SHARE Special ProjectCash Remediation Phase IIPlanning and Implementation CertificationOctober 22, 2014 SHARE:

Michael ChmuraSHARE Special Projects Leader

Department of Information Technology

Requesting Agency:

Ricky BejaranoDeputy Secretary and Controller

Department of Finance and Administration

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The State developed many functional customizations and “shadow systems” during SHARE’s original implementation. As a result: External payment systems are not integrated into SHARE SHARE does not contain all of the bank accounts owned by the State Reliance upon “Shadow Systems” has negatively impacted the ability to produce the CAFR

The purpose of these customizations and shadow systems were to replicate the processes and systems that were in practice before SHARE, driving an inefficient and error prone environment: Processes are labor intensive and therefore is subject to manual errors General Ledger maintenance process and the process ownership is not clearly defined System rules governing transactional accounting need to be updated and enforced General Ledger entries are inconsistent and controls need to be defined

The State’s ability to produce required financial reports that meet accounting standards, to reconcile cash, as well as to prepare for the upgrade to a newer version of PeopleSoft has been adversely impacted as a result as these current conditions.

The DFA CAFR Reporting Project and Historical Cash Reconciliation Project are both underway. These projects are not dependent on Cash Remediation Phase II, but will be coordinating with the project team as there are synergies between the three projects.

Current State

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Project Objectives

Process Objectives

Payment Processing

Implementation of leading business processes and practices will validate that there are adequate checks and balances in place for payment related activity

Payment information will be in SHARE and will be consistently accurate and in compliance with State requirements

Cash Control Processing

Modify processes and security related to deposits to provide proper segregation of duties

Assign each State owned bank account a unique General Ledger Account in SHARE and verify it is tracked in SHARE Cash Management

General Ledger Processing

Implement clearly defined controls and processes associated with the Chart of Accounts, and SHARE configuration to increase financial reporting accuracy and compliance with GAAP/GASB

Establish clearly defined processes and preventive system controls within SHARE to increase accuracy and efficiency of journal entry processing

Redesign the SHARE open/close process for periods and adjust SHARE configuration to facilitate the creation of financial reports

Focus on these areas with the associated business process redesign objectives will institute broadly accepted practices and mitigate the adverse effect of customizations and shadow systems on accuracy, controls and timeliness

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Why now? Four Factors are Driving Urgency

1. Near-term realization of dramatically improved accounting processes for the State:

― System Process Redesign: Adopting SHARE-delivered functionality thereby mitigating operational risks related to customizations, shadow systems and manual, error prone activities and interfaces

― Accounting Process Redesign: Adopting industry standard accounting practices thereby mitigating operational risks related to insufficient controls, accuracy and timeliness, and efficient and effective State accounting processes:

― Performance Enhancement: Realizing higher levels of process performance, controls and accuracy for the State’s accounting practices.

2. Implementation of compliance requirements related to audit findings:

― Reduce ongoing exposure related to non-compliance with accounting standards as well as financial and system audit findings

― Implement additional controls related to the Chart of Accounts, Configuration, and Security, which will provide the State increased data reliability

― Achieve proper division of accounting responsibility between Agencies and DFA

― Attain consistency in internal and external financial reporting in order to produce a compliant CAFR

3. Achieving these business results within the next 10 months

4. Setting the stage for a successful SHARE upgrade:

― Implementing the process and system enhancements in the 8.8 environment will reduce upgrade project complexity and risks due to having BPR implemented before the upgrade begins

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Summary of Scope

Process Area Scope

Payment Processing

External Payment Systems Warrant Printing, Processing &

Handling Electronic Data Interchange

strategy Accounts Payable Vendor

Processing Staledating and Escheatment Security and Approval

Processing Bank Integration

Cash Control Processing

Returned Depository Items Returned Electronic Payments Security Bank Accounts

General Ledger Processing

Control General Ledger Process

Close Process Financial Reporting Controls Security

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Project Timeline, Resources & Communications

Month 1 2 3 4 5 6 7 8 9 10 11 12

Project Planning and Organization

Design

Build and Test

Train and Deploy

Support & Project Close Out

Key Project Stakeholder CommunicationsProject Team Composition

Role Resources Meetings Status Reports

Executive Sponsor Ricky Bejarano Monthly Monthly

Steering CommitteeRepresentatives from DFA, DoIT, DOT, STO, and other identified agencies

Monthly Monthly

Project ManagementRepresentatives identified by agencies and vendor Bi-Weekly Bi-Weekly

Project TeamTechnical and Functional representatives from identified agencies and vendor

Bi-Weekly Receive from members

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Deliverables Summary

Phase Summary of Phase Key Deliverables

Project Planning and Organization

This phase outlines how the project will be conducted.

Scope Definition Project Plan and schedule Resource Requirements Bi-weekly and Monthly Reports

templates Risk and Issues Log templates Project Management Procedures

document (escalation process, issue resolution process)

Design The process, functional, and technical design activities will occur in this phase

Requirements Document Fit / Gap Document Configuration Design Reports and Workflow Design Process Flow Documentation

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Deliverables Summary (cont’d)

Phase Summary of Phase Key Deliverables

Build and Test The build activities and testing of the systems and related process, configuration, and other system adjustments will occur in this phase

Configure and Build Test Plan Testing Defect Tracking Log Test Scripts for Testing Cycles Unit Testing System and Integration Testing User Acceptance Testing Regression Testing

Train and Deploy User training, both support and end-user training take place in this phase as well as the implementation of the project

Job Aids Training Materials Training Delivery Knowledge Transfer Implementation Plan and Schedule Implementation Issues Tracking Log Cut-over

Support and Project Close-out

Support and final project documentation

On-site Support Off-site Support Transition Plan Close-out Report

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Risks, Dependencies and Assumptions

Agency payment systems will require modification to their processes and interfaces

External system integrator services will need to be engaged

SHARE delivered processes and functionality will be used

Agencies will be able to meet project deadlines including timely executive decisions

Sufficient state staff resource availability and project performance

Delay in funding, procuring, or contracting could push delivery dates

Organizational readiness

Agency modification of payment source systems

Completion of the project within the funding appropriations period

Availability of non-production SHARE financial environments for development and testing

Risks Dependencies Assumptions

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Budget and Funding Sources

Funding Source Amount Description

Previously Certified $54,000

Certification Request $1,000,000DOT Funding - DOT involvement to accommodate DOT requirements

Remaining Funding $3,946,000 Funding source to be identified

Total $5,000,000Request based on independent CAFR audit findings and related compliance remedies

DOT funding enables immediate project initiation resulting in new process implementation in 1Q FY16. Otherwise new process

implementation would occur in 4Q FY16 at the earliest.

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Cash Remediation Phase I was successfully delivered in February 2013. It automated the State’s cash reconciliation processes and had a dramatic impact on process efficiency and controls

Phase I was a ‘point forward’ solution and Historical Cash Reconciliation efforts are underway for the period between July 2006 and January 2013

Cash Remediation Phase II continues where Phase 1 left off. It will result in the expedient realization of the below project outcomes and benefits.

Summary

1. Near-term realization of dramatically improved accounting processes for the State in the areas of Payment processes, Cash Control processes and General Ledger processes

2. Implementation of compliance requirements related to audit findings

3. Achieving these business results within the next 10 months

4. Setting the stage for a successful SHARE upgrade

Primary Cash Remediation Phase II Project Outcomes and Benefits