Compliance Update




           Mike Malwitz
  Sr. Product Marketing Manager
             Hyperion
The Financial/BPM Market
                              Hyperion 2x nearest competitor
             2004 Financial / BPM Ma...
Corporate Performance Management
Gartner Magic Quadrant
                                                   The Magic Quadr...
Hyperion is Recognized by
 Analysts at IDC and AMR
“Hyperion has an excellent position and
vision into financial performan...
Business Performance Management
Cycle
                                                             Strategy

             ...
Customer Example: Business Reporting
  Systems, Process and People Linkage

       Finance Performance                    ...
The Most Complete Solution
Offering

                                              BUSINESS PERFORMANCE MANAGEMENT SOLUTIO...
Agenda

         Consolidation Accounting
         Governance, Compliance and Business Performance
         Management
   ...
Consolidation Accounting

     Accounting Cycle
     Mechanics of the Close – subledgers, general ledgers,
     consolidat...
In September, IBM in collaboration with the EIU
completed the global CFO survey data collection
with 889 CFOs and senior f...
Executive Summary
                                                   CFO Survey 2005 Summary


     Finance is emerging fr...
Overall Finance aspires to manage performance,
 drive greater insight and value, strengthen
 controls and meet fiduciary r...
Need for Performance Visibility
                                   Regulatory                Complex                  Earn...
Components of a Compliance Architecture



                                                     Sarbanes-            IAS  ...
PWC Whitepaper on
Spreadsheets and SOX
                                                   Change Control
                 ...
What’s New: COSO2 ERM

             The four objectives                   New with
             categories - strategic,   ...
““While identifying control deficiencies
                                        and significant deficiencies
            ...
““The internal control environment
                                       extends to …the period-end financial
           ...
Global Issues

     International Financial Reporting Standards
       —      Recognition and Measurement
       —      Co...
IFRS Success Stories
     WELLA
     Flexibility of HFM was key to IFRS compliance at Wella AG
     Dr Dietmar Scheja, who...
IFRS Success Stories
     FINANCIAL TIMES (Pearsons)
     Centralised web based model gave Pearson Group plc visibility of...
Sarbanes-Oxley Background


          Most significant legislation since
          the Great Depression
          11 major...
Sarbanes-Oxley Background




Copyright © 2005, Hyperion. All rights reserved.   P. 23
Sarbanes-Oxley Background




Copyright © 2005, Hyperion. All rights reserved.   P. 24
Sarbanes-Oxley Background




Copyright © 2005, Hyperion. All rights reserved.   P. 25
Sarbanes-Oxley Background




Copyright © 2005, Hyperion. All rights reserved.   P. 26
IDC Compliance Chasm Excerpts
220 CFOs Surveyed




Copyright © 2005, Hyperion. All rights reserved.   P. 27
Copyright © 2005, Hyperion. All rights reserved.   P. 28
How Hyperion Addresses Key
          Compliance Requirements
        Sect.                  Requirement/Eff. Date         ...
Agenda

         Consolidation Accounting
         Governance, Compliance and Business Performance
         Management
   ...
Disconnected Silos of Information


             XL                                    Email




         Word
           ...
Unifying Financial Information




                 Documentation




Copyright © 2005, Hyperion. All rights reserved.   P...
FM/SOX Presentations at Hyperion’s
Solutions 2005 User Conference
     Migrating From Hyperion Enterprise to Financial Man...
Hyperion Financial Management
Benefits
     Accelerates Reporting Cycles and Reduces Costs
     of Compliance

     Shorte...
Close Process…It’s Not Easy!
                    Local                                         Regional                   ...
Hyperion Financial Management
Features
     Market-leading Financial Consolidation
     and Reporting Application
     Pat...
Financial Management
SOX-Specific Features
      Audit Trail                                      Segregation of Duties
  ...
User Interface - Process
Management




Copyright © 2005, Hyperion. All rights reserved.   P. 38
Annotation
                                                                   Indicator

                                 ...
Hyperion Shared Services -
Metadata Compare




Copyright © 2005, Hyperion. All rights reserved.   P. 40
XBRL Output From Financial
  Reporting: Available Now!



                SAP



                 JDE




               O...
Summary

     Business Performance Management Has Major Role in
     Compliance
     Sarbanes-Oxley has had a profound imp...
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Diane furst re hyperion

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Diane furst re hyperion

  1. 1. Compliance Update Mike Malwitz Sr. Product Marketing Manager Hyperion
  2. 2. The Financial/BPM Market Hyperion 2x nearest competitor 2004 Financial / BPM Market Shares 2004 Worldwide Financial/BPM Revenues HYSL 292.6 HYSL 21% ORCL 121 COGN 119 Note: 40% SAP 97.2 ORCL Market Share Other 9% SAS 64.3 in Financial 55% GEAC 61.88 Consolidations! COGN 8% SAP 7% 2004 Total Market: $1.4B 2004-2009 CAGR of 11.3% Source: IDC, 2004 IDC counts software license and maintenance in their revenue estimates IDC derives their numbers independently, without validation from Hyperion Copyright © 2005, Hyperion. All rights reserved. P. 2
  3. 3. Corporate Performance Management Gartner Magic Quadrant The Magic Quadrant is copyrighted 2005 by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Magic Quadrants for CPM Suites, 2005: October, 2005; N Raynor, F Buytendijk, L Geishecker Copyright © 2005, Hyperion. All rights reserved. P. 3
  4. 4. Hyperion is Recognized by Analysts at IDC and AMR “Hyperion has an excellent position and vision into financial performance management.” Hyperion Vendor Profile, February 2003 “Hyperion retains its position (held since IDC established the category in 1997) as the leading analytic applications vendor by revenue…” H. Morris, R. Blumstein, D. Vesset, "Worldwide Total Analytic Applications Software Competitive Analysis, 2003: 2002 Shares and Current Outlook“. August 2003 Copyright © 2005, Hyperion. All rights reserved. P. 4
  5. 5. Business Performance Management Cycle Strategy Financial Modeling Financial reporting Benchmarking Sales planning Customer profitability Procurement and supplier analysis Working capital management Copyright © 2005, Hyperion. All rights reserved. P. 5
  6. 6. Customer Example: Business Reporting Systems, Process and People Linkage Finance Performance Business Level Impact Change Agent • Focus on Critical Issues Value Added Strategic Level Executive • Resource Allocation Actions Scorecards • Corrective Actions & Models Business Partner • Data Analysis Business • Decision Support Tactical Level Reporting and Analysis Information • P&L, Balance Sheet Delivery Scorekeeper • Transaction Efficiency Local IT Systems Operational Level • Fiscal Reporting Data Core Business Processes Copyright © 2005, Hyperion. All rights reserved. P. 6
  7. 7. The Most Complete Solution Offering BUSINESS PERFORMANCE MANAGEMENT SOLUTIONS Scorecarding and Dashboarding BPM APPLICATIONS Planning, Consolidation Tailored Modeling Budgeting and and Reporting Applications Forecasting Performance Query and Enterprise Developer Analytics HYPERION Metrics Reporting Reporting Tools BI PLATFORM Core and Data Integration Services LEGACY MDB DW ERP CRM Copyright © 2005, Hyperion. All rights reserved. P. 7
  8. 8. Agenda Consolidation Accounting Governance, Compliance and Business Performance Management – Analyst Viewpoints – Business Challenges (SOX, COSO, etc.) Financial Consolidation, Reporting and Compliance — Features and Benefits Copyright © 2005, Hyperion. All rights reserved. P. 8
  9. 9. Consolidation Accounting Accounting Cycle Mechanics of the Close – subledgers, general ledgers, consolidation and reporting Management vs Statutory Standard Setting Bodies Recognition and Measurement Consolidation and Reporting — ARB51/IAS27: Consolidated Financial Statements and Intercompany Eliminations — FAS94/IAS27: Consolidation of Majority-Owned Subsidiaries — FAS 8/FAS52/IAS21: Foreign Currency Transactions and Translations — FAS95/IAS7: Statement of Cash Flows — FAS131/IAS14: Disclosures about Segments of An Enterprise Copyright © 2005, Hyperion. All rights reserved. P. 9
  10. 10. In September, IBM in collaboration with the EIU completed the global CFO survey data collection with 889 CFOs and senior finance professionals CFO Survey 2005 Firmographics Distribution by Geography Distribution by Business Turnover Distribution by Sector Less than $1B, Asia Pacific, Public, 12% Comms, 14% 18% 23% Greater than $10B, 31% Americas, 44% Industrial, 25% Distribution, 23% $1B to 5B, 24% EMEA, 33% $5B to 10B, Financial 27% Services, 26% Distribution by Title Distribution by Scope Treasurer / Audit / Sr. Business / Other, 4% BU / Program Area, 15% Finance Mgr, 6% CFO/Deputy CFO/CRO/SVP, 40% Enterprise / en'l Mgr, SSCs, Country, 20% global, 47% 8% Controller/Asst Controller, 18% Finance Region, 17% Director/VP, 23% Source: IBM Business Consulting Services, The Global CFO Survey 2005 Copyright © 2005, Hyperion. All rights reserved. P. 10
  11. 11. Executive Summary CFO Survey 2005 Summary Finance is emerging from a period of foundation-building Foundations are enabling the linkage of controls/risk, performance management and business insight Integration of information can catalyze the close alignment on Finance’s focus and effectiveness The agile Finance organization utilizes processes, tools, technology and organization to balance business needs Emerging model for Finance keeps the upside opportunity and downside risk in balance to maximize returns Copyright © 2005, Hyperion. All rights reserved. P. 11
  12. 12. Overall Finance aspires to manage performance, drive greater insight and value, strengthen controls and meet fiduciary requirements Finance’s Top Areas of Focus Most Important Areas of Focus in Role as a Finance Professional Percent of High Responses (Responses = 870) Measuring / monitoring business Reflects the top priority Managing performance identified in IBM’s 2003 performance CFO study Partnering with your organization to identify and execute growth strategies Driving Aligns with the profitable insight and growth agenda identified Continuous process improvement / value in IBM’s 2004 CEO study business improvement Leading finance-related compliance programs and strengthening the internal control environment Managing Reflects the current controls and regulatory environment Meeting fiduciary and statutory risk requirements 0% 20% 40% 60% 80% 100% Source: IBM Business Consulting Services, The Global CFO Survey 2005 Copyright © 2005, Hyperion. All rights reserved. P. 12
  13. 13. Need for Performance Visibility Regulatory Complex Earnings Requirements Organizations Expectations Reporting & Unreliable Plans & Pressure on Controls Overhead Forecasts Profitability Fragmented Systems High Cost of Information Access Copyright © 2005, Hyperion. All rights reserved. P. 13
  14. 14. Components of a Compliance Architecture Sarbanes- IAS Basel II Oxley CFR Part 11 EU DPD CPM Reporting and Risk Assert Process Controls Business Process Management, Integration Broker, BAM Financial CRM and Business and Customer- Unit ERP Facing Systems Systems Systems Classify, Analyze, Interpret BI Infrastructure, Tools and Applications Document and Archive Records Management, Document Management, Knowledge Management, Content Management and Storage Identify, Audit, Secure and Protect Identity and Access Management, Network Security and Business Continuity Acronym Key ERP = enterprise resource planning Copyright © 2005, Hyperion. All rights reserved. EU DPD = European Union Data Protection Directive P. 14
  15. 15. PWC Whitepaper on Spreadsheets and SOX Change Control Version Control Access Control Input Control Security and Integrity of Data Documentation Development Lifecycle Backups Archiving Logic Inspection Segregation of Duties Analytics Bottom Line: Almost impossible to build a compliant spreadsheet environment – evaluate a purpose built application instead. www.pwcglobal.com Copyright © 2005, Hyperion. All rights reserved. P. 15
  16. 16. What’s New: COSO2 ERM The four objectives New with categories - strategic, COSO2 operations, reporting and compliance - are represented by the vertical New columns. Strategic with objectives are new. COSO2 The eight components are New represented by horizontal with rows. Objective Setting, COSO2 Event ID and Risk Response are new. The entity and its organizational units are depicted by the third dimension of the matrix. Copyright © 2005, Hyperion. All rights reserved. P. 16
  17. 17. ““While identifying control deficiencies and significant deficiencies represents an important component of management's assessment, the overall focus of internal control reporting should be on those items that could result in material errors in the financial statements.” US Securities and Exchange Commission Commission Statement on Implementation of Internal Control Reporting Requirements May 16, 2005 Copyright © 2005, Hyperion. All rights reserved. P. 17
  18. 18. ““The internal control environment extends to …the period-end financial reporting process including the preparation of both annual and quarterly financial statements, including controls over procedures used to record recurring and nonrecurring adjustments to the financial statements (for example, consolidating adjustments, report combinations, and reclassifications).” US Securities and Exchange Commission PCAOB Auditing Standard No. 2 March 9, 2004 Copyright © 2005, Hyperion. All rights reserved. P. 18
  19. 19. Global Issues International Financial Reporting Standards — Recognition and Measurement — Consolidation and Reporting — Transition Issues — US-GAAP Harmonization — Segment Reporting — Impairment (Fair Value) analysis — UK Operating and Financial Review (OFR) Sustainable Development Reporting Canadian Continuous Disclosure Obligations — (aka “Bill 198” or “NI 51-02”) — Canadian Version of Sarbanes-Oxley Copyright © 2005, Hyperion. All rights reserved. P. 19
  20. 20. IFRS Success Stories WELLA Flexibility of HFM was key to IFRS compliance at Wella AG Dr Dietmar Scheja, who was Head of Corporate Financial Analysis at Wella AG faced significant issues after the group had completed its IFRS implementation.“We had separate consolidation models for management and financial reporting. They were never completely in step and we had the added burden of making sure that what we reported externally to shareholders in IFRS agreed with what we were saying to management.” The flexibility of HFM really became apparent when the Wella Group was taken over by Procter and Gamble and was required to report under US GAAP as well as IFRS and local GAAP. “At first we simply added US GAAP adjustment members to the existing custom dimensions and put through the larger adjustments at a consolidated level. But later we were able to push responsibility for US GAAP adjustments down to the reporting,” says Dr Scheja. “HFM was also vital in allowing us to reconcile results between US GAAP and IFRS so that we could explain the differences”.“The most outstanding benefit of HFM is its flexibility. We were able to accommodate US GAAP when it was suddenly sprung on us and prepare profit forecasts in HFM very quickly and relatively easily without incurring big consulting costs. This really was a key benefit”. Copyright © 2005, Hyperion. All rights reserved. P. 20
  21. 21. IFRS Success Stories FINANCIAL TIMES (Pearsons) Centralised web based model gave Pearson Group plc visibility of IFRS Pearson Group plc, the publishing giant which owns the Financial Times has dual listings in the UK and the United States. As such, Andrew Midgley, Head of Financial Reporting had to cope with complex multi-GAAP issues when transitioning the group from UK GAAP to IFRS. “It was difficult at first because there was considerable uncertainty around the application of standards which were still subject to change,” says Midgley. An initial paper based exercise quickly identified the types of IFRS adjustments that had to be handled at the centre and those which could be posted by the reporting units. “There were fewer adjustments at the reporting entity level than we had expected and they tended to be relatively small. They mainly related to acquisitions, intangibles, leases, and joint ventures,” says Midgley. “Adjustments at the centre were bigger and more complex and included pensions, share option expense, deferred tax and financial instruments.” Given this relatively straightforward background, the group was quickly able to establish a unified chart of accounts in HFM covering, UK GAAP, IFRS and US GAAP. It was then a simple matter to post the adjustments against these accounts as required.Segmental reporting was a challenge but the group was already accustomed to the concept under US GAAP even though not all of the detail is required to be published in the US. Copyright © 2005, Hyperion. All rights reserved. P. 21
  22. 22. Sarbanes-Oxley Background Most significant legislation since the Great Depression 11 major sections (or “Titles”) — Public Audit — Corporate Responsibility — Financial Disclosures — Brokerage Practices — Penalties Adoption by SEC is proceeding Copyright © 2005, Hyperion. All rights reserved. P. 22
  23. 23. Sarbanes-Oxley Background Copyright © 2005, Hyperion. All rights reserved. P. 23
  24. 24. Sarbanes-Oxley Background Copyright © 2005, Hyperion. All rights reserved. P. 24
  25. 25. Sarbanes-Oxley Background Copyright © 2005, Hyperion. All rights reserved. P. 25
  26. 26. Sarbanes-Oxley Background Copyright © 2005, Hyperion. All rights reserved. P. 26
  27. 27. IDC Compliance Chasm Excerpts 220 CFOs Surveyed Copyright © 2005, Hyperion. All rights reserved. P. 27
  28. 28. Copyright © 2005, Hyperion. All rights reserved. P. 28
  29. 29. How Hyperion Addresses Key Compliance Requirements Sect. Requirement/Eff. Date Hyperion Solution 302 Quarterly certification of financial Cascading certification with FM Process statements (2002) Management, Doc Attachments, Cell Text 404 Annual assessment of effectiveness of 1. FM - Close and Reporting Controls and internal control and COSO Compliance Audit Trails (Dec 2004) 2. Integration with Hyperion Technology and GSI Partners: IBM Business Controls, Axentis, Upstream, OpenPages 409 Rapid disclosure of material changes – Financial Management, Hyperion BI Platform “Real Time” reporting (Mar 2004) 401 Pro-forma reconciliations Financial Management “What If” capabilities Off-balance sheet trans. (2003) SAS99 Clear audit trails from source to Upstream/HAL, FM Dimensions, Journals 10K¥10Q (2003) Module, Task/Data Audit Accel. 10K in 75 days moving to 60 (2005) Financial Management – That’s what it’s all Filings about! Copyright © 2005, Hyperion. All rights reserved. P. 29
  30. 30. Agenda Consolidation Accounting Governance, Compliance and Business Performance Management – Analyst Viewpoints – Business Challenges (SOX, COSO, etc.) Financial Consolidation, Reporting and Compliance — Features and Benefits Copyright © 2005, Hyperion. All rights reserved. P. 30
  31. 31. Disconnected Silos of Information XL Email Word ppt Copyright © 2005, Hyperion. All rights reserved. P. 31
  32. 32. Unifying Financial Information Documentation Copyright © 2005, Hyperion. All rights reserved. P. 32
  33. 33. FM/SOX Presentations at Hyperion’s Solutions 2005 User Conference Migrating From Hyperion Enterprise to Financial Management at Comcast: Christine Diantonio, Comcast & Tara Krause, Comcast Achieving Sarbanes-Oxley and Continuous Improvement Objectives Within the Corporate Reporting Cycle: Heather Wilson, PricewaterhouseCoopers & Dean Curtin, PricewaterhouseCoopers Meeting Sarbanes-Oxley Requirements With Hyperion HUB: Edward Roske, interRel Consulting Delivering Accountability Across the Enterprise With Financial Management at TV Guide: Diane Furst, Gemstar-TV Guide International Optimizing Financial Reporting With Financial Management at Kansas City Life Insurance: Rob Fisher, Kansas City Life Insurance & Jeff Branton, MarketSphere Meeting Sarbanes-Oxley Compliance and Beyond With Financial Management at Royal AHold: Tim Wassman, Axentis Copyright © 2005, Hyperion. All rights reserved. P. 33
  34. 34. Hyperion Financial Management Benefits Accelerates Reporting Cycles and Reduces Costs of Compliance Shortens close-cycles to report in a timely and accurate manner Unifies financial and operational results into “one version of the truth” Provides complete audit trails and process controls to reduce costs of compliance Provides detailed management information for better decision making Tax/Treasury Detailed Analysis Automates processes so Finance staff Internal Reporting can spend more time on analysis External Reporting Product Line Profitability Copyright © 2005, Hyperion. All rights reserved. P. 34
  35. 35. Close Process…It’s Not Easy! Local Regional Central Monthly/ Quarterly Input/Load Actual Results Approve Submit ERP/GL Validate Process Publish • Review Reports Process Monthly • Approve Forecast • Review Input/Load Approve Approve • Adjust Submit • Approve Submit Validate Reject • Consolidate Reject • Adjust • Intercompany SEC • Consolidate Tax • Currency Legal Annual Budget Treasury Input/Load Approve Management Submit Validate Reject Copyright © 2005, Hyperion. All rights reserved. P. 35
  36. 36. Hyperion Financial Management Features Market-leading Financial Consolidation and Reporting Application Patented financial consolidation and reporting features Complete audit trails, workflow and validations “Smart Dimensionality” Flexible "what if" scenario management features Powerful, reporting and analysis tools Full integration with ERP and other transaction systems Easy to customize and extend Web-architected Copyright © 2005, Hyperion. All rights reserved. P. 36
  37. 37. Financial Management SOX-Specific Features Audit Trail Segregation of Duties — “G/L to 10Q” Audit Trial — Roles — Task Audit — Classes — Data Audit — Authentication — System and Event Logs — Metadata security — Intercompany Transactions filtering User Interface Documentation — Process Management — Cell Text and — Control mechanism for data Document attachments submission — Signoff required Change Control — Prevent Control Validations enforced — Versioning of metadata — Workspaces — Comparisons of — Control how a user interacts with metadata updates system (Basic vs Advanced) — Provide controlled task flow User Monitoring — Task Automation — Users on System — Repeatable Processes Copyright © 2005, Hyperion. All rights reserved. P. 37
  38. 38. User Interface - Process Management Copyright © 2005, Hyperion. All rights reserved. P. 38
  39. 39. Annotation Indicator Attachment of full MS Word Commentary, then Print In Hyperion Reports Copyright © 2005, Hyperion. All rights reserved. P. 39
  40. 40. Hyperion Shared Services - Metadata Compare Copyright © 2005, Hyperion. All rights reserved. P. 40
  41. 41. XBRL Output From Financial Reporting: Available Now! SAP JDE Oracle Copyright © 2005, Hyperion. All rights reserved. P. 41
  42. 42. Summary Business Performance Management Has Major Role in Compliance Sarbanes-Oxley has had a profound impact on U.S. businesses Hyperion has the right applications and tools to help Hyperion customers are well equipped to handle Sarbanes- Oxley, IFRS and any other regulations Copyright © 2005, Hyperion. All rights reserved. P. 42
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