Report results: what each role knows and where the gaps bite

Local finance teams know why their numbers moved. The group consolidation team knows how the pieces must fit. Treasury knows which cash actually exists and in what currency. Trouble starts where these meet: intercompany balances that disagree, rates applied differently, and explanations that never travel with the figures.

The local finance team

The accountant in each subsidiary holds the context. They know a large invoice was booked before the goods arrived. They know a customer is disputing a balance and will probably not pay. They know which accrual is a guess.

Very little of this reaches the reporting pack. The pack asks for numbers in set boxes, and the boxes have no room for doubt. So a receivable that everyone locally treats as lost still shows as a clean asset at group level, until someone asks.

Local teams also know their own systems' quirks. A payment to a foreign supplier may be converted at the bank's rate on the day it clears, while the invoice sits at the rate on the day it was entered. The small difference lands somewhere. Locally, people know where. Upstream, nobody does.

The group consolidation team

The people at the centre see every entity side by side. They are the only ones who notice that one subsidiary reports a loan to another that the borrower does not recognise. They know the group's accounting policies, the elimination rules and the structure of ownership.

What they lack is the story behind any single line. When a figure looks wrong, they can see that it is wrong but not why. Their usual response is to post a top-side adjustment to make the group balance. That fixes the consolidated result and leaves the entity ledger untouched, so the same gap appears again next period.

Treasury

Treasury sees bank balances, hedges, internal funding and the cash forecast. It knows which large receipts and disbursements are coming and which accounts are trapped by local rules. It often knows about a funding decision before the accounting entries exist.

It rarely knows how those movements will be classified in the results. A cash sweep between entities can look like a loan to one team and an equity injection to another. Treasury's forecast and the reported cash position drift apart, and each side assumes the other made the error.

Tax and the business owners

Tax staff know which transfer pricing charges are required and when they must be booked. If those entries arrive late, entity results swing and the commentary written by budget holders no longer matches the numbers.

Budget holders, for their part, understand cost behaviour by project and cost centre better than anyone in finance. They are seldom asked until after the results are out. Their explanation then contradicts the one already sent to the board.

Where the gaps cause trouble

Intercompany mismatches are the most common symptom. Both sides booked something, at different times, at different rates, with different descriptions. Neither side can see the other's ledger.

Exchange rates are the next. Payments, invoices and the consolidation itself may each use a separate rate source. Every team is following its own instruction correctly, and the totals still refuse to agree.

Commentary is the quietest problem. Variance explanations get written by whoever is closest to the deadline, not by whoever understands the movement. Senior readers then act on a reason that was never true.

Disputed or doubtful receivables fall into the same pattern. Collection staff know a debt is stuck. That knowledge sits in emails, not in the reporting pack, so group results overstate what will come in.

Questions to ask the people who run it

Ask these of the people doing the work, not the people who wrote the procedure.

• When an intercompany balance does not agree, who calls whom, and what gets changed?
• Which top-side adjustments come back every period, and why has nobody fixed them at source?
• Which exchange rate do you use for payments, for invoices and for consolidation, and who chose each?
• What do you know about your numbers that the pack has no place for?
• When treasury moves cash between entities, how does accounting find out?
• Who writes the variance commentary, and did they speak to the budget holder first?
• Which receivables do you privately expect never to collect?
• What would break if the reporting deadline moved earlier?
• Where do you keep your own spreadsheet alongside the system, and what does it hold?

The answers to the last question are usually the most useful. Every private workbook marks a place where one role knows something the official process does not carry. Changing the process without finding those workbooks first tends to remove the only thing holding the numbers together.

APQC's Process Classification Framework® (PCF) is an open standard developed by APQC, a nonprofit that promotes benchmarking and best practices worldwide. To download the full PCF or to view definitions and measures, please visit www.apqc.org/pcf.