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Singapore C-suite execs, finance staff believe business decisions were based on inaccurate data: poll
A SURVEY of C-suite executives and financial professionals in Singapore has found more than seven in 10 respondents believe that their organisation has made significant business decisions based on inaccurate data. They identified this as a hidden problem, with close to half (45 per cent) stating concern over errors that they know must exist, but of which they have no visibility.
Some 74 per cent of respondents in Singapore believe that either they or their CEO has made a significant business decision based on out-of-date or incorrect financial data, with 18 per cent citing that this has “definitely occurred” in their organisation.
Although almost four in 10, or 36 per cent, of respondents in Singapore claim to completely trust the accuracy of their own financial data in general, the survey found "a significant discrepancy" between the views of the C-suite executives and finance professionals. While 40 per cent of C-suite respondents claimed to completely trust the accuracy of their financial data, only 32 per cent of finance professionals said the same.
Meanwhile, 19 per cent of respondents stated they are not completely confident identifying financial errors before reporting results. There were also low confidence levels in ability to spot errors to ensure accurate reporting, with around six in 10, or 62 per cent, of respondents in Singapore saying a company they have worked for had to restate their earnings due to inaccuracies in financial data that were not identified prior to close. Only 27 per cent of respondents agreed that they could trust that their finance team or CFO (chief financial officer) had identified all errors to ensure they are reporting accurately.
They cite human error (51 per cent), complexity of collecting and processing data (50 per cent), multiple data sources (40 per cent) and clunky technology (39 per cent), as well as the lack of awareness of competence for co-workers who input data (32 per cent) as contributing factors to their lack of trust.
Nearly all of the Singapore respondents (98 per cent) agreed that there would be negative impact if inaccuracies in financial data were not identified prior to reporting. This includes significant reputational damage (52 per cent), spending considerable time reworking the accounts (47 per cent), increasing debt levels (45 per cent), and an impact on their ability to secure additional investment (45 per cent). Seven in 10 or 70 per cent of local respondents said it takes up to five days to identify potential errors and record the necessary accounting adjustments.
Although 54 per cent of respondents in Singapore acknowledged that the acceptable margin of error with accounts is decreasing in today’s technology-driven world, 39 per cent said their organisation still would not consider US$2 billion of accounting errors reported in their financial statements as "material".
Mario Spanicciati, BlackLine chief strategy officer, said that high-profile misreporting scandals in the news could be just the “tip of a larger financial inaccuracy iceberg”. He said that not only are reporting errors prevalent, many of these inaccuracies remain hidden below the surface.
"Unless there is recognition that this is an unacceptable and unnecessary level of risk, we can expect to see an increase in large-scale financial misreporting. Business leaders have a responsibility to ensure that the processes and technology are in place to enable continuous visibility and accuracy of financial data," he added.
The survey, commissioned by financial control and automation software provider BlackLine, and conducted by research firm Censuswide, included 579 C-level and 575 finance professionals from large and mid-size organisations in Singapore, Hong Kong, the UK, the US, France, Germany and Australia.
Some 50 C-level and 50 finance professionals were from Singapore companies with a minimum revenue of S$20 million. The survey had looked to ascertain accuracy confidence levels in financial data and perceived impact of errors on business.