Record to Report (R2R) refers to the process that combines postings (records) from sub-ledgers and interfaces, as well as direct and manual postings in general ledger accounting, and generates reports from them. Depending on the recipient of a report or the client, delivery deadlines, as well as regulatory, tax or legal requirements have to be observed when creating and presenting the report. In some cases reports also have to be delivered in specified formats (e.g. XBRL). Examples of reports are:
The effectiveness and reliability in reporting depends to a large extent on the accuracy of the records and the efficiency in their provision. In addition, companies are often dependent on individuals with extensive industry and country-specific experience, exposing them to corresponding risks in the event of their short-term or long-term absence.
The four key process steps in record to report are:
In preparation for processing the records, it has to be ensured that they are complete and correct, as accurate records lay the foundation for a fast and smooth R2R process. There is maximum potential for automation here, as the reconciliation between source systems/subledgers and the general ledger should be completely automated. Any deviations above a configurable threshold are sent to experts for analysis and correction.
Recognition and measurement
The processing in the general ledger is essentially dependent on the recipient specifying the recognition and measurement rules to be applied, e.g. HGB, IFRS, US-GAAP.
Rule-driven automation of auxiliary calculations, valuations and postings frees employees from manual and error-prone tasks. Instead, they can focus on analyzing and processing special cases.
Processing and booking closure
After successful processing, the next step is to close the books. This is done using a closing calendar and workflow control integrated in the system. All relevant parties and systems are involved depending on their delivery and the completion date. Individual process steps - from processing/calculation/evaluation to report drafting - can be quickly repeated as needed until the close is complete and accurate.
If a (subgroup) consolidation is performed, this should also be integrated into the R2R process and automated as far as possible. This is the case regardless of whether it is for time-consuming process steps such as reconciliation, intercompany or transfer pricing, or for post-close activities such as late adjustments. Here, automation also makes it possible to reduce the throughput times for an iteration and to optimize the presentation of results.
The reporting cycle is the formal process of data collection, assimilation, preparation and presentation/formatting of the final results. A key element in this process step is the gathering and validation of information from all relevant data sources that are needed in addition to the general ledger. More and more frequently (e.g. with ESG), reports contain non-financial data in addition to financial data, which has to be integrated with the same quality and care. On this basis, the preparation and enrichment of the business reports, the final release and the customized provision for the stakeholders take place. Finally, reporting includes the transmission of reports and comments to the respective recipients (e.g., management, BaFin, Federal Gazette) as well as archiving. These process steps can also be supported and accelerated to a large extent by automation.
The intelligent automation and digitization of R2R process steps relieves companies through efficient preparation and effective delivery of their numerous internal and external reports. As part of the process, comprehensive and specific empirical values are mapped in executable sets of rules that can be improved as needed with little effort or continuously enhanced by self-learning technologies.
The end-to-end digitization of the process reduces or completely eliminates individual data processing and ancillary calculations. As a rule, existing ERP systems and databases are seamlessly integrated. Automated controls in the background and complete traceability ensure lower error rates and higher quality results. In addition, results can be optimized through shorter turnaround times in multiple iterations.
Therefore, an automated record to report process not only enables companies to meet their numerous reporting obligations on time, both nationally and internationally but it also creates the freedom to make value-added contributions to company-relevant decisions through analyses and simulations. By automating R2R process steps, companies can counteract the impending shortage of skilled workers. Qualified employees can focus on special cases instead of working through repetitive tasks that a machine can also take over.
A stable and high-performance R2R process is the backbone of every company. Fast and error-free reporting and in-depth analysis or simulation are essential for making informed business decisions, both in terms of content and time. With intelligent end-to-end automation of the record to report process, you can achieve better results with less effort.
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