The month-end close has become more complex since the early 2000’s. Increasing regulatory scrutiny is forcing companies to change the way they measure their success while continuing to generate full-scale, compliant, and timely financial statements every month. This paper examines four ways companies can remedy a dysfunctional month-end close without altering their core business systems or processes.

1. Driving Efficiencies in the
New Month-End Close
Month-End Close Series

2. The month-end close process has evolved through many iterations and
continues to change. Long gone is the traditional, slow close where the
goal was to generate accurate numbers. Finance organizations came
under pressure to speed up the process, and while software vendors
focused on automating the traditional close, life for Finance got
complicated.
The month-end close has become more complex and high risk since 2000
and legacy Finance applications have not generally been able to adapt to
the changes. Companies were forced to change how they measure their
success and faced increased regulatory scrutiny, but still needed to issue
full-scale, fully-compliant, timely financial statements every month. After
decades of attention and work on automating the month-end close, and
adapting software systems to handle time and regulatory pressures, there
is still substantial room for improvement.
Today, many companies endure a “dysfunctional” close – a costly, high-
risk process that is repeated every month. This paper examines why the
month-end close has become so difficult, and four options that companies
can choose from to dramatically improve efficiency and reduce risk.
Executive Summary
© 2014 Vena Solutions Canada, Inc. 1

3. A high-quality, well-managed close process is important
for building investor and marketplace confidence in the
company.
There is evidence that the month-end close process has room for
considerable improvement at many companies. Time spent closing is a
measureof dysfunctionintheoverallprocess.The2013BPMPartners’Pulse
of Performance Management Survey found that over 44% of respondents
needed two weeks or longer each month to carry out the close.6
• 18.4% took 1 to 3 days for month-end close
• 37.4% took 1 week
• 32.6% needed 2 weeks
• 11.5% needed 3 weeks or longer
The benefits of a smooth month-end close are not trivial. The Hackett
Group reports that “world-class companies spend 45% less” on their close
and reporting efforts than other companies, which on average, saves
$5.5 million per $1 billion in revenue.”3
Other research found that a 25%
reduction in close management process costs, and an up to 20% reduction
in reconciliation management costs are possible. Continuity Control
published a study in late 2013 demonstrating that, for banks, the cost of
compliance has soared past $43,000 per company per quarter.4
In a BDO poll of board members of public companies, 69% of respondents
indicated that the biggest risk to their business was regulatory and
compliance overload. The second most reported business risk was
cyberbreach (13%), followed by fraud (9%).5
The 2013 BPM Partners survey focused on the reasons companies are
trapped with a cumbersome closing process:
Spreadsheet spaghetti
Nineteen percent of respondents to the BPM survey said that their current
solution is based on spreadsheets - dozens or hundreds of spreadsheets
that were created over time, with no cohesive plan guiding their interaction
and design, and little or no governance mechanisms around them.
“The Bank’s goal is to
have zero errors.”
-Charles O Halliday, Jr,
Board Chairman,
Bank of America,
commenting on a $4 billion
reporting error, which led the
Federal Reserve to force Bank of
America to cancel its dividend and
share buyback plans 2
Challenges of the Month-End Close
1
© 2014 Vena Solutions Canada, Inc. 2

4. Obsolete legacy application
One major challenge for companies is that their legacy application no
longer meets their needs. For example, it may be pre-Sarbanes Oxley
and lacks a facility for compliance measures, such as data collection for
footnote disclosure.
Barriers to managing multiple currencies
The company may have grown or is now in a multi-currency situation
and has an application that does not extend without considerable
implementation costs to accommodate local currencies and currency
translation. The legacy application may require a separate currency
translation module, which cannot be upgraded without a round of
integration.
Intercompany eliminations
Many companies find themselves saddled with days of manual, error-prone,
intercompany elimination work because their current application cannot
automate this work, or cannot be customized to match the company’s
reconciliation challenges without major time and expense commitment.
Multiple systems that are difficult to integrate
Some organizations have multiple finance-related systems and must
manually collect and aggregate their output to provide reporting for
internal and/or external purposes.
Workflow not incorporated into the software
The current system used for a month-end close solution may have been
developed before today’s workflow was needed - before today’s regulations
existed - and has no ability, or limited ability, to expand to meet these new
requirements. This forces Finance to manually sequence tasks to support
the consolidation and ancillary processes.
Challenges of the Month-End Close
© 2014 Vena Solutions Canada, Inc. 3
“The benefits of a
smart month end
close are
not trivial.”
-Pat Calitri, Director, Financial Close
and Consolidations Solutions, Vena
Solutions

5. Any Finance director or CFO can confirm that the month-end close has
gone from absolute tedium to something far more stressful - a Pandora’s
Box of liability under time pressure. For many, there is constant concern
about errors, possible restatements, and even the possibility of major hits
to stock market value and career crashes.
The month-end close is a process that many describe today as inefficient,
error-prone, risky, time-consuming and costly.
Software systems designed in the 1990s are difficult to retrofit for newer,
mandated close processes and requirements. To appreciate the demands
put on Finance groups and the software they use to carry out the month-
end close, this document briefly reviews the events that have kept
corporate Finance in the global hot seat since 2000.
Changes in month-end close since 2000
Since the turn of the millennium, financial closes and reporting have
been impacted by a series of financial crises, scandals, and corresponding
regulatory responses, as well as evolving reporting standards.
What were the trigger events?
“When it comes to
financial reporting and
the closing process, we
find that our biggest
challenge isn’t getting
our GAAP financials
and SEC reporting in
good shape under tight
deadlines; rather, it’s the
ever-evolving managerial
reporting needs which
are more difficult
to deliver when the
organization is complex.”
-Marcelo Fischer, CFO, IDT Telecom 7
How the Month-End Close Became Dysfunctional
© 2014 Vena Solutions Canada, Inc. 4
The dot-com bubble pops, creating a
massive fall in equity markets from over-
speculation in tech stocks.
Enron bankruptcy and scandal.
A junk bond crisis.
The September 11 attacks and a nearly immediate string
of large bankruptcies attributed – rightly or wrongly – to the
attacks.
Worldcom bankruptcy and scandal.
US real estate crisis.
The collapse of large international
banks and financial institutions.
Panic in equity markets.
Bear Stearns fails.
Subprime and credit
problems explode.
2000 2001 2007
Lehman Brothers
goes bankrupt
The beginning of a long credit
crunch and a frozen interbank
market.
2002 2008

6. Regulatory whiplash
As a consequence of the scandals and near-panic seen in many countries,
new regulations and legislation were enacted to force greater accuracy
in financial reporting for public companies. The hope was to protect the
public and financial markets from malfeasance and to avoid an epidemic
of recklessness that one would not expect from highly-educated, highly-
trained, well-compensated executives. Some of these changes were
coming in any case, but the startling degree of wreckage in the overall
economy and the collapse of marquee “fortress” businesses motivated
policymakers to accelerate changes and toughen regulations.
© 2014 Vena Solutions Canada, Inc. 5
How the Month-End Close Became Dysfuntional
The Sarbanes-Oxley Act of 2002 is enacted and mandatory for ALL
organizations, large and small.
The Public Company Accounting Oversight Board (PCAOB), a non-profit
corporation, is established by Congress to oversee the audits of public
companies, as well as audits of brokers and dealers, including compliance
reports filed pursuant to federal securities laws. Auditors of U.S. public
companies become subject to external and independent oversight for the first
time.
Europe:The conversion from national GAAP reporting to IFRS is mandated by
the Council of the European Union for all member states.
Basel II is issued. It is an international standard for regulators to control how
much capital banks put aside to guard against financial and operational risks.
Many companies in Europe begin their conversion to IFRS.
The SEC approves releases for new rules that require operating companies
to report financial information, and impose requirements on mutual funds to
report risk/return summary information in XBRL.
Proposed rulemaking to implement the Basel II risk-based capital framework
in the United States.
Basel III global, voluntary regulatory standard on bank capital adequacy, stress
testing and market-liquidity risk.
The Dodd-Frank Wall Street Reform and Consumer Protection Act is passed; it
is a compendium of federal regulations.
US Federal Reserve issues joint notice of proposed rulemaking to amend the
capital adequacy framework of Basel II to be consistent with Dodd-Frank.
SEC statement on convergence between International Accounting Standards
Board (IASB) and Financial Accounting Standards Board (FASB) standards.
Canada : Publicly accountable profit-oriented enterprises required to use IFRS
in interim, and annual financial statements on or after January 1, 2011.
In December 2011, the The U.S. Federal Reserve announces that it will
implement substantially all of the Basel III rules; they are to regulate banks
and all institutions with more than US$50 billion in assets.
US - Final rules implementing the Basel III international capital accord are
adopted.
Volcker Rule passes. It forbids banks from engaging in proprietary trading and
puts limits on their investments in hedge and private equity funds.
2002
2013
2004
2005
2008
2009
2010
2011

7. The impact on the month-end close
Here are more details on the aforementioned rules and regulations:
Sarbanes-Oxley: Led to increased oversight and transparency to ensure
that public companies validate their oversight of data.
The Public Company Accounting Oversight Board (PCAOB): The
instrument of external regulation of the auditing industry, which
previously “regulated itself.” In simple terms, financial results and audits
now require more accompanying justification and explanation because
they are subject to tighter scrutiny.
International Financial Reporting Standards (IFRS) Transition:
Requires changes to GL and consolidation systems to support the
reporting in IFRS standards compared to the local GAAP.
eXtensible Business Reporting Language (XBRL): Requires tagging of
financial data. Full compliance is required in all cases on October 31,
2014.
Basel I, II, III: New disclosure and oversight rules about filing
requirements and added tagging.
Dodd-Frank Act: Promotes the financial stability of the United States
by improving accountability and transparency in the financial system, to
end “too big to fail”, to protect the American taxpayer by ending
bailouts, to protect consumers from abusive financial services practices,
and for other protection purposes.
How the Month-End Close Became Dysfunctional
“The only surprise
about BofA’s error
is that it doesn’t
happen more
often.”.
-Stephen Gandel, Senior Editor, CNN
Fortune, on how Bank of America lost
billions and forgot to tell investors
April 29, 2014 8
© 2014 Vena Solutions Canada, Inc. 6

8. High-profile mistakes illustrate the pitfalls and
consequences of a dysfunctional month-end close
If anyone doubts that Finance departments are highly stressed, the
following Citigroup case should give them pause. In March 2014,
Citigroup shares dropped 5.4% in one day, after the Federal Reserve
rejected the plans of Citigroup and four other banks to raise dividend
payments and increase stock buybacks. The Fed said the management
practices or capital cushions of these banks were not robust enough to
withstand a severe economic downturn.
It was the second time in three years that Citigroup failed the stress test.
This incident, among others, have motivated Finance executives and CEOs
to avoid painful, public blows - not to mention something like a roughly
10% stock price slide that subtracted over $14 billion from Citigroup’s
market value.
Similarly,GoldmanSachsandBankof Americaalsoinitiallyfellshortof the
minimum capital requirements, and were forced to reduce their planned
dividend payouts and share buybacks.
The examples above may seem anecdotal and unusual, but for each highly
public multi-billion-dollar reporting error, there are many companies that
have struggled to identify and correct errors and inadequate disclosures in
their month-end closes and reports.
“The advantages of a
five-day close are not
so much the speed
but reduction of risk,
more security, and less
error.”
-Tony Ho, Finance Director,Tesco Property,
China 9
How the Month-End Close Became Dysfunctional
© 2014 Vena Solutions Canada, Inc. 7

9. The good, bad-mixed-with-good, and the downright ugly
Every corporate Finance department must complete a variation of the
following phases, covering the required steps and disclosure, regardless
of whether their software infrastructure helps or gets in the way.
Three Month-End Close Scenarios
Below are three highly contrasted month-end closing scenarios:
• The Negative Scenario: A difficult spreadsheet-based close, but
certainly not a worst-case scenario
• The Typical Scenario: A more common close hindered by
inefficiencies and lack of cohesive automation
• The Efficient Scenario: An efficient close with a strong level of
software support for the newer requirements and processes.
The negative scenario: Excel®
- based and almost completely
manual
Many companies, including mid-sized and large organizations, still
conduct their month-end close using a completely manual system – they
use Excel alone, and all their controls, audits, and compliance activities
are based on manual intervention. This also means that the right
outcomes are dependent on users remembering to do things. Manual
copy-and-paste of data and information is the prevailing consolidation
method, along with manual aggregation for the various reporting
requirements.
© 2014 Vena Solutions Canada, Inc. 8

10. The frantic dash to close the books quickly puts significant pressure
on already over-taxed Finance professionals because data must be
consolidated from a range of systems, then reconciled and adjusted
in order to produce the array of financial statements needed for
management, investors, regulators, and other stakeholders.
The process in this first scenario is inherently risky; there is a high
probability of errors due to tight deadlines, unstructured interaction of
multiple employees, and disparate sources of data.
The common element of this very inefficient and time-consuming
process may also be the light at the end of the tunnel: almost all the data
collected, shared and reported upon is frequently found in spreadsheets
– more specifically, in Excel spreadsheets. Some newer solutions can easily
adapt to this situation, with fast implementation, easy customization, and
enterprise-grade data governance that encompass existing spreadsheet
models used in close and reporting processes.
The typical scenario: struggling with inefficiencies
In this common scenario, where “bad is mixed with good,” the
organization already has automated certain steps of the month-end close,
often via a high-maintenance client/server application. The automation
that currently exists in many organizations is delivered by point solutions
that address items such as financial consolidation. All the remaining
month-end close tasks are carried out manually. Sharing of data
between the various solutions is an ongoing integration and governance
challenge, which is usually accomplished by manual reconciliations and
intervention.
In this scenario, the ability to incorporate new financial regulations into
the month-end process is limited. The more rigid and inflexible the
application, the more likely it is that support processes like controls, data
collection, disclosures, and adjustments will take place across ungoverned
spreadsheets, email and word documents. The old fallback of printing
and manually approving many of these tasks using month-end binders is
usually a poor substitute for the automation of these tasks.
“The only surprise about BofA’s
error is that it doesn’t happen
more often.”
How Bank of America lost billions
and forgot to tell regulators.
Stephen Gandel, Senior Editor, CNN
Fortune,April 29, 2014
© 2014 Vena Solutions Canada, Inc. 9
Three Month-End Close Scenarios

11. Adding a software solution that can automate all of these support
functions, in a single platform, removes the need to find - and then
integrate - additional point solutions for each process. Turning to a unified
solution to complement existing solutions will ease the task of integration
and makes for easier and smoother collaboration.
The efficient scenario: automated, integrated, and adaptable
to new regulations
A minority of companies - we estimate under 20% - have achieved a
highly automated month-end close, with support processes and seamless
integration across the functional steps. This group often completes the
entire close in one to three days, according to BPM Partners.
This level of speed and efficiency generally occurs with a unified solution
that offers a high degree of flexibility and configurability, while fulfilling
data governance requirements.
© 2014 Vena Solutions Canada, Inc. 10
Three Month-End Close Scenarios

12. Month-end close best practices are intended to shorten the closing
cycle and reduce risk. They include a mixture of process, technology, and
communication measures.
To enable companies to achieve an efficient close, software should:
• Standardize formats and processes, even if different financial reporting
systems are still in use. This will help reduce the level of manual
intervention needed for reconciliation, while allowing the local
organization to meet local statutory requirements.
• Leverage current processes where possible to reduce training and
increase adoption.
• Protect spreadsheets used in the month-end close with data
governance safeguards.
• Automate data collection wherever possible.
• Adapt workflow to handle current requirements: controls signoff,
accounting tasks that drive journal adjustments, data collection, and
disclosures signoff, among others.
• Establish a common language for reporting across the enterprise to
achieve greater control over data and data quality.
• Automate closing activities and standardize financial systems. This
provides substantial advantages for implementing a high-quality
close.
• Handle the Last Mile and post-close effectively by enabling companies
to maintain communication with auditors and regulators to reduce the
time spent resolving unanticipated issues or unclear interpretations of
reporting requirements.
• Multinational companies can benefit by actively monitoring regulatory
discussions so that they can be prepared to respond with the least
amount of disruption to data collection, preparation, and reporting
processes.
Best Practices: How to Achieve the Efficient Close
© 2014 Vena Solutions Canada, Inc. 11

13. Many of the legacy solutions used to handle month-end closes were
conceived and built before today’s regulatory changes were in place.
Modifying or retrofitting these systems would be very expensive and time
consuming.
Because customizing or updating older tools may not be enough
to handle these requirements, companies should look at new, more
agile solutions that can easily be adapted to handle the broad range
of processes involved in month-end close and compliance reporting.
Compared to upgrading current legacy applications, this approach may
offer significant advantages in terms of cost, effort, and risk mitigation.
Should you replace, customize (at high cost), extend (at high
cost), or complement?
Many companies find themselves in the second scenario mentioned
above – they are typically saddled with major inefficiencies with an
existing client/server-based point solution application. Usually, partially
integrated add-on modules are available, and can automate more steps in
the close process—at a cost.
In this situation, there are four high-level options for companies to weigh:
1. Abandon and completely replace the legacy application.
2. Retrofit and customize the legacy application.
3. Acquire additional modules or additional point solutions from the
various vendors to obtain additional functionality.
4. Complement the legacy application with a next generation system to
handle the newer mandated processes.
Let’s briefly mention some considerations:
Most often, with Scenario 2 (“typical inefficiency”), the Finance
department executes numerous tasks manually, as it strives to build one
version of the truth. Manual copy and paste between the various systems,
along with reconciliation work, eat up many hours. Even if the same
vendor provides point solutions for some newer requirements, these are
Technology: Legacy Heavweights vs. Next Generation Solutions
© 2014 Vena Solutions Canada, Inc. 12

14. often separate application modules that were acquired in mergers, so
the validations between the modules are still manual in nature. In other
words, the extension modules are not unified, and there’s an integration
problem despite remaining with one vendor.
Option Cost Risk
Time to Project
Completion
Future
Adaptability
Replace and migrate
entirely to a light-
footprint, unified
application
Moderate to high Moderate to High 6 months to numerous
years, depending on the
solution selected
Depends on
solution selected
Customize legacy
application
Moderate to high Low, allows for
incremental testing
6 months to 12
months for each
customization or
module addition
Low
License more modules
for newer functions
Moderate to high Low, allows for
incremental testing
6 months to 12
months
Low to moderate
Complement existing
application with
light-footprint unified
solution
Low to moderate Low, allows for
incremental steps
6 to 12 weeks High
© 2014 Vena Solutions Canada, Inc. 13
Technology: Legacy Heavyweights vs. Next Generation Solutions

15. Month-end close workflow
Any Finance department should look carefully at how much month-end
close work can be automated and built into a solution. In most cases, the
answer will be consistent with the 80/20 rule: 80% of work should be
ripe for automation while the remaining 20% should have the possibility
of being automated - albeit at a much higher cost.
A detailed analysis of your workflow is critical for planning the
customization or extension of a new or existing system. It will provide
insight into the complexity and amount of manual work that corporate
accountants must face every month. An error in one of these steps, or
in a sub-step, can throw final results off. Large errors can slip into later
processes if there is no automation.
The Citigroup and Bank of America examples are just recent illustrations.
Humans become fatigued and distracted, and experience a certain
blindness to improbable numbers.
Legacy applications are often difficult and expensive to customize. This
is where a relatively lightweight system, built around Excel, but with
enterprise-grade safeguards and workflow, can reduce implementation
time and costs, while retaining application flexibility.
“I live it every day.”
-Brian Moynihan, CEO,
Bank of America,
Addressing shareholders on May 6, 2014
about a $4 billion reporting error which
led the Fed to force Bank of America to
cancel its dividend and share buyback
plans
“The only surprise about BofA’s
error is that it doesn’t happen
more often.”
How Bank of America lost billions
and forgot to tell regulators.
Stephen Gandel, Senior Editor, CNN
Fortune,April 29, 2014
The Manual, Excel-Based Close: How Much Can Be Automated?
© 2014 Vena Solutions Canada, Inc. 14

16. How the Month-end Close
became Dysfunctional
The month-end close has changed significantly since 2000, becoming
more difficult and high-risk for Finance. Legacy solutions are not easily
retrofitted or customized for added processes.
Newer, lighter footprint solutions can now enable a better closing process,
however. It can be much easier, faster, less expensive, and less risky to
complement legacy point solution close tools with a new, agile month-
end solution, than to retrofit the legacy application.
The gap in risk/outcome/cost from the manual and inefficient Close, to
typical inefficiency to efficient scenario is dramatic. Finance groups can
easily compare their month-end close to industry norms and the best-
case scenario presented here to calculate their own potential gain. The
results of many studies, including the Hackket Group study mentioned
earlier, support this conclusion. There is ample motivation for Finance to
investigate the options available for each month-end close situation.
Conclusions
© 2014 Vena Solutions Canada, Inc. 15
About the Author - Patrizio Calitri
As Director, Financial Close & Consolidations Solutions, Patrizio (Pat) Calitri, CPA, CA, is responsible for the overall business
leadership of Vena’s Financial Close and Consolidations solutions. Pat’s previous roles include corporate controller at Clarity
Systems, Retail Controller and Corporate Controller at Grand & Toy (OfficeMax’s Canadian subsidiary) and Audit Manager at
Ernst & Young LLP. During his nine-year tenure with IBM (Clarity), Pat held a variety of positions, including Project Implementation
Lead, Client Services Manager and Director of Financial Close Management. Pat’s position prior to joining Vena was Business Unit
Executive,WorldWide Product Marketing, IBM Analytics, where Pat managed product marketing for IBM’s Disclosure Management
and Financial Close solutions. In this role, Pat was responsible for defining and implementing the global market strategy for
IBM solutions that automate all areas of the financial close process. Pat holds a Bachelor of Mathematics (Honours Chartered
Accountancy Option / Information Systems – Co-operative Programs) from the University of Waterloo.

17. Vena Solutions delivers the most flexible performance management
solution available for budgeting, forecasting, planning, reporting,
analytics, and other mission-critical finance and accounting processes
to large and mid-market companies around the world. Vena’s unified
web-based software platform embraces all the power and flexibility of
Microsoft Excel, yet provides powerful workflow management, control
and reporting capabilities. This unique approach is complemented by
a dedicated consulting, advisory and training team. The result is fast
time to benefit for our clients, at a lower cost of ownership of a solution
that is easily managed by our clients. Vena’s rapid growth is due to our
success in improving our clients’ business processes to increase efficiency,
performance and drive true business value.
www.venasolutions.com
About Vena Solutions
© 2014 Vena Solutions Canada, Inc. 16
CFOs’ Insights into the Benefits of a High-Quality Close, CFO Research Services, 2013.
http://blogs.marketwatch.com/thetell/2014/05/07/bank-of-america-ceo-moynihan-says-4-billion-error-was-disappointing/
How IT Executives Can Help Speed Up Financial Closings, CIO Magazine, March 15, 2007
Source 1: https://d2b75q7u5jtkag.cloudfront.net/2013/Q3/BCI_Table.jpg
Source 2: http://www.insidecounsel.com/2013/10/14/surveys-show-regulation-compliance-overwhelming, Inside Counsel,
By Rich Steeves October 14, 2013.
Source: BDO Board Survey, http://www.bdo.com/download/2854
BPM Partners, Inc. www.bpmpartners.com Business Performance Management Pulse Survey, 2013
1
2
3
4
5
6
Source: CFOs’ Insights into the Benefits of a High-Quality Close, CFO Research Services, 2013.9
Source: CFOs’ Insights into the Benefits of a High-Quality Close, CFO Research Services
http://finance.fortune.cnn.com/2014/04/29/bank-of-america-error/
7
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