Building Trust in Business: The New Role of Finance


There’s much to be admired about people in business: their ability to innovate, stimulate economies, and foster competition that leads to growth in standards of thought and leadership. But today’s businesses also suffer from a lack of trust among the world’s populations.

Mention Enron, WorldCom, or Lehman Brothers and thousands of people, not to mention lawmakers and regulators, recall all too quickly how many lives can
be damaged by the actions of a business run badly.

It’s no surprise that business, and particularly big business, suffers in the eyes of the general population.

Comprehensive new controls were put in place following the Enron disaster. Enron and other scandals led to the passage of the Sarbanes-Oxley Act in 2002
and the creation of the Public Company Accounting Oversight Board (PCAOB).

Yet a 2017 Gallup report shows that, since 2002, big business has been scoring about a 20-percent confidence rating.

Accounting and finance can, and should, be able to help. After all, trust begins with the numbers, as finance professionals well know.

But finance can do more than get the numbers right. It can help build trust both within and outside of the organization by setting an example for process excellence,
and by bringing risk-aware strategic guidance to business planning.

Getting the Numbers Right

Among other things, accounting is a practice that’s obsessed with both precision and timeliness. Get it right, and you know it. Get it wrong, and you’re lucky if you’re
the only one who knows about it.

Because of this, some type of accounting automation is a must if you want to minimize the risk of mistakes or fraud.

Automation saves time. That’s important for reducing costs, of course, but it also eliminates time-consuming manual work, creating efficiency for accountants and
auditors—especially during the intensity of the financial close.

In a 2016 study of more than 750 U.S. financial executives, managers, and analysts, the Institute of Management Accountants found that about two-thirds were “highly dependent” on spreadsheets.

Of the respondents, nearly a quarter said that if they could cut closing times with automation, the most important benefit would be the ability to produce more timely
and accurate financial statements.

Adding Process Validation

Automated tools can help relieve the time pressure, but automated processes are even more valuable, says Stephen Wolfman, Director of Product Management for BlackLine.

“With process automation, you get end-to-end accountability,” he says. “The process workflow is where you put your policies and procedures. It embeds and standardizes your internal controls so they work consistently, and it validates the results you’re getting.

“Without the workflow, you could have people saying, ‘Well, for this account we do it this way, and for that account we do it that way.’ The process workflow avoids that problem.”

This process helps balance the workload, so you can adjust points of pressure before errors occur.

“You get visibility into the process, so you can see if those controls are being applied correctly. With visibility, you can see if there’s some added pressure in one place or another, so you can rebalance it to run smoothly and on time. That’s especially important in applications where accounts can change frequently.”

Well-balanced process automation can pay dividends in trustworthiness outside of the finance group—and outside the company—as well.

Clearsulting Founder Marc Ursick says, “If I’m a shareholder or stakeholder, I want to know my company’s financial processes are in order so I can rely on the financial statements they publish. I want to be able to trust the process.”

Adding Trust to Strategy

Finance management can also use information developed through its finance processes to add valuable insight to top-level strategic planning.

“Organizations need to be more adaptive to change,” notes the executive summary to the 2017 Enterprise Risk Management Framework from COSO, the Committee of Sponsoring Organizations of the Treadway Commission.

“They need to think strategically about how to manage the increasing volatility, complexity, and ambiguity of the world, particularly at the senior
levels in the organization and in the boardroom where the stakes are highest.”

Finance management can play a key role in helping decision-makers across the organization—from business units to executives—understand and interpret
the financial risks that accompany their strategic initiatives.

If, for instance, a business wanted to expand to a new geographical market, finance could draw on detailed reporting to show how the move might impact
each person involved in the reporting chain, from the business unit manager to the executive and even the board member.

The need for executive-level risk management—and for trustworthiness—is both clear and growing, and for finance, the tools are now in place to facilitate advancement.

**Making Reports Visible
Dashboards that can visualize meaningful views of relevant issues are now prevalent in the offices of most managers and executives. But for detailed yet understandable presentations, the better finance dashboards are able to drill into real-time, up-to-date information.

They are also capable of handling the massive data sets—sometimes hundreds of thousands of items—that routinely confront modern-day planners.
Moreover, these dashboards are process-aware, so they can tailor their presentations to a company’s organizational structure.

The reports themselves have to instill confidence that they’re based on a solid accounting and finance foundation. That way, the company and its shareholders and stakeholders will also be confident that decisions are well informed and trustworthy.

Read our first issue of BlackLine Quarterly to learn more about how to build trust within your organization, and also in the global economy.