The Financial Close Process: Implications for Future Research Discussant Remarks

Elaine Mauldin UM

2013

Do We Care?

• Motivation – From the introduction, goal is to:– Enhance understanding

of the current financial close process

– Provide practical recommendations to companies to improve

– Develop recommendations for future research

YES! Surprisingly Novel! • Little research exists • High Risk Process

Research Design?

• Qualitative field investigation interviewing 11 individuals

• Directors of financial analysis to corporate controllers

• Manufacturing, Utility, and Financial Services

Yes!Given how little we know, and lack of publicly observable data

An Aside:

This is NOT Easy!

Presentation & Analyses

Can we add

more value?

Match the Method to the ?• “The use of theories from organizational sociology,

psychology and economics, in combination with patterns in organizational practice can constantly build upon and enrich the theoretical basis from which, ultimately, textbook and consultancy prescriptions materialize.” (Lillis 2008)

• “In this study, we engage prior research in financial accounting, psychology, regulation, and information systems…to provide a systematic examination of the role of four factors”

• But, “Connecting empirical observations back to the theory that motivated the study is an essential research task.” (Lillis 2008)

• Not enough theory to make this approach work well?• Does it tie closely to the original question?

Enhance understanding of

the current financial close

process

An Alternative Approach• “Qualitative research can be used to build our

understanding of the “how” and “why” of management accounting practice, how these practices respond to real organizational settings and to explore the logic that drives the evolution and adaptation of practice. (Lillis 2008)

• Suggest a more descriptive, exploratory approach • Explore the process – rather than forcing the interviews into

4 factors• More fully utilize second page of Appendix A – incorporate

four factors as part of process

Appendix A Interview Questions

Matching Data to ?

• Are the interviewees at a high enough level? Versus CFO?

• Can you capitalize on different industries that seem to have very different close process issues?

• Separate Financial Close Processes (Figure 1)?– Internal Controls versus– Financial Close

Financial Close Process Model

A Few Final Questions

• How extensive is integration?• Only 3 respondents indicated

integration risks – suggests remaining are more integrated???

• Is the estimation process separate from the financial close process?

• Is the now “routine” XBRL tagging process still part of the financial close process?

Thanks for Listening & Best Wishes to Authors