Data Quality in Financial Reporting: The Double Risk

The month-end close demands precision and reliability. Finance teams in Swiss SMEs depend on the stability of their data and tools. This stability can no longer be taken for granted. The quality of financial data is threatened from two sides. On the one hand, economic uncertainty makes the underlying business data more volatile. On the other, constant software updates lead to technical instability in established reporting processes. This combination creates a new, double risk for data quality in financial reporting.

Economic Uncertainty as a Data Risk

The economic situation directly affects the quality of accounting data. An uncertain market environment leads to unpredictable fluctuations in revenue, costs, and supply chains. Forecasts become more difficult, and historical data loses its predictive power. A recent study confirms this connection. It shows that environmental uncertainty significantly influences the relationship between digital transformation and the quality of accounting information (doi.org 2024a).

Fundamentally, digital transformation has a positive effect. It improves the quality of accounting information by increasing transparency and reducing information asymmetries (doi.org 2024a). The effect was proven to be statistically significant with a coefficient of 0.596. In a stable environment, digitalisation therefore leads to better, more reliable data.

However, this positive effect is weakened by economic uncertainty. When the business environment is volatile, pressure on management increases. The reliability of the underlying data decreases. The study suggests that this is also because opportunistic management behaviour is constrained, which becomes more relevant in uncertain times (doi.org 2024a). For the finance team, this means that the raw data from the ERP system must be scrutinised more critically than ever before.

Technical Instability from Software Updates

The second threat comes not from the outside, but from within your own tools. Most finance departments use Microsoft Excel for reporting. This is an established practice. The challenge lies not in Excel itself, but in the manual processes built around the programme. These processes have often grown over years and are inadequately documented.

A new factor significantly increases the risk in these processes: the high frequency of software updates. Manufacturers like Microsoft introduce new features, especially in the area of artificial intelligence like Copilot, gradually and continuously. This often happens via a model where updates are first rolled out to a subset of users (learn.microsoft.com 2026).

For a finance team, this means a new form of technical uncertainty. A formula, a macro, or a data link that worked perfectly yesterday can fail today without warning. A small update to one component can have unforeseen effects on a complex Excel file. The chain from the ERP export to the final report becomes fragile. The risk of an undetected error in reporting increases.

Complexity as a Risk Amplifier

The two risks — uncertain data and unstable tools — reinforce each other. Finance teams must process volatile data with increasingly unpredictable tools. This increases the complexity of the entire reporting system. Manual interventions and corrections become more frequent to bridge the gaps in the process chain. Every manual step is a potential source of error.

This complexity is not just an efficiency problem. It is a serious risk to the accuracy of financial reporting. One study has shown that the complexity of financial reporting is a significant predictor of fraudulent financial reports (Beta = 0.39, p < 0.001) (doi.org 2024a). Even when there is no fraudulent intent, high complexity increases the likelihood of material errors.

The manual processing of complex data in a changing software environment is error-prone. A wrongly copied value, an outdated formula, or an overlooked change in the source data format can distort the results. The responsibility for finding and correcting these errors lies solely with the finance team, often under intense time pressure during the closing period.

A Robust System as a Shield

How can finance teams protect themselves against this double threat? The solution is not to replace the ERP system or abandon Excel. The solution is to stabilise and automate the manual Excel layer that sits between the ERP and the final report. A robust system serves as a shield against business and technical volatility.

In this context, robustness means more than just software. It means a managed process. The automation is operated and monitored as a service. If a software update breaks a process, it is detected and corrected before it jeopardises the month-end close. The responsibility for the technical functionality of the chain is outsourced.

Such a system also separates data, logic, and presentation. It has built-in validations and controls that check data quality at every step. Modern approaches also use machine learning techniques for anomaly detection. Such methods are significantly superior to traditional models in identifying suspicious patterns in financial data (doi.org 2024a). This creates an additional layer of security.

What You Can Do This Month

You can start increasing the robustness of your reporting today. No large investments are needed to take the first steps. The following measures will help you to better understand and reduce the risks in your current processes.

• Document processes: Select a critical reporting process, for example, the monthly income statement. Map out every single step, from the data export from the ERP to the final figure in the management report. Note every manual copy-paste action, every formula adjustment, and every manual correction.
• Identify weak points: Analyse the documented process chain. Where are the most fragile points? At what stage would a small change in the source data format bring the entire process to a halt? Where do manual adjustments occur that are not traceable? Mark these risk points.
• Reduce complexity: Before considering automation, check if the process can be simplified. Can several manual steps be consolidated? Can the export from the ERP system be adapted to require less manual preparation in Excel? The greatest efficiency gains often lie in simplification.

This analysis creates a solid foundation. It gives you a clear overview of the risks in your financial reporting. On this basis, you can make informed decisions on how to sustainably improve data quality and process reliability in your company.

Microsoft, Excel, and Copilot are registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries.