In these times of strict controls and increasing demands for transparency, companies are increasingly aware of the importance of open and honest financial practices. Financial technology expert Roman Tereshchenko argues that transparent governance helps build trust between all stakeholders and increases the level of responsibility. According to the analyst, an integral part of transparency is reporting. For its high-quality preparation, business process management (BPM) tools are used. And as one of the effective formats for transparent reporting, the specialist recommends using the XBRL language. How does all this work in practice – in a review from Roman Tereshchenko.
Ensuring transparency: key aspects of financial reporting
The expert is convinced that clear and accessible financial reporting plays a key role in transparency in the work of the company and its processes. It includes regular updates of financials, budgets, and forecasts. Roman Tereshchenko draws attention to the main components of such a strategy:
- Timely reporting. Regular publication of financial reports ensures that stakeholders are aware of the company’s health.
- Convenient format. Present information in an understandable format that is accessible to both financial experts and non-specialists. In this case, the analyst advises the use of visual aids, such as graphs and charts, to help make the content easier to understand.
- Availability. Ensuring that financial reports are accessible to all stakeholders (employees, investors, donors, and the public) through the organization’s website or other platforms.
Ensuring Transparency: How Open Accounting and External Auditing Improve Trust and Results – Roman Tereshchenko
In the practice of companies, it often happens that initiators of financial crimes (fraud, money laundering) are the employees themselves who have access to the database and all monetary transactions. To minimize such risks, the expert recommends using the “reverse” principle. One way is to maintain a strategy of trusting colleagues, and to do this, practice preparing open accounting.
– Accounting open to all employees is not just a technique, but a strategy. It encourages the exchange of financial information and the active participation of the entire team in discussing current issues. This approach helps to create a sense of employee involvement in the company’s activities,– comments Roman Tereshchenko.
He suggests considering the main steps of this strategy:
- Training in finance. The expert recommends allowing employees to learn the basics of finance so they can better understand reports and make informed decisions.
- Regular updates. Hold periodic meetings or share information with employees about new company financial results.
In addition to internal control, the expert calls independent external audits an important component of the company’s transparent activities. Its result helps to identify illegal operations and promptly eliminate such phenomena.
Real-time financial reporting: How innovative technologies can improve transparency
Real-time reporting is becoming increasingly important in the context of increasing financial transparency. Based on the position of Roman Tereshchenko, the introduction of such advanced technologies as BRM and XBRL makes it possible to instantly compile and provide financial information to interested parties. The specialist suggests paying attention to the advantages of these techniques.
One of the methods of maintaining the loyalty of shareholders, partners, and investors is the implementation of BPM projects. Roman Tereshchenko lists the following advantages of companies that use such technologies:
- Investments in BPM demonstrate the company’s desire to provide accurate and understandable information about its activities and its results.
- Companies using BPM typically report faster, resulting in higher price-to-earnings (P/E) ratios. Timely reporting indicates the company’s activity and its attractiveness to investors.
- Implementing BPM to meet regulatory requirements demonstrates that you have the necessary tools to manage risk and ensure transparency.
Given the globalization of the economy and the development of Internet technologies, XBRL tools are especially important for providing open company reporting in real-time. Their use helps provide reporting and data analysis in a single, standardized format that is understandable to most global companies. This modern approach increases the level, status, and image of organizations in the international arena, and creates an additional protective barrier against illegal interference by fraudsters.
Thus, it is the transparency of companies’ activities in the financial sector that ensures legitimacy. According to the expert, compliance with it helps companies strengthen their credibility, thereby attracting investors and donors, as well as increasing their efficiency and reducing the risks of fraud. In short, transparent organizations are better equipped to identify and address financial risks. And this is an indisputable fact, confirmed by many years of practice.
