Statutory reporting meets accounting standards and publication requirements. Management reporting is used to steer the business and explain performance. Both often use the same data, but they do not pursue the same objective.
Two views of the company
Statutory reporting prioritizes compliance, comparability, the audit trail and the legal scope. Management reporting is organized around responsibilities, segments, products, channels or scenarios useful for decision-making.
Why confusion is costly
- proliferation of Excel adjustments;
- competing KPI definitions;
- unexplained differences between finance and business teams;
- duplication of interfaces and master data;
- longer closing cycles;
- difficulty reconciling budget, forecast and actuals.
Management EBITDA is not an IFRS subtotal
Management may exclude certain costs to analyze performance. These adjustments may be relevant for management purposes, but they must be clearly distinguished from statutory aggregates. IFRS 18 will reinforce this requirement through the framework for MPMs.
Share the foundation, separate the rules
The right architecture maintains a common financial data foundation and applies different layers of rules. The same amount can be assigned to a legal entity for statutory reporting and to a business unit for management reporting.
Elements to govern
- indicator dictionary;
- statutory and management hierarchies;
- allocation rules;
- management adjustments;
- bridges between views;
- owners and approval workflows.
The role of EPM
An EPM platform can produce several views from a controlled foundation without duplicating data. Adjustments remain identified by nature and reporting framework, enabling rapid reconciliation of results.
A practical approach
- inventory reports and indicators;
- identify divergent definitions;
- define the common foundation;
- formalize the bridges;
- automate allocations and controls;
- gradually eliminate redundant files.
The two reporting systems should neither be artificially merged nor maintained in silos. The right model shares data and governance while respecting the specific objectives of each view of performance.