3 Top priorities on the 2024 CFO agenda

A sea of change will be crashing over finance departments in 2024. While the navigating rip tides of new requirements is nothing new for finance, this year’s swell of regulations and reporting needs will challenge the endurance of even the most agile teams. 

In this article, we’ll go over the three biggest items hitting the CFO agenda for 2024 — and what finance teams need to do to prepare.  

Priority 1: Overhauling ESG reporting to accommodate revolutionary new requirements 

On January 1st, 2024, two large ESG standards came into effect: IFRS S1 and S2 and corporate sustainability reporting directive (CSRD).  

IFRS S1 and S2 aspire to create a global baseline for sustainability disclosure. They require companies to provide sustainability information alongside financial statements in the same reporting package. IFRS S1 and S2 have a focus on financially material ESG risks and opportunities that affect a company’s bottom line. While the ISSB can’t mandate compliance, companies can voluntarily apply the standards and jurisdictions can decide whether or not to require them.  

Under CSRD, companies will have to disclose double materiality, provide third-party assurance, follow ESRS disclosure standards, and publish an XHTML file. In 2024, large companies reporting under NFRD with 500+ employees will have to comply. In 2025, non-NFRD companies that meet two of the following three requirements will have to comply: 500+ employees, 40M , 20 Mio.+ balance sheet total.

Both sets of ESG requirements introduce a new level of disclosure, requiring companies to incorporate financial information and materiality into their ESG disclosures. While IFRS S1 and S2 focus on single materiality (the impact of ESG issues on a company and its outlook), CSRD focuses on double materiality (the impact of ESG issues on a company and its financials and the company’s impact on ESG factors.) 

While ESG reports have largely involved non-financial data, these requirements point to a reporting landscape that is increasingly interested in the financial ramifications of ESG factors. This is great for investors and transparency, but also adds a new dimension — and added onus — to reporting. Companies now must find a way to integrate, contextualize, model, and project the ESG-financial performance connection.  

Even though this new layer of ESG reporting acuity poses its challenges to finance teams, it also opens the door to new opportunities when financial gains are realized by sustainability efforts.   

Priority 2: The harmonization of tax and finance 

Global tax reform is coming, and for many multinational enterprises, it’s time to act. The EU and several other jurisdictions intend on introducing aspects of Pillar Two, starting from 2024. Other countries have indicated they will closely follow in 2025. Companies based in countries that have not yet enacted Pillar Two, like the US, but have subsidiaries in countries that have will still be subject to its reporting requirements and could even be at risk of double taxation.  

While most countries have not yet pressed play on BEPS Pillar Two in its entirety, the Income Inclusion Rule (IIR) will be the first step for most. The IIR ensures a parent company pays the 15% global minimum tax in all operating jurisdictions. It’s followed by the top-up tax, where companies would have to fill the gap between their effective tax rate and the 15% global minimum tax.  

Going forward, some CFO offices will want to: 

1. Turn an eye to determining if they qualify for a transitional safe harbor via CbCR reporting data, and; 
2. Companies that pay less than 15% in other jurisdictions and that don't meet the transitional safe harbor requirements will have to prepare calculations according to the IIR and Under Taxed Profit Rules (UTPR.) 

BEPS Pillar Two requirements will only intensify as it comes into effect more broadly. The reach of this tax reform extends far beyond the doors of the tax department and will rope in finance teams to orchestrate: 

• The data sources necessary to understand the global tax position
• Adjusting tax processes to accommodate CbCR reporting for safe harbour tests 
• Altering local close and consolidation processes to accommodate Pillar Two data  
• Looping in adjacent departments, like IT for support with systems changes and HR to map out the global workforce 

Priority 3: The expanding scope of data required in the financial close

In recent years, the scope of the financial close process has expanded. While closing the books was once a matter of financials, now tax, ESG, managerial, lease, HR, transactional, and supply chain data have been added to the mix.  

Closing the books now requires data from tens of systems and applications, including: 

Financial systems: ERPs, data warehouses, planning systems, consolidation tools, reporting tools, tax systems, treasury systems, and spreadsheets 

Functional systems: HR systems, supply chain planning systems, procurement systems, commercial systems, IT systems, real estate systems, EHS systems, carbon systems, emissions systems, CRMs 

External systems: Vendor systems, market data, economic indicators 

Two factors have precipitated an increasingly complex and laborious financial close. First, growing global and local regulations are incorporating non-financial metrics into corporate disclosure requirements. This is data that historically lives outside close-connected systems. Second, an expanding stakeholder landscape where consumers, investors, and employees demand more transparency into how businesses operate, particularly in communicating their ESG performance to build trust and credibility. 

These factors are largely responsible for generating a growing volume of data and data sources. And these data challenges require finance teams to transform and contextualize financial data against unstructured operational information that needs to be managed across different dimensions. It’s not just about having the data on hand. It’s about how you use it. 

• Data availability: Information on demand, where and when it’s needed. 
• Data completeness: Telling the whole story at every touchpoint.
• Data detail: Information that’s granular enough to drive sound, timely decisions.  
• Data standardization: Consistent formats and standards regardless of source or use.
• Data accuracy and credibility: Not only accurate data, but relevant, timely information that stakeholders agree is meaningful. 

The issue is yesterday’s close solutions don’t support today’s the scope of today’s close requirements.  

As Deloitte put it so perfectly: “There was a time when keeping on top of your manual entries meant you were on top of your finance information. Then you switched to local spreadsheets. Then you started sharing them on a server or the cloud. Evolution in finance data isn’t new; it’s just at a turning point. Getting serious about data is no longer an incremental need for finance. It’s a transformative one — or a reason transformation might fail.” 

The good news is, as the scope of the financial close has grown, so has the means to cope with it. AI can now power data mapping, anomaly detection, planning, analysis, and analytics to vastly improve efficiency, accuracy, and the breadth of accessible insights.  

2024 marks another year of finance transformation 

Another swell of change is blowing in, but with the right tools, it’s nothing that finance teams can’t handle. CCH Tagetik is a corporate performance management solution that connects financial management processes and all enterprise data sources within a centralized platform.  

Using CCH Tagetik, you can: 

• Add financial information and materiality assessments to ESG reporting
• Harmonize tax and finance data to support BEPS Pillar Two requirements 
• Augment the expanding requirements of the financial close with AI 

Book a hands-on demo to explore how CCH® Tagetik can support your organization.