Legacy IT hampers drive for accurate accounting, claim CFOs in US

Poor technology may be hindering chief financial officers of major US companies as they struggle to comply with new regulations...

Poor technology may be hindering chief financial officers of major US companies as they struggle to comply with new regulations in the aftermath of the accounting scandals that have rocked the US.

Chief executive officers and chief financial officers raced to meet the US Securities and Exchange Commission (SEC) deadline last week to certify their companies' financial results,

But their efforts to make full and accurate financial disclosures are being impeded by legacy IT systems according to a new study, CFOs: Driving Finance Transformation for the 21st Century, from Cap Gemini Ernst & Young, the global management and IT consultancy.

The US authorities imposed last week's deadline for 695 publicly held companies with revenue in excess of $1.2bn (£780m) to swear by the accuracy of their financial statements.

The survey showed that 63% of the chief financial officers questioned had inadequate budgeting, forecasting and decision-support systems, which made it difficult to get the information they needed.

Many of those surveyed said this was partly because of difficulties in integrating the disparate systems acquired during waves of mergers and acquisitions.

Rich de Moll, vice-president in the finance and employee transformation practice at Cap Gemini, who collated the study, said, "I don't care if you're on the most current ERP system. If [a company is running] disparate systems, you're not going to have visibility and accuracy" in reporting financial data from scattered business units.

The survey also highlighted the difficulties businesses have in implementing technology and the importance chief financial officers attach to the further IT deployment.

For example, only 23% of the companies surveyed have partially or fully integrated enterprise resource planning systems for handling transaction processing, but 77% expected to implement these systems within the next three years.

Cap Gemini and CFO Research Services interviewed 265 senior finance executives at US companies with more than $500m in annual revenues.

Read more on IT risk management