Reinventing Record to Report For Worry-Free Governance Session... · 2014-06-03 · Improving the Record-to-Report Process • Focus relentlessly on driving Process Simplification

IASA 86TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW

Reinventing Record to Report For Worry-Free Governance

Session 402

Background

• Syril Mathai, CPA – Trintech, Inc.

• VP – Global Services and Partner Enablement

• 15 years Corporate Accounting Experience

• 5 years Consulting (Management and Implementation)

• Former Customer for Trintech (6 years)

Gaining Complete Confidence

in your Numbers: Reinventing the Record-to-Report Process

AGENDA

• Why Record-to-Report?

• Record-to-Report Challenges

• Reinvention Approach

• Solution-in-Action: Case Study

• Summary & Next Steps

© 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

“Out of intense

complexities intense

simplicities emerge.”

Winston Churchill

Improving the Record-to-Report Process

• Focus relentlessly on driving Process Simplification & Standardization to combat increasing business & regulatory complexity.

• Invest in Integrated Close to differentiate from peers relative to business performance & financial reporting

• Broad organizational value (through reliable information and business directed focus) provided by efficient and effective consolidation and close process.

• Integrated Systems & Single version-of-the-truth are critical to success for R2R process; enterprise-wide data standards & associated governance are requisite foundations.

• All Top Performing R2R organizations leverage technology extensively as an important component of the Integrated Close


Gartner View on R2R

Market Adoption Accelerating for Financial Solutions

Gartner continues to define Financial Governance as a whole and also in two

subsections, with a strong emphasis on Financial Governance Suites.


Financial Governance Suites Advantage 0 to 2 This is an emerging area and financial governance suites offer a strategic solution with new solutions entering the market in the last year. Evaluate against disclosure management and close management solutions.

Disclosure Management Choice 0 to 2 If your current disclosure processes are manual and rely on spreadsheets, evaluate within the next 12 months. These offerings are maturing in depth and scope.

Close/Reconciliation

Management

Choice 2 to 5 If your current close processes are manual and rely on spreadsheets, evaluate within the next 12 months. Evaluate the whole close process. Try to avoid tactical purchasing of reconciliation management solutions.

Source: Gartner IT Market Clock for Financial Management Applications, August 2012

Chief Accounting Officers’ Challenges

“Our goal is to remain on the constant improvement curve

because there will be persistent cost pressure on finance.” – Intel CAO

“What I do not know (unknown risk) and lack of communication

between key departments” – General Motors Controller and CAO

“Risks of things falling through the cracks as things are handed

off between shared service centers” – J&J VP, Controller and CAO

“Changing regulatory environment”

– Best Buy SVP, Controller, CAO


The CFO’s Perspective

Evaluating Record-to-Report risk & performance:


1. Manage Risk

2. Increase Effectiveness

3. Increase Efficiency

• What is our R2R risk?

• Do our processes complement our risk appetite?

• Are we doing the “right things” – in the right order?

• Are we missing critical steps?

• Are these steps auditable?

• Are they sustainable?

• Are we “doing things right?”

• Are we leveraging technology, people and

processes for maximizing value and ROI?

What’s Really Going On?

Myth:

Highly educated

finance personal are

working on value

added activities

Reality:

Many expensive

controllers/FP&A

professionals

spending 2/3 of their

time or more on low

value information

activities

The Approach


RISK

RISK RISK

RISK

RISK

THE COMPLETE APPROACH Reduce Risk

RISK

Reduce Risk In

cre

ase E

ffectiv

eness

The Complete Approach




RISK

Reg

ula

tory

Dea

dlin

e R

egu

lato

ry D

ead

line

Tra

nsfo

rmation &

Pro

cess

Impro

vem

ent

Reg

ula

tory

Dea

dlin

e

Reduce Time & Mitigate Risk



Reg

ula

tory

Dea

dlin

e


Tra

nsfo

rmation &

Pro

cess

Impro

vem

ent

Reg

ula

tory

Dea

dlin

e



How the R2R Process Often Works


SAP®

Close Cockpit

Legacy Systems

Outsourced

External



SAP®

Close Cockpit

Legacy Systems

Outsourced

External



SAP®

Close Cockpit

Legacy Systems

Outsourced

External



How Trintech Helps

The first, unified financial governance

solution to reinvent the entire Record-to-

Report process


“To improve is to

change; to be perfect

is to change often.”

Winston Churchill

BALANCE SHEET • Quantitative and Qualitative steps synchronized

• Provides transparency for all activities

• Immediate view to Balance Sheet progress, by

Financial Statement Line Item

• Status of activities by criticality and due date

23

Transparency for all “Close Task” related

activities:

• Journal Entry

• Reconciliations

• Disclosures

• Compliance

• Analytical

• Technical

• Organized by Close calendar, Entity

MANAGES ALL CLOSE RELATED FUNCTIONS

R2R SUMMARY

24 © 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

MANAGES ALL GENERAL LEDGER

RECONCILIATION PROCESSES

• Provides transparency for all

reconciliation-related activities

• Activity & Issue status filtered by

Entity and day-of-close

• Activity & Issue status filtered by:

• Individual roles / assigned

permissions

• Entity and day-of-close (or date)

CERTIFICATION


MANAGES ALL COMPLIANCE

PROCESSES

• Provides transparency for all

Compliance-related activities

• Controls linked to task

execution

• Activity & Issue status

• Progress of remediation

• Exception management

COMPLIANCE

26

MANAGES REPORT

CREATION

• Preparation of

documents required

for regulatory and

statutory reporting.

• A collaborative

platform to create,

update, edit, review

and finalize

documents

• Embedded XBRL

tagging

COMPLETION


VISIBILITY AT A SINGLE VIEW

• Understand the

status of R2R in a

single combined

view

• Drill down into status

within organization

across process

• See the impact of

one process to

another within R2R

CADENCY

28

Efficient Controls Testing

Collaborative Disclosures

Controlled Journals

Accomplishments Through Improvement

Full awareness of required activities within

the R2R effort

Reduction of close-day cycles through

removal of non-value added activities in

close cycle

Increased quality in reconciliations through

risk based approach

Reduced effort in monitoring compliance

initiatives by leveraging test data from

shared controls

Structured and controlled journal entry

processes through standardized journal

forms, automated approvals and postings

Collaborative approach for Disclosure

Management with full visibility back to

supporting processes

29

R2R Process Improvement

Efficient G/L

Recons

Full Awareness

of R2R Effort

Reducing Close Days


Summary

Cadency reinvents, transforms and

shortens the entire R2R cycle By establishing a repeatable “Rhythm of Finance”

through orchestrating all stakeholders, activities and

interoperable processes in a collaborative, real time

workflow environment

Cadency reduces costs & improves

efficiency enterprise-wide By optimizing resources, costs, risks and activities

across the entire finance organization worldwide

through:

Transparency and control across the governance

model for the R2R cycle

Empowering continuous process improvement

methods across the entire cycle

Cadency enables “controlled agility” By facilitating easy realignment for an ever-changing

business and regulatory environment


W&SFG Case Study

Improved Compliance through an

Effective and Efficient Close Process

Background

• Wade M. Fugate, CPA – Western & Southern Financial Group

• AVP & Assistant Controller

• 10 years Corporate Accounting Experience

– Responsible for GAAP and statutory close, analysis, consolidation,

internal management reporting and external regulatory reporting

– Responsible for Investment Accounting and Reporting and Variable

Annuity Accounting and Reporting

– Responsible for expense budget and cost allocation processes and

analysis

– Ernst & Young LLP

• 6 years external audit experience auditing life insurance

companies

Western & Southern Financial Group

Company History • Founded in Cincinnati in 1888 (The Western and Southern Life Insurance

Company).

• Provides life and health insurance, annuities, mutual funds, investment

management, broker-dealer services, and real estate investment and

property management through member companies across 50 states.

• Fortune 500 company with assets owned and managed in excess of $68

billion (March 31, 2014).

• Financial Strength Ratings* for Western & Southern's six life insurance

subsidiaries.

•AM Best – A+ Superior

•Standard & Poor’s – AA Very Strong

•Fitch – AA Very Strong

•Moody’s – Aa3 Excellent

•Ratings are current as of April 1, 2014, and are subject to change. Ratings refer to the claims-paying ability of the insurance company and not to the

safety, stability or performance of any investment product.

•*The Lafayette Life Insurance Company is not rated by Moody’s

The Challenge

Change in team members and expectations

• Aging workforce - knowledge Gaps in the business and the need for

knowledge transfer

• Associate Engagement in the business (Career vs. Job)

The Speed of Change

• Changes in processes, people, technologies

Regulation

• Disclosure changes

• Statutory and Federal regulation

Timeline and Implementation Strategy

Standardize Components of Financial Accounting and Reporting

across Insurance Companies

Build relationships and gain buy in through improvement

opportunities in business units (Reconciliation Implementation) • Enhance Control Structure

Leverage technology to improve financial reporting and enhance

team member flexibility and knowledge (Close Implementation) • Drive Financial Reporting efficiencies in direct business partner processes

Efficiently monitor and test on-going control structure • Leverage technology eliminate data gathering and testing redundancies

Recon Implementation Objectives and Results

Preliminary State of Reconciliations •Manage reconciliations across approximately 14 business units

•Execute approximately 1000 monthly reconciliations (1800 quarterly)

•Reconciliation process was extremely manual and not scalable

Update Reconciliation Result •Standardized, scalable process implemented within 4 mos.

•ReconNET Efficiency Results

•Standardized Management Reporting

•Standard measurable metrics to reduce risk of inaccurate financial reporting

Rec. Type # of trans

level recons

Ave. Mo.

Transaction

s

Ave. Mo.

Match %

Bank/Susp. ~50 dly/wkly ~130k ~80%

Benefits for Corporate Accounting

Process Enhancements

• Creation of enhanced monitoring and communication control

structure

• Eliminate redundant control execution and testing

• Elimination of wire account validation process due to more

timely reconciliation execution

• Drive Management and Business Partners to Action

• Create account reconciliation execution accountability and provide

visibility and transparency to business unit senior management

• Develop specialized teams responsible for reconciliation, root

cause analysis, and process improvement.

Close Enhancement Project

Close Overview • Approximately 30 individuals directly managing close activities

• Manage the close and consolidation for six insurance entities and multiple

non-life insurance entities.

• Initial process was manually intensive and managed through individual

spreadsheets and checklists for each entity.

• Initial State of the Close Process • Limit direct management oversight into real-time close status

• Lack of visibility into true status of close completeness

• Many business partners do not understand important of task timing or level of

urgency related to close tasks.

• Inefficient process to monitor process enhancements or roadblocks

Accountability and Education

Accountability

•Goals and development plans

•All users can see status of the monthly close

•Monthly reporting on the status of close tasks and late tasks

•Daily coordination and escalation of late tasks

Education

•All tasks have description including objective of the task

•Detailed instruction and reference materials to allow for transferability

• Tasks to track analysis issues and procedural changes

•Engagement in management tasks

Close Results

Process Replacement • Approximately 2000 tasks added in first six months

• Replacement of all checklist related activities involved in close

• Installation for entirety of Comptroller’s Department (Acct, FR, Inv.)

Management Engagement and Transparency • Improved discipline related to communication of non-routine items

• Improved flexibility through Co-management of team member inboxes and responsibilities to ensure appropriate prioritization (leverage queues)

Manage by Exception • Escalation of late tasks to management responsible for function

• Reconciliation Monitoring at an aggregate risk level

• Close Enhancements • Improved timing and completeness of close

• Enhanced accountability in operational areas related to financial reporting responsibilities

• Better leverage accounting resources to analyze data vs. routine non-complex task execution.

Enhanced Compliance through Close Standardization

Aligns to our MAR Strategy • Partnership between Comptroller and all business units

• Similar user base to share ownership and responsibility.

• Leverage ease of use and understanding from other products

• Expect to eliminate approximately 1000 hours of redundant and administrative efforts.

• Align close task execution that impact financial reporting to compliance related controls.

• Control Savvy Management Team • Challenge and Develop Talent to not only own and understand tasks,

but also control environment

• “It’s Good Business”

IASA 86TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW

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Documents

Reinventing Record to Report For Worry-Free Governance Session... · 2014-06-03 · Improving the Record-to-Report Process • Focus relentlessly on driving Process Simplification