Creation of a unified system of management control
Often, the perception of the fast-developing business by its owners and by the prospective outside investors is very fragmented. It might seem sometimes that such a business is not a single functioning mechanism but a constellation of unrelated business “planets” moving on their own orbits. This perception is often exacerbated by a legal disconnect among the constituent parts of a quasi-holding, by incompatible systems of accounting and financial reporting, and by the differences in accounting policies and their periodic revision.
It is only after the establishment of the effective holding structure and reorganisation of the business processes within the group that the operational controls can be applied successfully. This is usually accomplished by introduction of the unified accounting principles and policies consistent with international accounting and financial reporting standards; a computer-based financial accounting and reporting system usually forms the backbone of the enterprise-wide business control.
Overall, the investors’ attitudes are much more favourable towards a company that can control itself effectively and is capable of reacting in a timely manner to the possible emergence of negative operating events.