trintech kpmg finance transformation 2012 06 07
DESCRIPTION
KPMG and Trintech professionals will lead discussions about the challenges organizations currently face in the G/L, account reconciliation, close, consolidation, reporting, and compliance processes. You will also learn how Finance Governance Technologies enable the foundation for monitoring, visibility and benchmarking necessary to deliver value, manage resources, control risk, measure performance and capture assurance for the Record to Report process.TRANSCRIPT
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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Finance Governance and Transformation with KPMG and Trintech
June 7, 2012
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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Agenda
Registration, Breakfast, and Networking
Program
– Introduction
– Evolving Role of Finance and Governance
– Optimizing the Last Mile of Finance
– BlackRock Case Study: Process Improvement using Finance Governance Technology
Q&A and Panel Discussion
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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Presenters and Guest Speakers
Presenter Biography
Charles K Muldoon KPMG LLP
Charlie is a Director in the KPMG Management Consulting Practice and has over 25 years of finance and consulting experience. His focus is on Finance Transformation, Planning, Forecasting & Budgeting, Financial Consolidation and Enterprise Performance System integration.
David Taylor Trintech, Inc
David is with Trintech for over 11 years, and brings a wealth of knowledge from the Office of Finance to Trintech, including the Financial Close and Financial Reporting, Financial Planning and Analysis, as well as Mergers and Acquisitions. David is responsible for Strategic Planning, Corporate Business Development, Quality, Process Improvement and Product Strategy.
Kevin Buckley BlackRock, Inc
Kevin is the Director of BlackRock’s Corporate Control & Consolidation group and has been with BlackRock for over 7 years. Kevin is responsible for the planning and execution of the month-end close including the Balance Sheet reconciliation process, P&L flash, Balance Sheet analytics and financial systems access.
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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Finance Transformation with KPMG and Trintech Today’s discussion
Evolving role of Finance and Governance
Characteristics of Finance Leading Practices
Key Trends in Finance Governance and Transformation
Key Levers for Finance Transformation
Finance and Record To Report Functional Overview
Record to Report / Quality Close Deliverables
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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Finance Transformation with KPMG and Trintech Evolving Role of Finance and Governance
Strategic Decision Support
Low Cost Provider
Catalyst Governance
Finance
The role of Finance is evolving from a transaction processing, historical reporting focus to a business partner responsible for driving growth and profitability…
Integrated Finance Data Analytics Scenario Analysis Profitability Analysis
(customer, product, business unit, region)
Turning data into business insight
Merger Analysis Capital Planning Transaction Support Investment Analysis
Standard Global Processes Common ERP Lean Organization Structure Leverage low cost delivery
countries Economies of scale Simplified business structure Continuous Improvement Automated processes
Centralized management reporting
Task management Effective master data
governance Process KPIs Rationalize and continually
monitor controls BPO Monitoring Controls (if
using outsourcer)
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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Finance Transformation with KPMG and Trintech Characteristics of leading finance organizations
Finance Governance – Preventative and predictive policy and control environment with exception based controls that balance materiality, risk exposure, and savings benefits with a single point of truth and transparency for policy and information
…movement from solely financial steward to enterprise risk and business performance facilitator
Harmonized business information systems and business processes incorporating core ERP and enabling technology including Trintech business performance applications, self service, dashboards, and digitization
Unrelenting focus on simplification and taking the work out of the system. Lean Finance organization built around transactional, center of expertise, and business partnership activities
Analytics hubs expanding beyond Finance to business insights supported by standard data management and robust Business Intelligence and simulation tools
Fully integrated planning, dynamic forecasting, budgeting, reporting, performance management
Agility/ability to design, lead and sustain a change program, often with complex and concurrent change efforts, and align that program to the broader organization’s strategic direction
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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Finance Transformation with KPMG and Trintech Key trends – Finance transformation marketplace summary
Companies are increasingly leveraging hybrid finance models, integrated financial systems, customized talent strategies, streamlined global organizations/governance structures and processes to reduce cost and increase quality.
Transformation Dimension Key Observations
Planning/Decision Making
Systems/Tools
Service Delivery/Operating Model
Process Design/Ownership
Talent/People
Companies are using a hybrid approach, combining shared services and outsourcing delivery models
Companies are looking into non-transactional activities, such as audits, compliance and financial analysis as part of the SSC scope expansion
Companies are increasing using best of breed solutions and leveraging their ERP systems, to streamline business processes, and standardize business processes globally
Best of Breed work flow tools help to support the Finance Function
Companies are moving toward implementation of common standardized global processess
Governance structures with clearly defined roles and responsibilities are being rolled-out to deliver consistency in processes, increased quality, compliance and service levels
Rich solution toolkits and insightful analytics are being used Incentives/penalties for accurate forecasting are being employed by Companies Dedicated business partners and analysts are key components for planning and
decision making
Improving the ability of Finance to provide insight to operational managers with the right mix of skills/capabilities, knowledge and experience levels
Evolving demands on the Finance function require differences in the way Finance talent is identified and developed (i.e. Career paths to performance management, etc.)
Multi-generational Finance workforces require focused and customized strategies for attracting, developing and retaining the optimal talent mix
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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Finance Transformation with KPMG and Trintech Finance levers to drive improvement
Attributes of Leading Finance Functions
Typical Cost Drivers in Finance Functions Key Causes of Cost Drivers
Unnecessary Commercial and Business Complexity
Poor organizational discipline – Spans, Layers and Scope
High Incidence Rework, Errors or Manual Intervention
Business wide Data inefficiency
Ineffective Demand Management
Inadequate focus on Process, System and Control Optimization
Complex and redundant legal entity structures Large volumes of inter company charges Sales / procurement driven back office costs – e.g. use of POs
Reliance on data downloading and spreadsheet manipulation Focus on detail and report generation not linked to business value High error rates driving manual intervention and re-keying
Key stakeholder requirements not clear or understood Inability to say no to continual demand for reports / analysis Lack of clarity on role of finance
Corporate , Regions and Divisions duplication People overpaid / overqualified for their role Duplication between shared services and retained finance
High incidence of processes not standardized or automated Lack of robust process ownership and governance Opportunities for automation such as workflow or automated matching not
exploited
Inconsistent and unreliable data quality – data hierarchies not aligned to business structure
Volumes of data but no information High incidence of reconciliations at month end
Finance has the right level of influence. The business
avoids complexity arising from business decisions.
Lean organization, aligned to business requirements
populated by the “right” people
Integrated systems supported by good control process,
performance managed and fully trained people
All relevant processes and controls subject to continuous
improvement and optimized from a cost and risk view point
Data ownership and management embedded,
outputs trusted, technology optimized
Stakeholder requirements understood. Effective
prioritization, planning, and delivery to agreed service
levels
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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Finance Transformation with KPMG and Trintech Finance Functions and Record to Report overview
KPMG helps provide clients with a framework analyze their issues and define root causes
Organization and People (e.g., structure, roles, responsibilities)
Regulatory
External
Quality Close / Record to Report
Time to Close Time to Report Time to Consolidate
Process (e.g., policies, procedures, controls, chart of accounts)
Information Systems/Technology
Internal
Non-Financial Information
General Ledger Close
Consolidation Process
Purchase to Pay
Order to Cash
Human Resources and Payroll
Governance
Transaction processing
Fixed Assets and Capital
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL
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6.0 Financial Data Consolidation
Process
Total number of “top-side” journal entries booked
Total number of manual Consolidating journal entries booked
Total number of Consolidating journal entries booked
Materiality cut-off for journal entries
Days to consolidate financial data
Days to Close (thorough)
KPI Metric6.0 Financial Data Consolidation
Process
Total number of “top-side” journal entries booked
Total number of manual Consolidating journal entries booked
Total number of Consolidating journal entries booked
Materiality cut-off for journal entries
Days to consolidate financial data
Days to Close (thorough)
KPI Metric
Consolidation
Process 6.0 - Financial Data Consolidation
Sys
tem
Cor
pora
te
Yes
Yes
No
Changes required ?
Research change and
action required to correct
Consolidated financial
statements
Change trial balance?
Controller reopens
accounting period in GL
Draft notes to financials using
prior period’s notes as template
Consolidated financial
statements with accompanying
notes
Complete Disclosure and
GAAP Checklist
Review financial
statements, including variance analysis
Update financial
statements as required
Consolidation
To 4.0 GL Close
Run consolidated
financial statements
To 7.1 Management
Reporting
From 6.2 BU Data
Consolidation
6.3 – Consolidated Financial Statements6.1 – Consolidation Calendar Development & Communication6.2 - BU Data Consolidation
6.5 – Financial Statement Adjustments6.4 - Financial Statement Review
From 6.1 Consolidation
Calendar Development & Communication
To 7.4 Quarterly/Annual Filings &
Shareholder reports
No6.4.1 6.5.1
Connector
Control Reference
8.0Continuous
Improvement
7.0Reporting
6.0Financial Data Consolidation
5.0Preliminary Financial
Statements
4.0General Ledger
Close
3.0General Ledger
Accounting
2.0Allocations
1.0Feeder System
/Sub-ledger Accounting
9.0Accounting
System Maintenance
5.3Management Adjustments
5.1Trial Balance
Review
4.4Post-close Meeting
4.3Cut-off/
Post Sub-systems
4.2Pre-close Meeting
4.1GL Close Calendar
Development & Communication
3.3GL account
Reconciliations
3.1Process Journal
Entries
2.2Process
Allocations
2.1Allocation
Set-up
1.3Sub-ledger to GL
Reconciliation
1.2Sub-ledger Data Transfer to GL
1.1 Transaction
Posting to Sub-ledger
8.1Identify
Improvement Opportunities
7.4Quarterly/ Annual
Filings & Shareholder
Reports
7.3Notes to the Financials
7.2Prepare
Statements for the Board
6.4Financial
Statement Review
6.3Consolidated
Financial Statements
6.2BU Data
Consolidation
6.1Consolidation
Calendar Development & Communication
8.2Accounting Research
9.2Regular System
Upgrades
8.4Improvement
Implementation
8.3Evaluation of Improvement Opportunities
Data Recording/Accounting Period Close Consolidation Reporting Communication and Governance
Process
3.2 Intercompany Transactions
5.2 Preliminary Financial
Statement Review
9.3 Chart of Account
Maintenance
6.5 Financial Statement
Adjustments
7.5 Regulatory
Reports
7.1 Management
Reporting
9.1Feeds Connection to General Ledger
Regional SAP System Processes
Consolidation System Processes
Close Governance Processes
Sub-ProcessDescription Implementation
Impact
Effort A Standard Close calendar focuses on
redesigning the period close, consolidation and reporting timetable, while enabling a real time environment to support management decision making.
Among other benefits, a standard close calendar helps support the ability to decrease the number of days to close
Low Medium High
Low Medium High
Recommendations
Perform detailed close process review Balance speed vs. precision Eliminate the unimportant / unnecessary Gain top-level support
Risk Low Medium High
Benefits
Reduced days to close Streamlined, less complex process Standardized processes and outputs More focus on analysis, less on transaction
processing
KPMG provides clients with our leading practices and finance transformation methodology to assess, design and implement sustained change. The following are sample deliverables from a Quality Close / Record to Report project.
Sample Client Deliverables
Key Performance Indicators by Process
Tools & Templates
Process Flow Repository Leading Practices & Insights
Process Decomposition
(1) Yes = 1, No = 5
Same
level
Do you
understand where
we are in the G&A
Finance Project?
Are you
confident that
the G&A
Finance
Project will
succeed?
0,1
0,2
Not
improved
improved Segment 1
Segment 2
Segment 3
Germany
Europe
Americas
Asia - Pacific
Yes More yes
than no
1 2
Partly
3
More no No
than yes
4 5
Yes More yes
than no
1 2
Partly
3
More no No
than yes
4 5
Ø = 2,5 (1) Ø = 2,4 (1)
Assess Current State Define Future State
Finance Transformation with KPMG and Trintech Record to Report / Quality Close Deliverables
**Certain aspects of the service described herein is not permissible for KPMG audit clients and their affiliates
Trintech –Optimizing the Last Mile of Finance
www.trintech.com
Optimizing the LAST MILE of
FINANCE
Optimizing the Last Mile of Finance-roadmap for continuous improvement
David Taylor, ACMA CGMA Executive Vice President
Last Mile of Finance Process Timeline
Week -1 Week 1 Week 2 Week 3 Week 4
GL Closed
General Ledger Closed
Controller & CFO Reviews
Drafting of SEC Report
Drafting of Earnings Release
Financial Statement Analysis
Disclosure Committee Meeting
CEO Certification
Audit Committee
10Q Filed; ER
Published
Distribution of Drafts Week 4-5
Reconciliations
Internal Controls Review (ICFR)
Consolidations
Outsourced XBRL
Filing
The Last Mile – Resource Optimization
Work Load
100%
February March
80%
1 Cost
Reduction
1 - Eliminate manual work a) Right first time – reduction of corrections
performed during peak load b) Automation - cost reduction if the targeted
activity is performed during the peak load
2 – Evenly distribute the work load Moving activities from the peak load enables cost reduction and reallocated time to improve quality
2 2
Address bottlenecks to Improve Quality and Increase Efficiency
Sprint
Run
Crawl
Walk
Last Mile of Finance Maturity Model
Manual Process Improvements
• (Manual) detective controls & procedures
• Manual process improvements
• Legacy apps • Heavy spreadsheet
use • Email, Word, shared
drives
Semi-Automated Process
• Semi-automated controls
• Point solutions for collaboration (e.g. SharePoint), process management and compliance
• Lack of controls across data streams
• No single view into close and reporting process
Manual Processes
• Disjointed processes • Legacy apps • Heavy spreadsheet
use • Email, Word, shared
drives
Fully-Automated & Optimized
• Best practices • (Automated)
preventive controls embedded into business process
• Consolidated view into close & reporting process
• Fully integrated with XBRL, close, exception mgt, reconciliations, and compliance
• Automated and collaborative global workflow
• Real-time process optimization
Effic
ienc
y, T
rans
pare
ncy,
Qua
lity
Cost of Finance, Risk
Software solutions for Record to Report (RtoR)
Optimizing the “Last Mile” of Finance
Transactional Systems
Regulatory Authority
Reduce the Cost of Finance as a % of Revenue
17:
Production Platform ensures process discipline
Scope, Schedule
Monitor/Record
Manage
Report
Plan
Perform
Repeatable Sustainable
Transparent
Universal Oversight of the Last Mile
Entity Hierarchy View
Close Calendar Management
Pro-active, scheduled delivery of tasks
21:
Integrated Last Mile of Finance Timeline
Week -1 Week 1 Week 2 Week 3 Week 4
GL Closed
General Ledger Closed
Controller & CFO Reviews
Drafting of SEC Report
Drafting of Earnings Release
Financial Statement Analysis
Disclosure Committee Meeting
CEO Certification
Audit Committee
10Q Filed; ER
Published
Distribution of Drafts Week 3-4
Reconciliations
Internal Controls Review (ICFR)
Consolidations
Integrated XBRL
Filing
Shortened Cycle and Cost
Savings
Managing With AssureNET • Dashboards & Reporting
– Real time view of processes – Advanced Reporting
• Account Reconciliations – Auto/Bulk Reconciliations – Best Practices Templates
• Workflow – Configurable schedules, roles – Attachment enabled
• Dynamic Acct Maintenance – Stratify accounts to gain
efficiency – Eliminate manual rating
exercise
• Quality Assurance Review – Automate compliance testing – Flexible selection criteria – Standardized checklist
GL Balances GL Transactions
SL Balances FX Conversion
Software Solutions For Those Who Seek To….
Institutionalize financial best practices Centralize close tasklist, updated real-time as work is performed Self document controls during execution Identify, escalate, and track issues through resolution Achieve fully documented, paper-less close process from record to reporting
Blackrock Case Study: Process Improvement using Finance Governance Technology
www.trintech.com
Transforming the LAST MILE of
FINANCE
BlackRock Case Study: Process Improvement using Finance Governance Technology Kevin Buckley
Director of Accounting
The Organization
BlackRock, with more than $3.5 trillion under management, is the world's largest money manager. The firm specializes in equity and fixed income products, as well as alternative and multi-class instruments, which it invests in on behalf of institutional and retail investors worldwide; it does not engage in proprietary trading. Clients include pension plans, governments, insurance companies, mutual funds, endowments, foundations, and charities. BlackRock also provides risk management services through BlackRock Solutions and is a leading provider of exchange-traded funds (ETFs) through iShares. BlackRock has offices in some 25 countries.
Status Before Implementing AssureNET
• Burdensome paper-based global sign off process for approximately 3,000 reconciliations
• Lack of visibility into reconciliation completion status at a given point in time
• Difficult to identify bottle-necks and inconsistencies in the process
• Reconciliations stored locally by region hampered timely analysis and review
• Reliance on rep letters from regional controllers to confirm that reconciliations and financial statement reviews were completed
Benefits From Initial AssureNET Implementation
• Electronic workflow of approximately 2,000 reconciliations, reduced through the use of grouped reconciliations
• Timely view of global reconciliation status by management
• Centralized, secure repository of all reconciliations • Bottlenecks and inconsistencies identified for further
improvements • Task functionality used to replace rep letter process
Future Plans for AssureNET
• Utilize risk ratings to prioritize / standardize resources assigned to each reconciliation
• Move to a standard three level sign off process globally
Implementation Advice
• Have participation from all key groups on project team • Carefully assess how workflow and account
maintenance will be handled • Address reporting needs early on in the process • Don't underestimate balance load / tie-out challenges
Q&A and Panel Discussion
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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Thank you
All information provided is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.