• Recruiting skilled professionals remains challenging

in an environment of low unemployment for accounting and finance professionals.

• Companies are aiming to ensure that they’re offering competitive compensation and benefits as a primary means of attracting financial talent. Positions that emphasize career development opportunities, an appealing work environment and good work-life balance can be especially enticing.

• Executives said that although it may cost more to hire and retain financial professionals, their departments have found savings through technology upgrades and process improvements, which helps to keep finance costs in line.

• Businesses continue to use temporary staff and project professionals to supply specialized skills, such as systems upgrade help. Temporary professionals are also brought in to provide backup support for employees and, sometimes, as a means of evaluating professionals for full-time positions.



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Key Data Findings• The largest percentage of survey respondents had

100 to 500 active general ledger accounts.

• Slightly more than half of U.S. (52 percent) and Canadian (55 percent) companies rely on manual reconciliation of accounts.

• Whether they are largely automated or lean more toward manual reconciliation practices, companies seem generally satisfied with their timeliness for closing the books and compiling year-end financial information.

Discussion and AnalysisCompanies may be trying to practice simplicity when it comes to general ledger (GL) accounts. Our survey has shown a slight but steady downward trend line in the number of GL accounts since 2014. The largest percentage of companies in both the U.S. and Canada said they have 100 to 500 GL accounts. The number of GL accounts rises somewhat with company revenue size, however (see Figure 9). For instance, 9 percent of companies with $5 billion or more in revenue have more than 10,000 GL accounts.

ACCOUNTING OPERATIONS

FIGURE 9: Number of Active General Ledger Accounts, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


100-500 86% 60% 50% 43% 41% 27% 69% 64%

501-1,000 9% 23% 28% 29% 23% 18% 18% 17%

1,001-3,000 4% 11% 13% 17% 15% 18% 8% 12%

3,001-5,000 0% 3% 3% 9% 8% 27% 2% 4%

5,001-10,000 0% 2% 3% 3% 8% 2% 1% 1%

More than 10,000 1% 2% 3% 0% 5% 9% 2% 2%

Among executives surveyed this year, 10 percent in the U.S. and 13 percent in Canada indicated they reconcile more than 500 accounts at least quarterly (see Figure 10). This number increased slightly for Canadian companies, up from 12 percent in 2015, but decreased for U.S. companies (from 17 percent last year).


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FIGURE 10: General Ledger Accounts Reconciled at Least Quarterly, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


100-500 93% 91% 87% 71% 56% 36% 89% 88%

501-1,000 5% 5% 9% 20% 26% 9% 6% 10%

1,001-3,000 1% 3% 2% 6% 8% 27% 3% 2%

3,001-5,000 0% 0% 1% 3% 10% 18% 1% 1%

5,001-10,000 0% 0% 1% 0% 0% 0% 0% 0%

More than 10,000 0% 0% 0% 0% 0% 9% 0% 0%

The high volume of reconciliations has an impact on accounting and finance departments because the process remains labor-intensive and often manual. In fact, more than half (52 percent) of U.S. executives said their reconciliation process is manual (see Figure 11). But that percentage has steadily declined over the past two years, from 54 percent last year and 59 percent in 2014. Among Canadian companies, 55 percent said they reconcile accounts manually, the same percentage as in last year’s survey.

Manual reconciliation of accounts can place a burden on finance departments and take away from their ability to engage in more value-added analysis. Nonetheless, many companies are meeting generally accepted benchmarks for closing the books, whether their process is mostly automated, partially manual or largely manual (see Figures 12A, 12B, 12C).

“We’ve automated quite a bit through implementation of a general ledger system, but there is still a manual review for quality assurance of what’s been done with the reconciliation. So you still have to go through that process and make sure your aggregates net out and that type of thing, but, by and large, it’s very much automated now.”

— Gil Darnley Senior Project Manager/Corporate Governance Ontario College of Trades, Toronto



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do not use toolthird party softwaredeveloped internally

FIGURE 12A: TOOL/SYSTEM USED FOR ACCOUNT RECONCILIATION, BY COUNTRY

24%20%

52% 55%

24% 24%

Developed internally Third-party software Manually reconcile/ Do not use a tool or system

United States

Canada

FIGURE 11: Tool/System Used for Account Reconciliations, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Developed internally 23% 27% 23% 23% 26% 18% 24% 24%

Third-party software 29% 17% 17% 26% 26% 36% 24% 20%

Manually reconcile/ Do not use a tool or system

48% 55% 60% 51% 49% 45% 52% 55%



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FIGURE 12C: WORKING DAYS TO CLOSE THE BOOKS (MEDIAN)

7

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15

20

7 8

United States

Canada

Monthly Quarterly Annually

FIGURE 12B: WORKING DAYS TO CLOSE THE BOOKS (AVERAGE)

912

25 27

810

Monthly Quarterly Annually

United States

Canada



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Points of View: Speed of the Closing ProcessSurvey respondents who participated in interviews seemed satisfied for the most part with their organizations’ ability to close the books and produce financial statements in a timely manner.

“We’ve gotten quicker over time, but we’re not looking to advance it any further than where we are now,” said David Noymer, CFO of the Greater Boston Food Bank, a nonprofit organization. “We are comfortably on a public company reporting calendar. They have to do it within 90 days. We’re going to be before our board of directors on the 75th day. And we’re probably even a little better than a public reporting calendar, because we’re going to be in front of our board with audited financial statements and 990s completed for their review, which are the tax returns for nonprofits. Also, we receive over $750,000 in federal money, so we have an A-133 audit that will be before the board, as well. So everything is going to be signed, sealed, delivered and done on the 75th day — with no audit adjustments and no management findings.”

Dave Sackett, corporate controller at ULVAC Technologies, Inc., a public manufacturing and distribution company in Methuen, Massachusetts, described a similar timeline. “I would say it takes about 90 days to produce our annual financial statements. It has just decreased because of our new ERP (enterprise resource planning) system, where we can pull information up quickly. And we’re also utilizing Box.com, which is a cloud-based storage spot for our account reconciliations, footnotes, draft financials — anything our auditors need to see — and they can access it no matter where they are in the world.”

Robert Laverdure, director of finance and operations at Cambridge School of Weston, said his private educational institution in the Boston area produces annual financial statements in about 31 days, which is noteworthy given their limited resources.

Several CFOs of private companies reported time frames of about two weeks to produce annual financial statements. “We got it done in two weeks last year for our annual statements, and that’s been reduced by about 30 percent,” said Keith Randall, CFO of Playtime, a private manufacturing company in Englewood, Colorado.

Respondents attributed their timeliness to two primary factors:

Process analysis and improvement “I think our speed is the result of putting processes in place that spelled out what it is we wanted to do,” Randall said. He came to his current role about two years ago from a large public company that closed the books in one day, and he has tried to apply some of the practices learned there to his new role. He’s done this through process improvement: studying the upstream and downstream activities and the inputs and outputs and their timing, including what can be completed ahead of time.



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“My goal has been to put staff in place with the skills that allow us to get back to a one- or two-day closing,” Randall added. “We’re at a five-day right now in an ordinary month. But the goal is to get it down to a one- or two-day close.”

Upgraded employee skills Laverdure struck a similar note about focusing on improving processes and upgrading skills. He also attributes the smoother close to having more experienced staff members. “The auditors typically come near day 31; we have draft financials ready for them, then they have a five-day fieldwork endeavor, and we’re done. So I think it really is about recruiting and retaining the right people. Folks who are committed for the long term build institutional knowledge that makes the job easier from year to year, and I think having the right skill set and a mindset for growth makes the difference as well.”

Although finance departments regularly benchmark the speed of the closing process, speed isn’t always an ideal barometer of effectiveness. Some finance departments have more of a need for a speedy close than others, and a smooth, error-free close is preferred over one that is rushed and riddled with problems.

Takeaways• Manual reconciliation of accounts can place

a burden on finance departments and take away from their ability to engage in more value-added analyses.

• Automation of the account reconciliation process is a worthwhile goal, but executives said there would likely continue to be some accounts that require a manual approach.

• Many financial executives believe that by speeding the closing process, they can free up finance staff to focus on more value-added work, such as conducting analysis and delivering more forward-looking financial information. They can also free up core staff with the judicious use of interim professionals.



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A Hybrid ApproachHow Realistic Is a Fully Automated Reconciliation?

Financial executives described a largely automated accounts reconciliation process at their companies, but they acknowledged that there continues to be an ongoing need for some degree of human or “manual” intervention to perform oversight and make judgments. Thus, most companies seem to have a hybrid or mixed approach to reconciling accounts.

“We’ve automated quite a bit through implementation of a general ledger system, but there is still a manual review for quality assurance of what’s been done with the reconciliation,” said Gil Darnley, a senior project manager overseeing corporate governance at the Ontario College of Trades, a nonprofit regulatory organization. “So you still have to go through that process and make sure your aggregates net out and that type of thing, but, by and large, it’s very much automated now.”

Keith Randall, CFO of Playtime, a private manufacturing company in Colorado, agreed: “I’m interested to see whether somebody has a [fully] automated process, because, ultimately, there has to be logic around the process. It can’t just be a regurgitation of the transaction. There has to be, ‘What is the right answer?’ And then, ‘How do you know from month to month whether that answer is still correct?’”

Dave Sackett, corporate controller at ULVAC Technologies, Inc. in Massachusetts, said that his group’s approach to accounts reconciliation is a mix. “We have automatic subledgers in many accounts, and they are dictated by the ERP system. Anything that has a journal entry hit to it is manually reconciled. Right now, moving that to fully automated is just not in the cards.”

Generally speaking, financial executives are open to automating the reconciliation process as much as possible with products from companies such as Oracle, BlackLine and Trintech, among many others, but some said their teams are faring pretty well with a largely manual approach. Nonetheless, to the extent they can find the financial and human resources to move toward automation, several said they might do so.

At the Greater Boston Food Bank, CFO David Noymer said accounts reconciliation is still a manual process at his small organization of about 100 people, with four people dedicated to the accounting function. “Would we look at it? Sure,” Noymer said. “Is it an absolute must-have, can’t live without? No, we’re doing fine. If we can deliver financial statements in eight working days every month and audited financials in 70 working days at year-end, and we’re doing it all manually, then we are in good shape. Certainly if we could make people more efficient, we’d love to. And automated account reconciliation is something.”



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Key Data Findings• Acceptance of cloud-based solutions in the financial

function seems to be increasing: 62 percent of U.S. respondents said they’re either using cloud-based solutions or plan to in the future, compared to 51 percent in last year’s survey.

• Canadian respondents have been somewhat slower to embrace cloud-based solutions, with only 47 percent saying they use some or only cloud-based technology or are planning to in the future. More than half (53 percent) of Canadian respondents said they don’t currently use cloud-based solutions and don’t plan to in the future.

• The percentage of U.S. companies using an on-premises ERP system as their primary financial system dropped considerably this year, to 32 percent from 53 percent in 2015 and 78 percent in 2014, a likely response to the growing use of cloud technology.

Discussion and Analysis

CLOUD-BASED SOLUTION

With many businesses demonstrating a growing acceptance of cloud computing, this year’s survey asked financial executives whether their companies were using cloud services in their accounting and finance departments or planning to do so (see Figure 13). Nearly half (42 percent) of U.S. respondents said they are using at least some cloud-based solutions, while 20 percent reported they are planning to in the future. More than a third (37 percent) said they have no plans to adopt cloud-based computing solutions.

Usage rates and interest were lower among Canadian respondents: Slightly more than one-quarter (27 percent) said they’re using some or only cloud solutions, 20 percent said they plan to in the future and 53 percent said they have no plans to do so.

When those using cloud-based solutions were asked what percentage of their financial systems are being managed in the cloud, a larger percentage of U.S. companies said they’re using the cloud for these systems — a median of 45 percent of U.S. firms versus a median of 30 percent of Canadian firms (see Figure 14).

FINANCIAL SYSTEMS

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FIGURE 13: Use of Cloud-Based Solutions for Financial Functions, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Use only cloud-based solutions 11% 10% 5% 3% 3% 0% 9% 6%

Use some cloud-based solutions 30% 29% 27% 37% 51% 18% 33% 21%

Do not currently use cloud-based solutions but plan to in the future

17% 22% 28% 17% 16% 27% 20% 20%

Do not currently use cloud-based solutions and do not plan to in the future

42% 40% 40% 43% 30% 55% 37% 53%

ERP SYSTEMS

The percentage of respondents who use an on-premises ERP system as their primary financial system declined considerably this year, a possible response to the growing use of cloud-based solutions and the overall increase in technology investments reported by many companies. U.S. companies included in the survey who use an on-premises ERP system as their primary financial system dropped to 32 percent in this year’s survey from 53 percent last year. The use of on-premises ERP systems among Canadian firms surveyed also decreased this year, to 42 percent, compared to 58 percent in 2015 (see Figures 15A, 15B).

FIGURE 14: Percentage of Financial Systems that Are Cloud-Based Solutions, by Company Size and Location (by quartile)

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Bottom quartile 20% 15% 10% 10% 9% 8% 10% 10%

Median 50% 30% 25% 15% 10% 10% 45% 30%

Top quartile 94% 90% 75% 55% 50% 13% 85% 75%

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30

40

50

FIGURE 15A: Primary Financial System Used, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


On-premises ERP 17% 42% 52% 54% 73% 73% 32% 42%

Cloud ERP 12% 10% 11% 11% 16% 0% 12% 9%

Stand-alone accounting system 66% 40% 27% 31% 8% 18% 49% 45%

Other 5% 8% 9% 3% 3% 9% 7% 5%

FIGURE 15B: PRIMARY FINANCIAL SYSTEM USED, BY COUNTRY

42%

49%45%

7% 5%

32%

9%12%

On-premises ERP Cloud ERP Stand-aloneaccounting system

Other

United States

Canada

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FIGURE 16: Leading Brand of ERP or Cloud ERP System Used, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


SAP 4% 5% 5% 27% 19% 43% 5% 10%

Oracle/PeopleSoft/JD Edwards 4% 7% 22% 35% 50% 57% 13% 18%

Microsoft Dynamics(AX, GP, NV, SL)

24% 18% 21% 12% 11% 0% 19% 21%

NetSuite 8% 7% 1% 4% 3% 0% 6% 6%

Financial Force 0% 0% 0% 0% 0% 0% 0% 0%

Workday 0% 0% 0% 4% 0% 0% 0% 0%

Other 60% 63% 51% 19% 17% 0% 56% 46%

When it comes to ERP systems, companies have varied allegiances to some of the most well-known brands or systems, and certain brands seem to be favored, depending on company size. In addition, many companies, especially in the lower revenue ranges, selected “other” as their system, which might indicate a more customized or hybrid solution (see Figure 16).

BUDGETING AND LONG-RANGE PLANNING TOOLS

When it comes to budgeting and long-range planning tools, Microsoft Excel continues to dominate: 68 percent of U.S. companies and 78 percent of Canadian firms rely on Excel for budgeting and planning (see Figure 17). While Excel is frequently used by accounting and finance professionals at businesses of all sizes, the survey responses indicate that it is especially popular with companies in the lower revenue ranges. For instance, more than three-quarters (77 percent) of businesses with less than $25 million in revenues said they use Excel for budgeting and planning.

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FIGURE 17: Leading Brand of Budgeting and/or Planning Tools Used, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


IBM/Cognos 1% 0% 2% 5% 7% 13% 1% 2%

Oracle/Hyperion 1% 3% 7% 20% 22% 25% 5% 2%

SAP/BPC 0% 1% 3% 5% 9% 6% 1% 2%

Microsoft Excel 77% 70% 60% 56% 48% 44% 68% 78%

Internally developed/Legacy tool 10% 9% 11% 5% 10% 6% 10% 7%

Other 10% 17% 17% 10% 3% 6% 14% 8%

Points of View: Cloud Computing Gaining Greater AcceptanceOne notable difference from last year’s survey is that financial executives interviewed this year seemed considerably more comfortable with using cloud-based solutions for their accounting and financial data. Most have adopted or expanded the use of cloud-based systems and software — or they’re actively exploring their options in this area.

CLOUD PROPONENTS

“We are using cloud in the accounting and finance function,” said Dave Sackett, corporate controller at ULVAC Technologies, Inc., a public company in Massachusetts. “I’ve researched it, and the risk of me having the data here in my network behind a firewall is just as great as [having it] in the cloud. Here, my resources may be limited to defend against attacks. A cloud company should have the resources in place to really protect against hacking and breaking in. So the mindset has changed over the years to allow us to use a cloud service.”

Sackett said his company’s next IT project is to move its ERP system to the cloud and gradually reduce on-site servers, “so our network files and ERP system will transition to the cloud.”

Keith Randall, CFO of Playtime, a private manufacturing company based in Colorado, said his firm implemented a new ERP system, NetSuite, which is cloud-based. “I think everybody was on board with it. The encryption and so forth that NetSuite offers appears to be robust.”

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Other executives are wading into the usage of cloud-based solutions by moving certain processes to the cloud, but not others. One executive, a director of financial planning and analysis at an information services firm in the mid-Atlantic U.S., said his company had recently implemented Host Analytics, an EPM system that they’re continuing to develop into a robust solution. They also use Coupa, a cloud-based technology for procure-to-pay solutions, and an older web-based ERP system, which is hosted remotely. They have an eye toward adopting SAP in the near future, but he doesn’t think it will be a cloud-based solution.

Another executive said his company is using cloud hosting only for the payroll process, because the business is too small to achieve any return on investment by having local hosting of the payroll system, “but future processes are going to be cloud.”

UNDECIDED ON THE CLOUD

On the other hand, the corporate controller of a private manufacturing company in Canada said she and other financial executives at her firm remain reluctant to move to the cloud because of security, cost and resource concerns.

“I’m still not 100 percent convinced that my data in the cloud would be as stable or as secure as I would like it to be,” she said. “But the other part of it is that moving to a new platform just takes considerable time and resources, and I don’t think our IT department may have either.

“I think it comes down to spending our dollars on the most worthwhile projects. We have a fair amount of IT-related upgrades that are necessary, and considering what it would cost to move to a cloud-based system, I don’t think that it would be the smartest move for where my organization is today.”

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David Noymer, CFO of the Greater Boston Food Bank, has had to balance similar concerns when it comes to technology investments. “In our case, it’s less about the funding and more about the team needed to implement a solution; so two things: the manpower or brainpower to get it done and, second, the corporate goal or initiative. But I think we understand as an organization that technology will help us do what we do better, so this year we’re actually prepared to make some fairly meaningful investments in technology,” he said.

“We’re contemplating a platform change,” Noymer continued. “We’re going to certainly look carefully and seriously at cloud-based applications and follow the guidance of an outside consultant. I would say if I have a predisposition, there are some awfully attractive cloud solutions out there that I’m very interested in learning more about.”

Noymer said his organization doesn’t have reservations about risks associated with cloud technology, partly because their nonprofit organization operates in a highly transparent environment. “Our financials are out there for the world to see. We’ve got little to hide. Our payroll is done in the cloud, as is just about everybody’s, so I’m not worried. If somebody learns what our fixed assets are, bless them. They’ve got less to do than I do.”

Takeaways• Financial executives interviewed noted that

their companies have increased investments in technology over the past year. Some have adopted or expanded their use of cloud-based systems, while others have implemented or upgraded ERP systems, some of them cloud-based.

• Financial executives seem less concerned this year about moving sensitive financial or customer data to the cloud. Several suggested that on-site servers might be more vulnerable than cloud-based options and also more onerous to maintain.

• Microsoft Excel remains a popular tool for budgeting, planning and analysis among finance departments, due to its flexibility and ease of use.

• Experienced project-based consultants can assist companies in choosing the right financial systems upgrades.

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Key Data Findings• Tax and payroll remain the two most commonly

outsourced functions among U.S. and Canadian companies.

• Companies of all sizes see benefits to outsourcing payroll. For smaller companies, lack of internal staff or expertise is often the driver. For larger companies, the complexity of performing payroll in multiple countries and tax jurisdictions is often a key factor in the decision to outsource payroll.

• Some companies also see benefits in outsourcing activities that are somewhat unique to their businesses, such as the collection of or processing of certain types of payments or compliance activities.

Discussion and AnalysisAs in years past, tax and payroll are the two leading outsourced functions for U.S. companies, garnering 43 percent and 39 percent of total responses, respectively (see Figure 18). Among Canadian companies surveyed, 44 percent said they outsource tax preparation, while 37 percent outsource payroll.

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FIGURE 18: Outsourced Functions, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


A/P 2% 1% 2% 0% 22% 44% 3% 1%

A/R 1% 0% 1% 0% 9% 0% 1% 1%

General accounting 1% 2% 3% 0% 4% 11% 2% 3%

Internal audit 4% 5% 11% 18% 9% 11% 6% 8%

Payroll 43% 39% 33% 36% 26% 33% 39% 37%

Tax 42% 47% 44% 43% 17% 0% 43% 44%

Treasury 2% 2% 2% 0% 9% 0% 4% 3%

Other 4% 4% 3% 0% 4% 0% 2% 3%

NOTE: Because shared services centers (see Figure19) handle operational tasks — such as accounting, purchasing and human resources — internally in the companies where they exist, they do not represent outsourcing in the most common sense. Outsourcing typically involves a third party. We have titled this section simply “Sourcing” to cover both. Larger companies are more likely to use shared services centers, and smaller companies are more likely to go with a payroll service provider, for instance, which is true outsourcing.

A majority (86 percent) of U.S. companies surveyed that use a shared services center reported that the center is located in the U.S. (see Figure 19). This percentage increased slightly, from 82 percent in last year’s survey. Eighty-three percent of Canadian companies with shared services centers maintain them in their home country, up from 79 percent last year, with another 14 percent located in the U.S. (see Figure 19), up slightly from 9 percent in last year’s survey. Again this year, the survey confirmed a steady trend toward locating shared services centers in a company’s home country, or at least on the North American continent, as is the case with some Canadian companies.

Sourcing

FIGURE 19: Locations of Shared Services Centers, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


U.S. 74% 69% 71% 50% 58% 58% 86% 14%

Canada 20% 20% 14% 27% 11% 8% 2% 83%

South America 1% 1% 2% 0% 6% 0% 1% 2%

Europe, Middle East, Africa 3% 5% 5% 13% 8% 17% 5% 0%

Asia-Pacific 2% 1% 3% 10% 8% 0% 2% 0%

India 0% 1% 4% 0% 6% 17% 2% 1%

Mexico 1% 2% 0% 0% 3% 0% 1% 0%


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With both U.S. and Canadian companies, more functional areas are being managed through a shared services center. As in years past, general accounting, A/P, A/R and payroll functions were the most likely to be consolidated, although the functions managed through a shared services center are becoming more dispersed (see Figure 20).

FIGURE 20: Functions Within Shared Services Centers, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


A/P 19% 20% 18% 14% 19% 24% 19% 19%

A/R 18% 20% 17% 15% 15% 8% 18% 17%


Internal audit 7% 5% 6% 10% 9% 4% 6% 6%

Payroll 15% 15% 15% 14% 12% 20% 15% 15%

Tax 8% 8% 10% 14% 11% 4% 8% 0%

Treasury 10% 10% 14% 14% 15% 8% 11% 12%

Other 3% 3% 2% 3% 3% 4% 3% 2%Sourcing

Points of View: Sourcing Provides Efficiencies, Peace of MindPayroll and tax preparation are the business areas most likely to be outsourced by financial executives, which is consistent with previous years’ studies. Several executives said they have a greater level of comfort by outsourcing these specialized and continually evolving aspects of their business. They also noted that they can receive a better return on their investment than if they tried to handle these areas in-house.

“The rules change all the time, and it would be tough to have someone here stay on top of all those changes, so [we outsource payroll and tax] more from a liability point of view,” said Dave Sackett, corporate controller for ULVAC Technologies, Inc., a public manufacturing

and distribution company in Massachusetts. “I’d rather have a third party do that and not reflect poorly on my department should something go awry.”

Carl Gauvreau, CFO of Knowlton Development Corporation based in Quebec, said outsourcing payroll simplifies the process for his company. “We operate in five states in the U.S. and two provinces in Canada, so it’s a challenge to have people who can keep up to date with new taxes that change all the time — like Obamacare in the U.S., and so on. We prefer to use an outside party; however, we feel the way to do this is to add maybe one or two people internally to coordinate with the outside party. So, we input the transaction here, but then the processing is done externally.”


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David Noymer, CFO of the Greater Boston Food Bank, said his organization outsources payroll, “but it’s really a lot more than payroll” in that it includes human resources information systems (HRIS) features, such as timekeeping software, applicant tracking and performance management, all of which is cloud-based.

“We’re looking for the best way to do whatever it is we do,” Noymer said. “And if it means outsourcing, great, we’ll do it. We’re looking to be cost-effective and really smart about what we do. I don’t care how we do it, as long as we do it as best we can and try to improve what we do all the time.”

Some executives said they also outsource specialized functions that make sense for the nature of their organizations. For example, Robert Laverdure, director of finance and operations at Cambridge School of Weston in Massachusetts, said his private school outsources its tuition payment collection system. “They handle the front line and first efforts at collecting past-due amounts; 99 percent of those get taken care of before they land on my desk, resulting in just a handful that I deal with every year. I also outsource preparation of the Form 5500 and all of the discriminatory testing that goes along with each of those plans.”

Like other organizations, the private school also outsources payroll, which ensures timeliness and compliance with payroll regulations. “If there’s ever been a discrepancy, they’re quick at responding, and

they resolve it right away. That’s the essence of what I need outsourcing to look like — it really has to be hassle-free. If I outsource something and have to come back to the table and provide clarity, direction and missing information that might be specific to our community or our organization, that’s problematic. For me, the benefit of outsourcing is that I don’t want to worry about it,” Laverdure said.

Takeaways• Business functions that require staying

abreast of highly specialized knowledge and frequently changing regulations, such as payroll and taxes, are the most likely to be outsourced, to either a shared services center or a third-party service provider.

• Activities that involve repetitive processes with frequent cycles, such as recurring payments that may be specific to an industry, may also be good candidates for outsourcing.

• Generally speaking, businesses indicated that they’re comfortable and satisfied with the service quality they receive from their outsourcing providers.

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Key Data Findings• The finance function — and, in many cases, its

certifying officers who must sign the internal control report — is the most likely organization to have primary responsibility for the overall effectiveness of internal control over financial reporting (ICFR).

• Those tasked with financial reporting duties are the most likely to bear responsibility for executing compliance with the Sarbanes-Oxley Act (SOX) or similar mandates.

• The number of key internal controls documented in ICFR frameworks decreased somewhat from last year. Eighty-three percent of both U.S. and Canadian companies surveyed had 100 or fewer key controls.

• For the third consecutive year, more companies reported that cost of compliance requirements had remained steady, rather than rising. Nonetheless, over the next three years, more than half of both U.S. and Canadian companies expect their compliance burden will increase.

Discussion and AnalysisU.S. executives surveyed cited various functional areas as having primary responsibility for the overall effectiveness of ICFR. The largest percentage of U.S. companies (38 percent) indicated that their certifying officers who sign the internal control report (CEO and/or CFO) are responsible, while 33 percent reported the same in Canada (see Figure 21).

INTERNAL CONTROLS AND COMPLIANCE

FIGURE 21: Primarily Responsible for Overall Effectiveness of Internal Control over Financial Reporting, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Audit committee 9% 6% 9% 23% 12% 9% 8% 11%

Certifying officers who sign the internal control report (CEO and/or CFO)

38% 36% 37% 34% 32% 45% 38% 33%

Finance function 36% 40% 37% 31% 26% 27% 36% 38%

Financial reporting 8% 12% 8% 3% 9% 0% 8% 13%

Internal audit 2% 2% 6% 6% 21% 9% 5% 1%

Other 7% 4% 3% 3% 0% 9% 5% 4%



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Consistently across both U.S. and Canadian companies — 42 percent and 51 percent, respectively — the financial reporting function is primarily responsible for executing the SOX compliance management process or similar mandate (see Figure 22).

Additionally, the financial reporting area is also the majority owner of the design and operating effectiveness of specific key internal controls — 46 percent for U.S. firms and 47 percent for Canadian companies (see Figure 23).

FIGURE 22: Primarily Responsible for Executing SOX Compliance Management Process, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Finance projects 5% 3% 4% 0% 4% 0% 4% 0%



Internal audit 5% 7% 17% 38% 38% 0% 13% 9%

Separate SOX project management organization

14% 11% 9% 0% 0% 0% 4% 5%

Other 2% 1% 0% 25% 4% 38% 9% 14%

FIGURE 23: Owns Responsibility for Design and Operating Effectiveness of Specific Key Internal Controls, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over



Individuals directly responsible for executing the controls

28% 26% 18% 32% 18% 9% 25% 26%

Internal audit 2% 3% 8% 6% 21% 9% 4% 4%

Owners of applicable business processes in which controls reside

17% 18% 18% 21% 29% 45% 18% 19%

Other 6% 6% 7% 0% 3% 0% 6% 4%



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Eighty-three percent of both U.S. and Canadian companies surveyed had 100 or fewer key controls (see Figure 24). The steady decrease in recent years in the number of key internal controls suggests that companies continue to work toward streamlining the number of controls they have in place by reducing redundancies and generally striving to make compliance activities more efficient.

Currently, half of U.S. companies (50 percent) expect that their cost of compliance requirements will remain steady, but almost as many (48 percent) expect compliance costs to rise. Canadian companies seemed slightly more optimistic, with more than half (57 percent) expecting the cost of compliance requirements to remain steady and 41 percent expecting them to rise (see Figure 25).

Over the next three years, both U.S. and Canadian firms said the compliance burden is likely to rise. Roughly two-thirds (68 percent) of U.S. companies and 60 percent of Canadian firms cited this response (see Figure 26).

FIGURE 24: Number of Key Internal Controls Documented in Internal Control over Financial Reporting Evaluating Framework, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Less than 101 93% 86% 83% 28% 46% 44% 83% 83%

101–250 6% 10% 15% 44% 25% 11% 13% 8%

251–500 0% 2% 3% 20% 21% 22% 3% 7%

501–1,000 0% 1% 0% 4% 7% 11% 1% 2%

More than 1,000 0% 1% 0% 4% 0% 11% 1% 0%


FIGURE 25: Cost of Compliance Requirements Impact on Accounting and Finance, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Rising 44% 46% 48% 54% 56% 73% 48% 41%

Falling 1% 2% 3% 3% 0% 0% 1% 2%

Staying steady 55% 53% 49% 43% 44% 27% 50% 57%


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FIGURE 26: Compliance Burden over the Next Three Years, by Company Size and Location

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Rising 64% 66% 69% 77% 71% 100% 68% 60%

Falling 2% 1% 1% 6% 3% 0% 2% 2%

Staying steady 35% 33% 29% 17% 26% 0% 30% 39%

Points of View: Compliance Has Its RewardsComments from survey respondents suggest that mandates related to SOX and Bill 198, its Canadian counterpart, have largely become second nature for their companies. Several U.S. respondents noted, however, that a newer compliance challenge has been meeting the payroll reporting requirements associated with the Affordable Care Act (ACA).

“I made a very clear decision to outsource the administration of the ACA requirements from the get-go, because it was new and complex, and I wanted the best possible outcome for full compliance,” said Robert Laverdure, director of finance and operations at Cambridge School of Weston.

Another financial executive said he expected his company to face some challenges implementing the new standards around revenue recognition and sales compensation, but the private company he works for doesn’t have to contend with too many compliance issues, for the most part.

Financial executives acknowledged that there are some benefits to having an improved control environment. In fact, some private company financial executives said their companies had voluntarily enhanced their standards, either with an eye toward eventually going public or to provide greater confidence to stakeholders.

“Where we do feel a greater compliance burden, it’s driven more internally than externally. Improved business processes and better controls are definitely what’s driving us,” said the corporate controller of a private manufacturing company in Canada. “We’ve really made an effort in the last year of moving to a place where we can reduce, for example, the number of audit points mentioned in our audit that need attention. Ensuring that the board has confidence in our organization has been one of our drivers toward some of these additional compliances.”

Dave Sackett, corporate controller at ULVAC Technologies, Inc. in Methuen, Massachusetts, noted that his finance department got approval for a new ERP system to help manage compliance initiatives. “That’s



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a big plus. It makes us more knowledgeable. We also have more controls in place, so there is some benefit to compliance,” he said.

Carl Gauvreau, who is the CFO at Quebec-based Knowlton Development Corporation, a private manufacturing company, agrees. “We definitely expect to see better productivity as a result of increased compliance,” Gauvreau said. “By centralizing certain processes, you put one standard in place, so you have one documentation process to do and one set of controls to test. So that’s going to be easier. At the same time, you free up your teams on the ground to offer more support to the business. That should, if not generate more productivity, at least maybe generate more return. Because we have better information, we’re more ahead of the game in terms of forecasted projections and control of capital. So I expect this to give us a better performance, maybe not in the short-term, but in the midterm.”

Takeaways• Companies of all sizes seem to be reducing

the number of key internal controls over financial reporting, suggesting that they have eliminated some unnecessary repetition and complexity and are growing more comfortable in how they establish and test controls.

• Some businesses are voluntarily adopting regulatory requirements, either in an effort to provide stakeholders with greater assurance in their operations or possibly to position the business for a sale or future initial public offering.

• Many firms are using senior-level interim consultants to help them maintain regulatory compliance.



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The findings in this report allow senior financial executives to quickly and easily make comparisons and get a better sense of how their finance function operates in relation to their peers. Financial leaders should be able to gain a glimpse into the successes and struggles that other accounting and finance departments are facing when it comes to aligning technology, knowledge, and human and financial resources to respond to the growing demands accounting and finance departments face. Areas where shortcomings appear can then be targeted for improvement.

Research Methodology and Respondent DemographicsFrom September 2015 through November 2015, Financial Executives Research Foundation (FERF) and Robert Half conducted their seventh annual benchmarking survey of accounting and finance departments at more than 1,700 public and private companies, mainly in the U.S. and Canada. The data contained within this report was compiled from U.S. and Canadian responses to a 39-question online survey. Slightly less than a quarter (24 percent) of respondents identified themselves as CFOs, and most (77 percent) are located in the U.S., while 20 percent are in Canada. Two-thirds of respondents are private

companies (66 percent), while 16 percent are public companies. More than three-quarters of respondents (84 percent) said their company’s annual revenue is under $500 million.

The most broadly represented industry is manufacturing (23 percent), followed by services (12 percent). Additionally, the survey also looked at the number of business divisions/units of respondent companies; whether they have centralized or decentralized finance functions; and where their finance and accounting operations are based. The charts and graphs that follow represent the demographic profile of respondents.

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Number of Divisions/ Business Units

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


1 33% 12% 9% 1% 6% 1% 20% 16%

2–10 60% 67% 58% 42% 42% 33% 57% 62%

11–20 4% 14% 19% 28% 16% 9% 12% 12%

21–30 2% 3% 4% 7% 9% 10% 3% 4%

31–50 0% 1% 5% 9% 11% 6% 2% 3%

50 or more 1% 3% 5% 13% 16% 41% 6% 4%

Domestic/ International

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Domestic only 86% 79% 66% 49% 38% 13% 76% 69%

Domestic and international 14% 21% 34% 51% 62% 87% 24% 31%

Centralized/ Decentralized

Less than $25M

$25M– $99M

$100M– $499M

$500M– $999M

$1B– $4.9B

$5B and over


Centralized 88% 82% 65% 55% 38% 36% 77% 76%

Decentralized 3% 5% 8% 20% 8% 7% 4% 7%

Both (some functions centralized; some functions decentralized)

9% 14% 28% 25% 53% 57% 19% 18%

Throughout this report, there are tables referring to the top and bottom quartile, as well as the median. These quartiles and the median represent the three points that divide the total response rate for a given question into four groups. Each group represents a fourth of the sample group. Therefore, a response or value that is equal to or above the top quartile figure would be considered in the top or upper quartile.*

*Due to response rate variation (not every respondent answered every question) and rounding, totals may not equal 100 percent.



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About the Authors

Thomas Thompson, Jr. Thomas Thompson, Jr., is a research manager at Financial Executives Research Foundation (FERF), the nonprofit research affiliate of Financial Executives International (FEI). Thompson specializes in qualitative and quantitative research methodologies and has authored more than 60 executive reports and white papers. He earned a B.A. in economics from Rutgers University and a B.A. in psychology from Montclair State University. Prior to joining FERF, Thompson held positions in business operations and client relations at NCG Energy Solutions, AXA-Equitable and Morgan Stanley Dean Witter.

He can be reached at 973.765.1007 or [email protected].

Paul McDonald Paul McDonald is senior executive director at Robert Half (NYSE: RHI), which specializes in the placement of professionals in the accounting and finance, technology, legal, creative, and administrative fields. He writes and speaks frequently on hiring, workplace and career management topics. Over the course of more than 30 years in the recruiting field, McDonald has advised thousands of company leaders and job seekers on how to hire and get hired.

McDonald joined Robert Half in 1984 as a recruiter for financial and accounting professionals in Boston, following a public accounting career with Price Waterhouse. In the 1990s, he became president of the Western U.S., overseeing all of the company’s operations in the region. McDonald become senior executive director of Robert Half Management Resources in 2000, and assumed his current role in 2012. He earned a bachelor’s degree in business administration with a concentration in accounting from St. Bonaventure University in New York.

ABOUT THE AUTHORS

mailto:tthompson%40financialexecutives.org?subject=


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Robert Half Founded in 1948, Robert Half is the world’s first and largest specialized staffing firm, and has more than 400 staffing locations worldwide. The company’s professional staffing divisions include Accountemps®, Robert Half® Finance & Accounting, and Robert Half® Management Resources for temporary, full-time and senior-level project professionals, respectively, in the fields of accounting and finance.

Robert Half also is the parent company of Protiviti, a global consulting firm that helps companies solve problems in finance, technology, operations, governance, risk and internal audit.

Robert Half is the oldest and most respected financial recruiting firm, and has assisted businesses with their hiring needs for more than 65 years. The company is a leading resource and authority on management and workplace trends and issues impacting the accounting and finance profession.

For free resources, tools and advice, and more information about the specialized staffing and recruitment divisions of Robert Half, visit www.roberthalf.com.

Robert Half is an Equal Opportunity Employer M/F/Disability/Veterans.

Financial Executives Research Foundation, Inc. Financial Executives Research Foundation (FERF) is the nonprofit 501(c)(3) research affiliate of Financial Executives International (FEI). FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and nonmembers alike, in a variety of publication formats. FERF relies primarily on voluntary tax-deductible contributions from corporations and individuals. Publications can be ordered by logging on to www.ferf.org.

The views set forth in this publication are those of the authors and do not necessarily represent those of the FERF Board as a whole, individual trustees, employees, or the members of the Advisory Committee. FERF shall be held harmless against any claims, demands, suits, damages, injuries, costs, or expenses of any kind or nature whatsoever except such liabilities as may result solely from misconduct or improper performance by FERF or any of its representatives.

ABOUT ROBERT HALF AND FINANCIAL EXECUTIVES RESEARCH FOUNDATION

http://www.ferf.org


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Acknowledgments

Copyright © 2016 by Financial Executives Research Foundation, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means without written permission from the publisher.

International Standard Book Number 978-1-61509-206-2 Printed in the United States of America First Printing

Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by FERF, provided that an appropriate fee is paid to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923. Fee inquiries can be directed to Copyright Clearance Center at 978.750.8400. For further information, please check Copyright Clearance Center online at www.copyright.com.

Financial Executives Research Foundation (FERF) and Robert Half would like to thank the more than 1,700 finance leaders who participated in the online survey and the many executives who spoke with the authors in follow-up interviews. Their real-world experiences and comments gave us a deeper understanding of and appreciation for the role of the accounting and finance departments at companies and organizations of all sizes and the opportunities and challenges that lie ahead. While many of these executives are acknowledged within the report, others requested anonymity, yet offered valuable insights.

ACKNOWLEDGMENTS

http://www.copyright.com

https://www.facebook.com/pages/Robert-Half/182444181913924

http://www.linkedin.com/company/1681

https://twitter.com/roberthalf

http://www.youtube.com/user/RobertHalfNA

https://instagram.com/roberthalf

https://www.roberthalf.com/blog

2016 BENCHMARKING - Abacuslearn.abacus.com/rs/082-WJU-260/images/Robert-Half...As in our past benchmarking studies, this year’s findings show that larger companies — especially

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