Fei venamonth-endclosewebinar-may222014final-140527083256-phpapp02

Month-End Close:
Best Practices for Today’s Finance Leader
© 2014 Vena Solutions Canada Inc.

Agenda
• Welcome & introductions
• Today’s month-end close process: definition
• Market data: the state of the month-end close
• The role of technology
• Common pain points
• Next generation processes: best practices & client stories
• Wrap-up & questions

Rishi Grover
Co-Founder, President & SVP Solutions Engineering
Responsible for the day-to-day operations and the success of client implementations at Vena
Solutions.
• Extensive experience in the Corporate Performance Management and Business Intelligence
space, working in a variety of capacities including Consulting, Marketing and Sales.
• Worked very closely with numerous Fortune 500 companies in re-engineering and
optimizing financial processes and developing custom software solutions for finance and
accounting functions.
• At Clarity Systems - Director of Enterprise Solutions at Clarity Systems and a subject matter
expert in financial planning and regulatory reporting
Bachelor of Applied Sciences from the University of Toronto, specializing in Computer
Engineering and Communication Systems.

Patrizio (Pat) Calitri, CPA, CA
Director, Financial Close & Consolidations Solutions
Responsible for the overall business leadership of Vena’s Financial Close and Consolidations
solutions.
Previous roles include:
• Clarity Systems: Corporate Controller
• Grand & Toy (OfficeMax’s Canadian subsidiary): Retail Controller and Corporate Controller
• Ernst & Young LLP: Audit Manager
• IBM (Clarity): Project Implementation Lead; Client Services Manager; Director of Financial
Close Management
• IBM Analytics: Business Unit Executive, WorldWide Product Marketing for IBM’s Disclosure
Management and Financial Close solutions
Bachelor of Mathematics (Honours Chartered Accountancy Option / Information Systems – Co-
operative Programs) from the University of Waterloo.

What is the Month-End Close
Process?
Overview

History of the Month-End Close Process
Historically,
the month-
end close
process has
undergone
many
iterations
The Original Close
Slow manual close where finance focuses on and is only interested in
generating numbers for reports.
The Faster Close
Speeding up the Original Close by adding resources or streamlining activities
based on risk assessments.
The Soft Close
Close focusing solely on internal management reporting and thus reducing
the scope of the close work.
The Virtual Close
Completing a close by moving activities up in the process through estimation
of items and system automation – significant cost.

What Has Impacted the Month-End Close?
2000 • The dot-com bubble pops, creating a massive fall in equity markets from over-
speculation in tech stocks
• Enron bankruptcy and scandal
2001 • The September 11 attacks and a nearly immediate string of large bankruptcies
attributed – rightly or wrongly – to the attacks
2002 • Worldcom bankruptcy and scandal
2008 • Bear Stearns fails
• Lehman Brothers bankruptcy
• Subprime and credit problems explode
Some Significant Economic Factors

Regulatory Changes Enacted
• The Sarbanes-Oxley Act of 2002, The Public Company Accounting Oversight Board
(PCAOB), a non-profit corporation, is established by Congress.
• The conversion from national GAAP reporting to IFRS is mandated by the Council of the
European Union for all member states. Canada converts to IFRS. SEC statement on
convergence between International Accounting Standards Board (IASB) and Financial
Accounting Standards Board (FASB) standards.
• The SEC approves releases for new rules that require operating companies to report
financial information, mainly imposing requirements on mutual funds to report risk/return
summary information in XBRL.© 2014 Vena Solutions Canada Inc.

Regulatory Changes Enacted: (continued)
• Basel II, an international standard for banking regulators to control how much capital
banks need to put aside to guard against financial and operational risks is created.
• Basel III global, voluntary regulatory standard on bank capital adequacy, stress testing
and market liquidity risk is created then the U.S. Federal Reserve announced that it would
implement substantially all of the Basel III rules.
• The Dodd-Frank Wall Street Reform and Consumer Protection Act passed; later the
Volcker Rule passes.

How Has This Impacted the Month-End Close?
More administrative tasks are now part of the close process!!
• Multiple GAAP reporting and currency requirements due to M&A and worldwide economy
• Regulatory filing scrutiny and additional requirements – Basel, XBRL, Pillar, CCAR, others
• Auditor Scrutiny – PSAOB – auditors are no longer self regulated and thus scrutiny and
procedures have changed as a result

3. Consolidation
(Statutory &
Management)
CONSOLIDATION MANAGEMENT
REPORTING
COMPLIANCE
CHECKLISTS
DATA ASSURANCE
2. Data Collection
Financial Close
• Collect Notes Disclosure
Data Submissions
• Reconcile Notes Data
Submissions to Trial
Balance
• Perform account
reconciliations
• Journal Entry Creation
Process
• Other External
Reporting Data
Submissions (MD&A,
Sustainability
Reporting, etc…)
Financial Controls, Workflow Collaboration & Process Visibility
• Currency Translation
• Intercompany
eliminations
• Group closing and
other Management
adjustments
• Corporate
Allocations and
other calculations
• Cash flow data
submissions and
preparation
4. Internal
Management
Reporting
• Tax and Treasury
analytics
• Operational data
collection
• Complete internal
management
reporting for decision
making support
services
• Internal Management
Consolidated
Reporting
• Dashboard reporting
for Internal
Management
5. Compliance
Checklists
• Sarbanes Oxley 302 &
404 data certifications
• Internal audit
checklists
• External audit
checklists
• Risk mitigation
through data
validation of key
elements
• Incorporation of
materiality to
variance or flux
analysis requirements
• Close the local
ledger and sub-
ledger data
• Map local chart of
accounts to
corporate chart of
accounts and submit
trial balance results
• Validate data
submission
• Roll forward data
validations
1. Close Local Books &
submit to corporate
Typical Month End Close Process
LEDGER CLOSE

What is the Market Saying About
the Month-End Close Process?
Overview

BPM Partners
2013 Pulse Survey
Budgeting, Reporting,
Consolidation, the Cloud
and Mobile

Gartner Analysis

What are the Technology Options
for the Month-End Close Process
Overview

Gartner: Evolution of Organizational CPM Maturity

Aberdeen Group

3 Existing Month-End Close Current States
1. 100% Manual – MS-Excel close system with rigours and
controls that are manually documented and executed
2. Hybrid - Part automated and part manual MS-Excel
3. Utopia for the Month-End Close – a completely automated
close process with an integrated/platform solution approach

Why a Spreadsheet-Only Approach Isn’t Acceptable

Common Month-End Pain Points

Current process
G/L
Sub-Ledgers
Other Systems
Source Data Numerous e-mails and
versions of each document
Month-end Close
Activity
Review
and Approval
Manually
extract data
& re-key into
spreadsheets
Pain points
• Manual, time-intensive
process
• Inconsistent workflow –
modest controls of the
process
• Limited audit / tracking
capabilities
• Serial approach to
organizational involvement
• More data collection – less
analysis
• Errors/restatements are toxic
Why Do We Care About the Month End Automation?

Current process
G/L
Sub-Ledgers
Other Systems
Source Data Numerous e-mails and
versions of each document
Month-end Close
Activity
Review
and Approval
Manually
extract data
& re-key into
spreadsheets
Pain points
• Manual, time-intensive
process
• Inconsistent workflow –
modest controls of the
process
• Limited audit / tracking
capabilities
• Serial approach to
organizational involvement
• More data collection – less
analysis
• Errors/restatements are toxic
Finance organizations that struggle to finish their
close on time are far more likely to make serious
mistakes.
Also, they generally don’t have enough time for
entity-level controls or advanced analysis that could
help the business manage risk and make decisions
more effectively.
Why Do We Care About the Month End Automation?

Possible Return on Investment?

What Does It Mean To You?
Is Excel the issue? No.
Finance today loves Excel for
many reasons but they are
leveraging this personal
productivity tool to do more
than it was meant to do.
Examples:
• A data repository for data collection
instead of just a form used to
collect data
• Manual version and audit controls
on the excel models for structure
and data elements

What to look for:
• A system that leverages your investment in Excel but adds
controls, interoperability and visibility into the process
Why:
• Minimal change perceived and thus quick adoptability
• Leverage and complement the manual process in place today
but automate the manual compliance and auditability of the
current process
How to Improve Your Month-End Close Process

Deloitte Assessment of the Close Process

Next Generation Processes:
Best Practices & Client Stories
Rishi Grover

Intuitive
User Experience
Simple
Administration
Corporate Performance
Management
Extended
VENA
VENA Training and
Support Services
VENA Consulting and
Advisory Services
Web-based
Collaboration
About Vena Solutions

Benefits of Leveraging Technology
• Involves many tasks that need to be completed in a short amount of time
• Requires controls around those tasks to maintain data integrity
• Finance requires visibility of the process
Why technology for month-
end close?
• End-to-end functionality that automates and streamlines accounting
processes in a centralized, automated system
What does technology
enable?
• Allowing companies to gain critical, real-time visibility into their financial
close while optimizing workflow, saving time and enhancing accuracyWhat are the benefits?
• Goal is to compile accurate financial statements that management can use
to make business decisionsWhat’s the final outcome?

Month-End Close Best Practices
• Leverage a Process Manager to have visibility into the close processVisibility
• Leverage a template audit trail to enforce compliance and
accountabilityAudit Trail / Version Control
• Central database to reduce errors or misstatements
• Validation rules and compliance checklists for data integrity
Risk Mitigation
• Automation to reduce time to completion and manual user effortsAccelerated Close
• Allow teams inside and outside of finance to provide input and insight
into data collectedCollaboration

Examples of Helping Vena
Customers

Operational Tasks
Long-Term Planning
Budgeting
Forecasting
Management Reporting
Regulatory Reporting
Footnote Data Collection
Account Reconciliation
Tax Provisioning
Variance Fluctuation Analysis
CCAR/DFAST – Financial Services
Other Industry Related Reporting
BusinessProcesses
Financial Consolidation
Month-End Close Management
External Reporting
Other...
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Repeated & Interrelated Processes
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Customer Example 1: Regulatory Reporting &
Footnote Data Collection
The Problem
– Too many Excel files (125 unique Excel
templates times 100+ business line
submissions)
– No visibility in data gathering process
– No data validations
– No version control (almost filed an incorrect
number)
– Risky macro that consolidated all
submissions (hundreds)
– Difficult to shape consolidated results into
SEC tables
The Companies
– Large Financial Institution Headquartered in
the West US
– Large Private Energy firm in the Central US
The Solution
– Template-ized Excel files
– Process management to automate multi-
step workflows
– Embedded input data validations
– Single version of the truth of all updates
– Automated consolidation of data through
in-memory cube
– Enhanced reporting and analysis of data

Customer Example 2: Month-End Close Management
The Problem
– Internal audit requiring control and
auditability of multiple, disparate
spreadsheet processes
– 25 different finance and accounting
processes that are manual
– Many Excel links across multiple
workbooks (very risky!)
– Difficult to collaborate
The Companies
– Major Bank in Canada
– Mortgage Insurance Company in Canada
– Energy Company in Boston
The Solution
- Process manager to visualize and
automate processes with full audit trail
- Direct link to source systems for actuals
- All spreadsheets now talk to a single
database.
- Period reference variables for quick
rollovers
- Process owner distributes out
responsibilities to different users and
can now track statuses

Customer Example 3: Account Reconciliation
The Problem
– Hundreds of Excel files to manage all
account reconciliations
– Manual copy-paste from source systems
– Manual data comparisons
– No version control
The Companies
– Major Airline in the South US
– Energy Company in the East US
The Solution
– Source system integration
– Enhanced workflow to assign account
reconciliations and enforce segregation of
duties
– Automated data comparisons and data
validations
– Standardized journal entry creation
– Automated journal entry extracts back to
source systems

Feature Benefit
Process Automation &
Rollover
Automate user assignments
and workflow
Data Collection Ability to collect data & text not
in source systems
Feature Benefit
Integration to source data Latest, accurate data
Business Rules Numbers always tie-out
Workflow Review & electronic sign-off
Data Integrity
Increased confidence in the results Start reviewing the data sooner
Feature Benefit
Security to view or edit
data
Users only see the data they
are supposed to see
Workflow controls access
throughout the process
Users only see data when
they are allowed to see it
Access to information is controlled
Feature Benefit
Compliance Checklists To ensure that the right steps
are being followed
Audit Trail To track who did what, and
when they did it
Compliance information always available
Clarity FSR Reduces the Risks
Accelerated Close
Security &
Collaboration
Control & Auditing
What our Customers Gain

Questions & Answers

© Vena Solutions Canada Inc. 2014
Patrizio (Pat) Calitri
Director, Financial Close & Consolidations
Solutions
pcalitri@venasolutions.com
Rishi Grover
President, SVP Solutions Engineering
rgrover@venasolutions.com
venasolutions.com
Thank you!

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