This document provides an overview of automating account reconciliation processes. It discusses the current regulatory environment facing finance organizations and the importance of account reconciliations. It then presents a case study of how Atlas Air Worldwide automated their account reconciliation process, realizing benefits like reduced costs, improved visibility and control, business continuity, and happier auditors. The document concludes with a Q&A section.

1. 1© 2013
Automating Account Reconciliation to
Mitigate Compliance Risk
Marc Ursick, CPA,
CMA, CISA
Ernst & Young LLP
Susan Parcells, CPA
BlackLine Systems
Wendy Shapiro, CPA
Atlas Air Worldwide

2. 2© 2013
Account Reconciliation Point of View
Utilizing Close Management Technology to Enable a Faster, Higher Quality
Close

3. 3© 2013
Marc Ursick, CPA, CMA, CISA
Ernst & Young LLP

4. 4© 2013
AGENDA
FSCP Overview
Account Reconciliation – Example Issues
Value Proposition / Business Case
Process Overview and Implementation Approach

5. 5© 2013
What is Financial Statement Close (FSCP)?
Budgeting
Long Range Planning
Consolidated
Financial
Information
Business
Unit
Submissions
External Reporting
Internal Reporting
Production
feed schedule
Chart of
accounts
FSCP is the bridge between critical business processes (e.g. order to cash,
purchase to pay, etc.) and the ability to report the financial results.
Data Collection
Entity Close
and Submission
Consolidation Reporting
AnalysisDetailed Close
Checklists
Allocate
Eliminate
Perform
Acct. Recons

6. 6© 2013
FSCP process: ERP vs. complementary
software to drive efficiency
4.0 Internal/External
Reporting
Level 1
1.0 Data Collection 2.0 Entity Close and
Submission
3.0 Consolidation
Level 2
Close all incomplete tasks
1.1
Run end of day General
Ledger close
1.3
Reconcile Feeds
1.4
1.2
Reconcile all General Ledger
accounts to Consolidation
Software
2.1
Close all open issues related
to the close
2.2
Perform variance analysis
2.3
Obtain supporting
documentation for
elimination and consolidation
entries
3.1
Review and approve the
elimination and consolidation
documents/ entries
Reconcile intercompany
accounts for accuracy
(Multiple manual systems often
demand a compensating manual
control)
Reconcile key accounts and
agree on intercompany
balances
3.2
3.3
3.4
Business Unit
Reporting
Conduct initial variance
analysis and commentary
Analyze variances for actual
versus budget
Analyze variances for actual
versus prior year
Complete business specialist
detailed financial analysis
4.1
4.4
4.5
4.6
4.7
Daily throughout the month Days one and two
Collect Subledger Feeds
Record standard JE’s
- Steps wholly supported by most ERP or
consolidation packages
- Steps where Close Management Software can supplement
the quality of the process or increase the efficiency
Compile disclosures and
external financial statements

7. 7© 2013
Acct Recon – Example Issues
ResultsProcesses
Inconsistent
application
Inappropriate
SoD
Aged
reconciling items
Lack of approvals
Potential
unreconciled
balances
Issues
Financial
statement
risk
Compliance
(SOX)
risk
Inefficient
processes
Decentralized
execution
Not timely
Limited visibility
Manually intensive
Decentralized
testing

8. 8© 2013
Value Proposition
What:
Standardize,
centralize, automate
Why:
Create efficiency,
visibility, reliability,
confidence and better
manage overall risk

9. 9© 2013
Account Reconciliation - Why Fix It?
Keep Us Out Of Trouble
Drive Sustainable Cost-Effective
Compliance
Make The Business Better
Drive Process & Operational
Improvements
Increased Visibility
Quantification of
Errors
Consistent Formats
Completeness Validation
302/404 Certifications
Compliance
Financial Misstatements
Auditable Support
Approval Certifications
Workflow Management
Risk Based Priority Approach
Automation of Controls
Process Improvement
Monitoring vs. Transactional
Reduce Audit Fees
Operational Reconciliation
and Exception Management
Continuous Improvement
and Quality Assurance
Account
Reconciliation
Process
Improvement

10. 10© 2013
Business Case
Quantitative Benefits Qualitative Benefits
Compliance and Operational Benefits
► Completeness Validation
► Standardized Policies & Procedures
► Adjustment Rollup
► Consistency in Execution
► Vertical vs. Horizontal Control
Environment
► Priority Based Risk Assessment and
Approach
► Centralized Configuration and
Compliance Management
► Centralized Security and Help Desk
ActivitiesBusiness Case
► Process Execution Time Savings
► Process Administration
► Paper Savings
► Audit Savings
► Storage Savings
► Segregation of Duties Assurance
► Centralized Repository and Archiving
► Workflow and Assignment
Investing in an account reconciliation tool will not only provide cost savings, but also
compliance and operational benefits

11. 11© 2013
Process Overview
Facility-level
Technical
landscape
Corporate
Review and
approve
Monitoring
dashboard
Centralized
audit
Web-based
forms
Prepare
reconciliation
using online
tool Technical support
Attach supporting
documentation
Workflow
engine
Central repository
and database

12. 12© 2013
Implementation Approach
Assessment and
fit analysis
Remediation and
improvement
design
Develop, test
and train
Rollout and
control
Execute and
improve
Monitor and
control
Develop GL reconciliation improvement
Assess the
potential benefits
Project management
Change enablement

13. 13© 2013
Contact
 Marc Ursick (440) 476-0149 (cell)
 Marc.Ursick@ey.com
Do not hesitate to contact if you have any questions after this session.

14. 14© 2013
Susan Parcells, CPA
BlackLine Systems

15. 15© 2013
AGENDA
Current Regulatory Environment/Impact
on Finance Organization
Importance of Account Reconciliations/
What to look for in an Automated Solution
Client Case Study – Atlas Air Worldwide
Q&A

16. 16© 2013
Current Regulatory Environment
Accounting standard setters, including the European Financial
Reporting Advisory Group (EFRAG), the FASB in the United
States and the IASB (its international counterpart), are enforcing
multiple standards that companies must adhere to
Accounting rule makers also are mandating international
alignment on reporting rules and requirements
Restatement of corporate earnings worldwide are more
common than ever due to new and changing rules, tax credits, etc.
Convergence of standards and guidelines causing confusion
among CFOs/CEOs about what is required and how to comply

17. 17© 2013
Accounting-Specific Changes for 2013
Several projects underway to align U.S. and international
standards on revenue recognition, leasing, financial
instruments and insurance.
SEC setting new policies for how U.S. companies will
adopt International Financial Reporting Standards (IFRS).
Updated COSO Framework was issued on May 14, 2013
and added more stringent mandates on internal controls for
large corporations
Regulators in the United States and Europe are
considering a rule requiring public companies to switch their
auditing firms every several years

18. 18© 2013
CEOs/CFOs have to be more meticulous than ever in enforcing company reporting
policies and procedures; more training will be required
Number of reconciliations, tasks, journals, etc., is multiplied for each set of books
maintained
Maintaining multiple sets of accounting standards, including IFRS, GAAP, and
Statutory accounts, will create significant resource constraints and challenges for
companies when closing the books each month
By leveraging technology, a company can automate its reconciliation process and
link accounts across different standards to minimize the amount of manual labor
required for each financial close
Just as account reconciliation is a key control in producing accurate financial
statements, proper IFRS reconciliation will be key, as well – a process must be put in
place to ensure this is done effectively
What Does All This Mean For The
Corporate Finance Dept?

19. 19© 2013
Lack of visibility
Little/no standardization of reconciliations
Too many manual processes
Unclear ownership of tasks
Too much room for human error
New Rules Causing Confusion, Weaknesses
In The Close Process

20. 20© 2013

21. 21© 2013

22. 22© 2013
Current Regulatory Environment/Impact
on Finance Organization
Importance of Account Reconciliations/What
to look for in an Automated Solution
Client Case Study – Atlas Air Worldwide
Q&A
AGENDA

23. 23© 2013

24. 24© 2013
Doing manually
Excel/spreadsheets
Internally developed tool/system
Automated technology/software tool
Others?
Existing Methods for Handling Account
Reconciliations

25. 25© 2013
POLICIES AND
PROCEDURES
World-class Process
STANDARDIZATION
AVAILABILITY
TRAINING
CONTROL

26. 26© 2013
Standardization
• Accommodates complex org & account structures
• Standard templates
• Pre-populated
• Policy procedures
• Supporting docs
• Full audit trail

27. 27© 2013
VISIBILITY & CONTROL
• Role/risk-based
• Real-time status
• Drill-down links
Dashboards (quick view of assignments)

28. 28© 2013
Automated Interfacing
between Data Sources and
Software Functionality,
Modules

29. 29© 2013
System that can be used for entire balance sheet:
pre-paids, accruals, bank, subledger, debt, equity, etc.
Auto-certification of low risk reconciliations
Templates-based process for standardization and quality
Supporting documents – can be saved/accessed from
within the system
Approval workflow – multiple levels with flexible scheduling
Automated e-mail alerts for proactive notification/monitoring
Reporting for real-time status updates
Centralized, global access – anywhere, anytime
Multi-currency AND multi-language (available in 15 languages)
Easy integration with existing ERP, GL systems
Specific Functionality to Look
for Surrounding Account Recs

30. 30© 2013
BENEFITS OF GOING WITH A CLOUD/SaaS SERVICE PROVIDER:
No hardware or software to purchase, install, or maintain
Lower upfront costs/minimal capital outlay at onset
Pay as you go, only for the users who need access
Reallocation of internal IT resources to more strategic projects
Quick implementation, even for multiple locations
When using world-class hosting partner (such as Rackspace):
Higher level of uptime guaranteed
Hot disaster recovery built-in
Security is No. 1 priority
24/7 access to superior customer service/support team
Anytime access from anywhere with an Internet connection
Should We Maintain In-house
Or Host “In The Cloud”?

31. 31© 2013
WORRY-FREE SECURE Saas SERVICE
No software to maintain or install
Quick implementation
Hot disaster recovery built-in
Encryption of data in transmission and at rest
Redundant world-class data centres
Only financial close software provider to successfully complete a SOC 2
Type 2 security examination, complementing its SOC 1 Type 2 audit
prepared in accordance with Statement on Standards for Attestation
Engagements No. 16 (SSAE16)
ISAE 3402 audits – internationally recognised standards developed
by the AICPA and IAASB (3rd-party opinions on control effectiveness)

32. 32© 2013
ROI & CUTTING COSTS
Auto-certification
Increased staff productivity
Reduced paper, printing, storage
overhead, auditor fees
Improved process management
Faster close
Return on investment
is one of the most important
indicators of value
MeadWestVaco Corporation
ROI: 495% Payback: 2 Months
Cox Communications
ROI: 227% Payback: 6 Months
Education Management Corporation
ROI: 138% Payback: 10 Months

33. 33© 2013
Current Regulatory Environment/Impact
on Finance Organization
Importance of Account Reconciliations/What
to look for in an Automated Solution
Client Case Study – Atlas Air Worldwide
Q&A
AGENDA

34. 34© 2013
Wendy Shapiro, CPA
Atlas Air Worldwide

35. 35© 2013
Atlas Air Worldwide Overview
Atlas Air Worldwide before Automating
Why Automate?
Implementation
Realized Benefits from Automating
Here is what our Auditors say……….
Q&A
AGENDA

36. 36© 2013
Atlas Air Worldwide is the leading global provider of outsourced aircraft and
aviation operating services.
Our headquarters are located in Purchase, NY
We are the world’s largest operator of Boeing 747 freighter aircraft, as well as
Boeing 747 and 767 passenger aircraft and Boeing 767 freighters. We are the
only outsource provider that offers Boeing’s new 747-8 freighter. In addition, we
dry lease Boeing 777 freighters to leading carriers in the airfreight industry.
Customers include some of the world’s leading airlines and express carriers –
British Airways, Etihad Airways, Qantas, and DHL Express; air charter specialist
Chapman Freeborn; as well as governments, nongovernment organizations and
major freight forwarders – DHL Global Forwarding, Agility,CEVA,
Expeditors,Hellmann, Kuehne+Nagel, Nippon Express, Panalpina, among others.
CMI customers include Boeing, DHL Express, MLW Air and SonAir-Serviço
Aéreo, S.A. (SonAir).
In 2012, we operated more than 22,700 flights, serving over 360 destinations in
more than 110 countries.
About Atlas Air Worldwide

37. 37© 2013
Atlas Air Worldwide Before Automating
Which was the final
reconciliation?????
Filing reconciliations, journal
entries and sox documents
Excel reconciliations – Are
the formulas even right????? Drowning in papers…….

38. 38© 2013
Atlas Air Worldwide before Automating
Documents disappearing Stressed employees……..
Photocopies, photocopies,
photocopies
Mailing information from international
locations to headquarters

39. 39© 2013
Better visibility into close process
Automated workflow
Business continuity
Cost savings
Streamline processes
Risk mitigation
Efficiencies between international locations and headquarters
One system for account reconciliations, variance explanations, journal
entries and checklists
Efficiencies for internal and external auditors
Employee morale
Why Automate?

40. 40© 2013
Signed contract in Q4 2008
Phased approach
December 2008 – variance module
February 2009 – task module
March 2009 – account reconciliation module
August 2010 – journal entry module
October 2010 – matching module for bank reconciliations
January 2013 – auto certification
Ongoing – matching module for other account reconciliations, sub ledger match for
Accounts Receivable, Accounts Payable and Cash reconciliations
Minimal IT resources required
Approximately 85 users worldwide
Implementation

41. 41© 2013
Cost savings
Business continuity
Ability to close remotely
Ability to access prior periods
Fewer SOX deficiencies
Documentation for reconciliations that remains unchanged does not need
to be reattached each month
Simplified variance analysis
Ability to file faster – Filed 2010 10-K 10 days earlier
Improved employee morale
Happy auditors
Realized Benefits from Automating

42. 42© 2013
Audit Fees have decreased
PBC list has decreased
Reconciliations given to the auditors are always the final version
Knowing exactly what schedules were given for an audit request in a
prior year
Fewer audit questions
Simplified controls to test that appropriate review of reconciliations and
journal entries have been completed
SOX testing efficiencies
Fewer critical spreadsheets
Realized Benefits from Automating

43. 43© 2013
Ability to work remotely
All PBC items are uploaded and readily available
Reduces the number of requests related to SOX controls
No duplicate requests for misplaced workpapers as they are
stored online
Multiple accounting periods are stored, therefore you can easily
refer to prior period activity
No need to tie reconciliation balances to the ERP system
Easy access to test SOX controls
Here is What Our Auditors Say……….

44. 44© 2013
Thank You!

45. 45© 2013
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