FSN: US ‘Fast Close’ timescales go into sharp reverse

US ‘Fast Close' timescales go into sharp reverse

5th November 2007
The most extensive global annual research into year end results announcements and audit timetables of the world's largest companies has revealed that the UK has stagnated while continental Europe continues to accelerate and the US has gone into sharp reverse. In the US time to close and announce has extended by 10% and audit timetables extended by a huge 40% over a four year period.

The UK Top 100 companies have continued to stagnate with no significant change in the overall picture either for the preliminary announcement or audit sign-off metric in the last four years.

David Jones, Director of Paragon Consulting Group, who conducted the research, comments “The stagnation is concerning, but don't assume its all bad news. There has been significant acceleration by some companies in the UK , for example Vedanta, Alliance-Boots, Shire, Intercontinental Hotels, Imperial Tobacco, British Sky Broadcasting and Lloyds TSB have all shaved at least two weeks off their time to close and announce year end results. Sadly, there are just as many companies who have significantly slowed down”.

In continental Europe, the most significant reductions in time to close over the last four years have been in Switzerland (average reduced by 15%), the Netherlands (12%) and France (5%). This includes dramatic reductions at companies such as Adecco, Ahold, Swiss Re, Phillips and LVMH.

In contrast, the USA has suffered a dramatic deterioration, with time to close and announce extending by 10% and audit timetables extending by a huge 40% over the four year period.

Another associated and dramatic US trend is that the number of year end results announcements with audit sign-off has plummeted from 45% to 5% in the last four years. While this trend is nowhere near as dramatic in Europe , despite many large European companies also needing to be Sarbanes-Oxley compliant. The UK and Switzerland , for example, have seen small falls in the number of audited results announcements while some European countries, such as Norway and the Netherlands , have actually seen an increase.

“This is one of the great ironies of the introduction of Sarbanes-Oxley”, comments Jones. “Tightening of compliance legislation was meant to increase confidence in reported numbers, but the impact in the USA has been to dramatically reduce the number of year end results announcements that have the key confidence factor of being audited.” The highly successful Berkshire Hathaway, run by Warren Buffet, is one of the few US companies who have preserved the principle of ensuring year end results, when announced, have audit sign-off. “At this pace of change, Corporate USA will loose its title as the champion of the fast close to one of our European cousins within a decade. Indeed, there is a strong argument for saying that European Companies such as Novartis, Banco Comercial Português and Danske Bank, who all announce audited results before the end of January, should really be credited as true champions. Meanwhile corporate UK needs to decide if it wants to emulate the achievements of these European champions ”, adds Jones.

About Us