The Fast Close Toolkit

CHAPTER THIRTY NINEThe Virtual Close: Myth or Reality?

INTRODUCTION: THE VIRTUAL CLOSE was once looked upon as the “holy grail” of finance efficiency. The expected benefits were substantial—faster results for decision makers and a less painful and cumbersome process for the finance and accounting staff.

Then along came SOX, IFRS, and XBRL. The new regulations added back some manual steps to the closing process. As a result, the virtual close became a low priority, and by the time the financial crisis hit in 2008, the virtual close was no longer on the corporate radar screen. Now that companies have embedded the new regulatory requirements into their corporate DNA, a tighter close process is getting more attention. Companies are now prioritizing the need for a faster, higher-quality close, with the goal of getting accurate, comprehensible information about the business to decision makers as quickly as possible.

WHAT IS THE VIRTUAL CLOSE?

A virtual close involves the use of fully integrated company-wide accounting systems to produce financial statements at any time, on demand. This approach requires not only enterprise resources planning (ERP) systems, but also a great deal of effort to ensure that the underlying information is correct. The required investment is so large that you rarely see a virtual close in smaller companies. The virtual close requires attention to the following areas:

• Centralized accounting: It is nearly impossible to achieve a virtual close without a great ...