Financial Accounting Advisory Services - EY · Page 9 Financial Accounting Advisory Services | Accounting policy and governance Leading practice policies Accounting policy contents

Financial Accounting Advisory Services

Accounting policy and governance October 2015

Page 2 Financial Accounting Advisory Services | Accounting policy and governance

1

2

3

Accounting policy and governance

About EY

Contacts

3

18

21

Agenda


Accounting policy and governance


Accounting policy and governance From principles to practice

► Accounting policies are central to an organization’s financial controls ► However, when they fall short of being clear, consistent and up to date, they can reduce an

organization’s efficiency and effectiveness, and increase risks ► A number of triggers can turn a lingering worry about the effectiveness of policies and the

governance process into reality: ► Company-specific, e.g., changes to the operation model, transformational events and a lack of standardized

global policies

► Industry-wide, e.g., regulatory changes and shifts in the business environment

► Policy overhauls can seem daunting, but are, however, necessary. EY can help you address these challenges


Accounting policy triggers Accounting policy requirement across the corporate life cycle

IPOs and other capital markets activity

Organization and incorporation

M&A activity

Performance improvement: ► New

operating model

► Process improvement

Risk: ► Internal audit

► Enterprise risk management (ERM)

► Remediation

► Investments, divestitures, restructurings and M&A

► Convergence between FASB and IASB

Birth Sustained operations Rebirth and evolution

Major transaction: Driven by changes in capital structure, new regulatory oversight and other major organizational changes.

Remediation or improvement projects: Driven by a need to remedy risk events or improve efficiency in organizations. These can occur in any phase of the corporate life cycle.

Business as usual: Driven by changes in accounting standards, regulations and business processes and industry best practices throughout the corporate life cycle.


Sustainable solutions A typical policy framework

Policies

Standard operating procedures

Desk instructions

Our focus

► Assess

► Optimize

► Govern

► Deploy


A complete policy solution Key considerations for a global organization

Do you have the right policies?

Rapid assessment Optimization

► Does your organization have all the policies it needs? ► Are there out-of-date and duplicate policies? ► Are there gaps or inconsistencies across geographic or

business lines? ► Are internal customers satisfied with policies? ► How do your policies compare with those of industry peers and

good practice?

► Do your organization’s policies comply with GAAP, IFRS, and other applicable accounting frameworks and prevailing regulatory requirements?

► Are they user friendly? Are they the right length? ► Are they written in plain language to bridge the gap effectively

between rules and business practice? ► Are they linked to standard operating procedures - and desk

instructions - to form a policy framework that supports the control environment?

Are your policies effective?

Governance and control Education and deployment

► Does your organization have a “policy on policies” that defines when to create, revise or decommission policies, identifies process owners, and sets approval requirements?

► How is consensus and stakeholder alignment achieved? ► How are policy changes communicated to the organization and

implemented? ► When are external resources used to aid drafting?

► Are your policies centrally accessible to employees? ► Is training provided? ► Is employee learning monitored? ► When are external resources brought in to assist in the creation

and delivery of training?


EY’s approach How we can assist

Rapid assessment Key activities: ► Review current policy library ► Conduct end-user and stakeholder

interviews or surveys ► Identify the needs of finance

function members to help determine whether enhancements meet those needs

► Compare policies with those of your peers

Optimization Key activities: ► Identify any key policy gaps related

to technical or regulatory requirements, user-friendliness and overall structure

► Conduct interviews with process owners, technical accounting personnel and other stakeholders, to understand concerns and potential issues

► Check the links between your user manual, policies and standard operating procedures

► Develop a policy prototype ► Create an accounting manual

format that all team members can easily use

Governance and control Key activities: ► Develop work plans to support the

implementation of policies, and the creation of systems and processes for the adoption of new or revised policies

► Align policies and procedures after M&As

► Identify when external resources should be used to assist with the governance process

► Assist with all phases of a global or local policy transformation

► Draft new policies and procedures (including manuals) or update existing ones

► Develop white papers ► Advise on the impact of new

accounting standards or regulatory requirements

Education and deployment Key activities: ► Support the dissemination of the

policy manual through monitored training, helping to determine whether policies are used consistently across the organization

► Provide company-specific alerts as to when policies need updates

Deliverables: ► Project charter ► Interview or survey results ► Findings and recommendations

Deliverables: ► Project charter ► Findings and recommendations ► Policy prototype for approval ► New and refreshed policies and

procedures

Deliverables: ► Project charter ► Findings and recommendations ► New or refreshed policy on policies ► Future-state process flowchart

Deliverables: ► Project charter ► Findings and recommendations ► New or revised training materials

(co-developed with management) and education sessions

Policies Policy function


Leading practice policies Accounting policy contents

2

1

3

4

5

1. Table of contents

Providing background of company and policy issues to help frame policy and provide context.

2. Scope and purpose

Policy includes “plain language” examples and definitions that are specific to the industry.

3. Hedge accounting requirements

The audience is considered throughout the policy (i.e., does the audience have significant accounting expertise, or will additional examples be required to explain key concepts?).

4. Regulatory reporting consideration

Leveraging GAAP and regulatory expertise during policy drafting and creation can assist in efficient incorporation of such information. Including relevant disclosure requirements can help financial reporting employees to meet GAAP and regulatory disclosure requirements.

5. Authoritative guidance

Including authoritative guidance references helps users to bridge the gap between guidance and company finance policy.


Leading practice resources Accounting policy template library

Goo

dwill

and

inta

ngib

les

Bus

ines

s co

mbi

natio

ns

Res

earc

h an

d de

velo

pmen

t

Sto

ck-b

ased

com

pens

atio

n

Res

truct

urin

g co

sts

Goo

dwill

and

inta

ngib

les

Impairment

Leases

Inventory

Revenue


The EY advantage Our web-based Accounting Policy Wiki (APW)

Our Accounting policy Wiki allows a company to:

Drafting new or updated policies is not just a mere content “exercise”. Day-to-day accounting requires an efficient way to address challenges. We are glad to complement out accounting policy and governance services with a web-based Accounting Policy Wiki (APW) as a way to combine the necessary and useful information of an accounting policy manual with a state-of-the-art web-based deployment process.

Also available on mobile devices!

link the accounting policy manual information to the company’s processes and products

increase user friendliness enhance accounting policy deployment process


The EY advantage (continued) Our web-based APW

Critical questions to ask:

► How can I increase the awareness and acceptance of our company´s policies and governance?

► How can I deploy new accounting policies efficiently to all my users worldwide?

► How can I integrate our company´s policies into our ERP system?

► How can I facilitate user access to our policies?

► How can I reduce the cost of maintaining and updating my company´s accounting policies?

Facilitates integration of processes across the internal control environment

Fast and easy update and change process

Features links between financial statement accounts, business processes and products

Provides easy browsing, intelligent search functionality, printing options and access via mobile devices

Shows information about your different products, services and related accounting guidelines

Enables cost-effective technology (SharePoint, Media Wiki) with simple user rights management

Supports policy deployment across the organization

Enables a more effective financial statement close process

Web-based accounting manual Highly customizable Requires low maintenance costs


SharePoint Accounting Wiki Our web-based APW


SharePoint Accounting Wiki (continued) Our web-based APW


SharePoint Accounting Wiki (continued) Our web-based APW

Links between processes and accounting guidelines


What benefits can you expect?

Cost reduction Up-to-date accounting policies and procedures improve efficiency, effectiveness and productivity - at the same time reducing risks - by helping organizations to standardize and streamline practices.

Cost prevention Compliant policies and procedures help to eliminate control deficiencies and costly remedial measures, which may include restatements to correct errors.

Operational synergies Global accounting policies help to create synergies and alignment among cross-functional, geographically dispersed teams, improving productivity and results. This keeps the finance and controllership teams on track.

Governance and control Clear, transparent accounting policies strengthen the control function and key relationships between management, employees and investors, while helping management comply with regulatory rules and requirements.

Overall ► Reduced regulatory and

enterprise risk ► Reduced costs by

promoting consistency and standardization

► More effective statutory and financial reporting process: ► Reduced close time ► Fewer errors ► Lower costs

► Increased compliance and consistency

► Corporate energy focused on strategic and high-risk areas

► More educated and flexible workforce


Why EY?

Critical success factors: catalyst for change, executive sponsorship, stakeholder buy-in, efficient and effective methodology, PMO and third-party support.

Teaming and collaborative approach Our success is attributable to our flexibility: ► We can work with your team Or ► We can operate independently with minimal disruption to you

Strategic and sector insights Our broad experience gained from other projects enables us to bring high-level strategic insights and a commercial approach. Our professionals have worked on multidisciplinary engagements and bring a depth and breadth of sector and technical knowledge.

Global network We use our global network to draw on the diverse and in-depth skills of teams in more than 75 countries. This globally connected, multidisciplinary and locally delivered model will help you meet to your business objectives.

Proven tools and methodologies Our robust methodologies and technology services allow us to provide tailored cost-effective strategies, efficiently.

Why EY?


About EY


Credentials

Client Sector or industry Service Service description

Listed multinational Food and beverages

Accounting manual

Improvement of internal processes and accounting systems, accompanied by the development of new accounting guidelines and reporting manuals

Listed multinational Oil and gas

Accounting manual and peer comparison analysis

Compilation of a complete accounting manual (collection of existing documentation, interviews with stakeholders, and comparisons with policies of other companies in the oil and gas sector)

Listed multinational Media and entertainment

Compliance analysis

IFRS compliance review of the accounting manual and plan (which were redesigned by the client to reflect revenue recognition issues), and testing of its implementation in overseas subsidiaries

Multinational — not listed

Industrial products

IFRS conversion and related accounting manual

Supporting the preparation of an accounting manual, in the course of an IFRS implementation at the group


Regional EY network Africa Angola, Botswana, Cameroon, Chad, Congo, Democratic Republic of Congo, Equatorial Guinea, Ethiopia, Gabon, Ghana, Guinea, Ivory Coast, Kenya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Seychelles, South Africa, South Sudan, Tanzania, Uganda, Zambia, Zimbabwe

Belgium and Netherlands

Germany, Switzerland and Austria

Commonwealth of Independent States Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Russia, Ukraine, Uzbekistan

Central and Southeast Europe Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Kosovo, Latvia, Lithuania, FYR of Macedonia, Malta, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, Turkey

France, Maghreb and Luxembourg Algeria, France, Luxembourg, Monaco, Morocco, Tunisia

Financial Services Organizations Belgium, Channel Islands, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Switzerland, the UK

India Bangladesh, India

Mediterranean Italy, Portugal, Spain

Middle East and North Africa Afghanistan, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Pakistan, Palestinian Authority, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates

Nordics Denmark, Finland, Norway, Iceland, Sweden

United Kingdom and Ireland The UK, the Isle of Man, the Republic of Ireland


Contacts


Financial Accounting Advisory Services Contacts

Accounting Policy and Governance

Andreas Muzzu

[email protected]

Accounting Policy and Governance

Dr. Detmar Ordemann

[email protected]

+49 231 55011 22126 +49 160 939 22126 +49 711 55011 15438 +49 160 939 15438

EY | Assurance | Tax | Transactions | Advisory

About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. © 2015 EYGM Limited. All Rights Reserved. EYG no. AU3545 BMC Agency BACS 1002437 ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

ey.com

Documents

Financial Accounting Advisory Services - EY · Page 9 Financial Accounting Advisory Services | Accounting policy and governance Leading practice policies Accounting policy contents