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NEW YORK, March 9, 2004 Four in 10 U.S. multinational companies will be unable to meet the Securities and Exchange Commission’s accelerated quarterly and annual corporate reporting requirements without significant internal changes in procedure, according to PricewaterhouseCoopers’ Management Barometer. Another 50 percent expect to meet all requirements.

The new SEC rules, to be phased in over the next two fiscal years, ultimately require companies’ quarterly reports to be filed 35 days after a quarter’s end, and annual reports to be filed 60 days after year-end. Currently, companies are allowed 45 days for the quarterly 10-Q reports and 90 days for the annual 10-K.

To meet the new regulations, 59 percent say they will use their existing reporting systems more effectively; 29 percent will upgrade their reporting systems; and eight percent will make significant investments in new information technology.

“Companies will need faster and better-managed month-end closing procedures to meet the new timetables, said PricewaterhouseCoopers Partner, Tom Watson. “The SEC has been pushing for accelerated filings as a way to improve investor confidence in the wake of corporate and accounting scandals. As the SEC focuses in on speed, it will also expect management to provide higher levels of accuracy in the numbers, to display a better understanding of the results, and to communicate those results in much richer detail.”

Challenges

Company executives expect an array of challenges and difficulties in meeting the requirements. Nearly half (46 percent) of the 177 surveyed executives expect their company will encounter challenges, while 42 percent foresee no problems. The greatest concerns are:

Cross-company issues (Net)		29%
	Inconsistent closing and analytic activities	19%
	Lack of consistent account definitions	12%
	Lack of common financial measures	8%
Ineffective closign and/or reporting processes		25%
Ineffective IT infrastructure (e.g., systems not integrated)		21%

Potential Roadblocks

Executives expect several factors to complicate the conversion process:

Standardization -- Although 72 percent of respondents have standardized company-wide policies and procedures for closing the books in all business units, 19 percent say their policies are only “somewhat” standardized and may differ from one business unit to the next. Five percent say their policies are not standardized.

Accountability -- Ten percent say roles for business units, geographic regions, and functional finance leaders are not clearly defined, while 86 percent cite clear accountability for financial information throughout the organization.

Training -- Only 40 percent of companies have an enterprise-wide training program for all employees responsible for financial reporting, and another nine percent plan to develop one. But 47 percent do not have or expect such training.

Automation -- Only 28 percent of large companies use a closing and reporting process that is almost entirely automated, while 45 percent need to manually supplement their system’s outputs, and 22 percent still have substantial parts of their closing process that are not automated.

Timeliness -- Nearly three-fourths (72 percent) of senior executives say their financial information is received in a timely manner. However, 13 percent cite problems with timing, including eight percent who would like more time to review the data, and five percent who say they receive data up to the last minute.

“Flash” Reports -- Three-fourths (75 percent) have formal “flash” reports to get an early indication of performance before the closing is finalized. Another 12 percent see “draft” numbers at various points throughout the close, but without a formal process, while 10 percent say the first number that executives see is the “final” number.

Performance Metrics -- Nearly half (45 percent) use performance metrics to monitor the effectiveness of the closing and reporting process; 22 percent have an informal monitoring process and say they could use more information; and 29 percent say they do not measure the process.

“If some shortcomings exist now,” said Watson, “it would be prudent to identify them as quickly as possible, and address them in the conversion process. It takes vocal, aggressive, visible commitment to improve closing and reporting at the top levels of an organization, and determined attention to detail at the mid and lower levels.”

Potential Benefits

Executives also cited potential benefits their company would seek to achieve from improvements to their closing and reporting process:

More time for analysis and review of reported information	67%
Increased quality of financial information	55%
A more timely and accurate decision-making process	48%
Better information fromexisting systems	35%
Process alignment and improvement	24%
Improved credibility in the market and within the organization	18%
Improved staff awareness and satisaction	14%
Improved shareholder confidence	6%

PricewaterhouseCoopers’ “Management Barometer” is an established quarterly survey in the U.S. These surveys are developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services for public and private clients. More than 120,000 people in 139 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders. “PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

Direct questions about Management Barometer to Pete Collins, survey director and publisher, at 646-394-4496 or e-mail to: pete.collins@us.pwc.com.

For more information about Barometer surveys, including recent economic trend data and topical issues, visit www.barometersurveys.com.