Magazine article American Banker

Viewpoint: Five Methods to Ensure Financial Data Accuracy

Magazine article American Banker

Viewpoint: Five Methods to Ensure Financial Data Accuracy

Article excerpt

Byline: Navin Sharma

The Sarbanes-Oxley Act has survived its recent Supreme Court challenge and financial institutions have returned to the task of researching, reconciling and reporting on financial data. As the end of the quarter approaches, analysts will work around the clock to ensure the accuracy and completeness of corporate reports.

While the rules have remained the same, however, the mind-set toward financial data quality has changed in recent months as financial executives are now adopting many of the best practices developed by customer data stewards to streamline and automate the process.

Terms like validation, business rules, data normalization, jurisdiction assignment and governance are coming into vogue as new technologies emerge that can help institutions overcome many of the challenges associated with financial data quality.

Clearly, financial data is different from other data assets such as customer addresses. Financial data reports on the health of a company and must comply with numerous regulatory requirements. In addition to P&L statements, this information drives tax payments, agreements, royalties - and ultimately, investor confidence. Unlike character-based records, tools like "spell check" and data parsing offer little assistance; currency conversion can complicate matters; and speed is critical given the time-sensitive nature of financial reporting.

Managers must also deal with the same challenges associated with customer data. The accessibility of accurate data is hampered by the fact that records are stored on disparate systems. It is not uncommon for different divisions or subsidiaries to rely on different platforms (or even desktop Excel files). Inconsistencies in definitions and labels are likely when enterprise resource planning, order entry and customer relationship management systems are compared, and the same company may refer to the same product using product codes, part numbers, brand names or abbreviations. Bundled offers may include both goods and services. And at the end of the day, financial executives must still find ways to allocate costs and revenue with total integrity.

For bankers, these issues affect not only their own firm, but commercial clients as well. A Gartner survey of senior finance managers reports that "the most critical technology issue was the need to improve data quality to enhance the accuracy and consistency of financial reporting."

Ultimately, one's ability to streamline and automate the quality of financial data begins with an understanding that financial data is just another data domain. Data quality methods that have proven to be cost-efficient and effective in managing customer data are often applicable to financial data - once you can deal with the unique attributes of numeric data. …

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