Key takeaway: Connecting financial close and compliance can help to relieve congestion in the last mile of finance, saving days or even weeks in producing financial disclosures.
Workiva Amplify was a hands-on summit. The majority of sessions in this 17-parallel-tracks summit were hands-on sessions with Workiva, and they were packed. And the attendees were younger than other conferences I’ve participated in over the years — not counting Scouting jamborees. I’ve been to conferences with a lot of buzz, but a conference of auditors, financial managers and compliance professionals with so much energy — I haven’t experienced that before.
Throughout the summit, attendees were reminded of connected reporting, connected sheets, connected data, and linking. To get a handle on what Workiva means by “connected,” I attended a Workiva hands-on session on 10-K reporting.
For their 10-K preparations, some companies lock up the key members of the accounting staff on the entire floor of a hotel room for a week as they make the final changes of this critical report. Senior execs run room to room to make sure that everyone is in sync, and that changes made in one part of the report are also captured in other parts of the report. It’s a nightmarish week, and it’s also repeated on a smaller scale each quarter with the 10-Q reports.
In the the hands-on 10-K session, the instructor took us through how to create hyperlinks throughout the document, like between the table of contents and various headings — ho, hum – I can do that in Word, right? Now, here’s what I can’t do so easily in Word — connected data. There are data links throughout the 10-K, and if I change the source data, it changes anywhere that data is used – and it keeps a record of those changes. So, let’s say I find an ERP error in data entry in the accounts receivable of a measly $10million. I correct that, and then it ripples through to anywhere that piece of data is used –perhaps in 15 different spreadsheets (Workiva calls them “connected sheets”), the 10-K, and even the presentation to the board.
No more do senior managers and executives chase down dozens of people to make sure they incorporate the change, and no more having to take out an annual lease of a couple of floors of a mid-town hotel for their sequestered accountants. Plus, with all of this connectedness, data transfer errors are greatly reduced, thus reducing the chance of a misstatement. I later attended a SOX reporting hands-on session – same thing. This connected data and reporting made me think of the promises of robotic process automation (RPA), though, in the case of Workiva, the data and documents are either in the Workiva system or are connected through APIs, rather than an RPA tool. Still, the benefits — removing highly educated humans from boring, trivial data transfer and manipulation tasks with cheap, smart integrations between enterprise applications — are the same.
A good friend at Gartner with whom I worked on several research projects, John Van Decker, called reconciliation, close and disclosure at end of the fiscal year the “last mile of finance.” Running parallel to reconciliation and close in this last mile are the SOX and financial statement audits. It reminds me of the most horrendous last mile on the Capital Beltway around Washington, DC, where the express lanes dump into the regular lanes just a mile short of the American Legion bridge crossing the Potomac from Virginia to Maryland. It’s this last mile that Workiva is helping to run smoother.
And Workiva is not alone on the last mile challenge. At Amplify, Deloitte announced a new strategic partnership with Workiva. Speaking with Deloitte representatives, I learned that they are investing in building a number of targeted Deloitte-branded solutions on Workiva’s platform that they believe will further speed up the close process.
I’ve puzzled for years on why more GRC vendors have not invested in developing solutions for the last mile of finance, but for now, Workiva’s capabilities to link SOX compliance and audit to reconciliation, close and disclosure reporting, along with connected sheets and connected reporting are a solely Workiva differentiator in the GRC market. Workiva would do well to invest in expanding its GRC capabilities beyond its basic SOX and audit solutions, and a very basic ERM application. With a broader GRC portfolio, Workiva’s internal linking capabilities could enable better connections between risk management, compliance, audit, third party management, IT security and other GRC functions. And the linking capabilities to enterprise financial and performance management solutions could advance integrated risk management. For instance, connecting performance management and risk management by linking KPIs and KRIs could bring critical insights to decision making on both the planning and execution of strategic business initiatives.
Note: Workiva did not pay for this article; nor did anyone else. The opinions and observations in this article are mine alone and not necessarily the views of Workiva.