Trintech KPMG Finance Transformation 2012 06 07

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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.

Trintech KPMG Finance Transformation 2012 06 07

  1. 1. 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 1member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  2. 2. 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 2member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  3. 3. Presenters and Guest Speakers Presenter Biography Charles K Muldoon Charlie is a Director in the KPMG Management Consulting Practice and has over 25 years of KPMG LLP finance and consulting experience. His focus is on Finance Transformation, Planning, Forecasting & Budgeting, Financial Consolidation and Enterprise Performance System integration. David Taylor David is with Trintech for over 11 years, and brings a wealth of knowledge from the Office of Trintech, Inc 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 Kevin is the Director of BlackRock’s Corporate Control & Consolidation group and has been BlackRock, Inc 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 3member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  4. 4. Finance Transformation with KPMG and TrintechToday’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 4member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  5. 5. Finance Transformation with KPMG and TrintechEvolving Role of Finance and Governance 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  Standard Global Processes  Data Analytics  Common ERP  Scenario Analysis  Lean Organization Structure  Profitability Analysis Strategic Decision Low Cost  Leverage low cost delivery (customer, product, business countries unit, region) Support Provider  Economies of scale  Turning data into business  Simplified business structure insight  Continuous Improvement  Automated processes Finance  Merger Analysis  Centralized management  Capital Planning reporting  Transaction Support  Task management  Investment Analysis  Effective master data governance Catalyst 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 5member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  6. 6. Finance Transformation with KPMG and TrintechCharacteristics 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 6member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  7. 7. Finance Transformation with KPMG and TrintechKey trends – Finance transformation marketplace summaryCompanies are increasingly leveraging hybrid finance models, integrated financial systems,customized talent strategies, streamlined global organizations/governance structures and processesto reduce cost and increase quality. Transformation Dimension Key Observations  Companies are using a hybrid approach, combining shared services and outsourcing delivery models Service Delivery/Operating Model  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 Systems/Tools  Best of Breed work flow tools help to support the Finance Function  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 Talent/People 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 Process Design/Ownership  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 Planning/Decision Making  Incentives/penalties for accurate forecasting are being employed by Companies  Dedicated business partners and analysts are key components for planning and decision making© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 7member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  8. 8. Finance Transformation with KPMG and TrintechFinance levers to drive improvement Typical Cost Drivers in Attributes of Leading Finance Functions Key Causes of Cost Drivers Finance Functions  Complex and redundant legal entity structures Finance has the right level of Unnecessary Commercial influence. The business  Large volumes of inter company charges and Business Complexity avoids complexity arising  Sales / procurement driven back office costs – e.g. use of POs from business decisions.  Corporate , Regions and Divisions duplication Lean organization, aligned to Poor organizational business requirements discipline – Spans,  People overpaid / overqualified for their role populated by the “right” Layers and Scope  Duplication between shared services and retained finance people  Reliance on data downloading and spreadsheet manipulation Integrated systems supported High Incidence Rework, by good control process, Errors or Manual  Focus on detail and report generation not linked to business value performance managed and Intervention  High error rates driving manual intervention and re-keying fully trained people  High incidence of processes not standardized or automated All relevant processes and Inadequate focus on  Lack of robust process ownership and governance controls subject to continuous Process, System and  Opportunities for automation such as workflow or automated matching not improvement and optimized Control Optimization exploited from a cost and risk view point Stakeholder requirements  Key stakeholder requirements not clear or understood understood. Effective Ineffective Demand  Inability to say no to continual demand for reports / analysis prioritization, planning, and Management delivery to agreed service  Lack of clarity on role of finance levels  Inconsistent and unreliable data quality – data hierarchies not aligned to Data ownership and Business wide Data business structure management embedded, inefficiency  Volumes of data but no information outputs trusted, technology optimized  High incidence of reconciliations at month end© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 8member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  9. 9. Finance Transformation with KPMG and TrintechFinance Functions and Record to Report overviewKPMG helps provide clients with a framework analyze their issues and define root causes Quality Close / Record to Report Purchase to Pay Time to Close Time to Consolidate Time to Report General Ledger Internal Order to Cash Close Transaction Consolidation Process External processing Human Resources and Non-Financial Payroll Information Regulatory Fixed Assets and Governance Capital Organization and People (e.g., structure, roles, responsibilities) Process (e.g., policies, procedures, controls, chart of accounts) Information Systems/Technology© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 9member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  10. 10. Finance Transformation with KPMG and TrintechRecord to Report / Quality Close Deliverables 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. Process Decomposition Process Flow Repository 1.0 Data Recording/Accounting 2.0 3.0 Period Close 4.0 Consolidation 5.0 Reporting 6.0 Communication and Governance 7.0 8.0 9.0 Leading Practices & Insights Feeder System Allocations General Ledger General Ledger Preliminary Financial Data Reporting Continuous Accounting /Sub-ledger Accounting Close Financial Consolidation Improvement System Process Accounting Statements Maintenance Connector Consolidation 1.1 2.1 3.1 4.1 5.1 6.1 7.1 8.1 9.1 Control Reference Transaction Allocation Process Journal GL Close Trial Balance Consolidation Management Reporting Identify Feeds Connection to General Ledger Description Implementation Process 6.0 - Financial Data Consolidation Sub-Process Posting to Sub- Set-up Entries Calendar Review Calendar Improvement ledger Development & Development & Opportunities 6.1 – Consolidation Calendar 6.3 – Consolidated Financial Statements 6.4 - Financial Statement Review 6.5 – Financial Statement Adjustments Communication Communication  A Standard Close calendar focuses on Development & Communication 1.2 2.2 3.2 Intercompany 4.2 5.2 6.2 7.2 8.2 9.2 redesigning the period close, consolidation Effort Low Medium High 6.2 - BU Data Sub-ledger Data Process Transactions Pre-close Preliminary BU Data Prepare Accounting Regular System Consolidation Transfer to GL Allocations Meeting Financial Consolidation Statements Research Upgrades and reporting timetable, while enabling a real Statement Review for the Board time environment to support management From 6.1 To 7.1 Management To 7.4 Quarterly/ Annual Filings & Shareholder To 4.0 GL Close Impact Low Medium High Consolidation Calendar Development& Reporting reports 1.3 3.3 4.3 5.3 6.3 7.3 8.3 9.3 decision making. Communication Sub-ledger to GL GL account Cut-off/ Management Consolidated Notes to the Evaluation of Chart of Account Reconciliation Reconciliations Post Sub-systems Adjustments Financial Financials Improvement Maintenance  Among other benefits, a standard close Risk Low Medium High Corporate No 6.4.1 6.5.1 Statements Opportunities From 6.2 BU Run Draft notes to Consolidated financial Review financial Research Controller calendar helps support the ability to decrease Complete financials using Data Consolidation consolidated financial Disclosure and GAAP Checklist prior period’s notes as statements with accompanying notes statements, including Changes required ? Yes change and action required reopens accounting 4.4 6.4 7.4 8.4 the number of days to close statements variance to correct period in GL template analysis Post-close Financial Quarterly/ Annual Improvement Meeting Statement Review Filings & Implementation Shareholder Recommendations Benefits Yes Reports Regional SAP System Processes 6.5 Update Financial Statement 7.5 Regulatory  Perform detailed close process review  Reduced days to close financial Change trial Consolidation System Processes Adjustments Reports  Balance speed vs. precision  Streamlined, less complex process statements as No balance ? required Close Governance Processes  Eliminate the unimportant / unnecessary  Standardized processes and outputs  Gain top-level support  More focus on analysis, less on transaction System Consolidated financial processing statements Consolidation Tools & Templates Sample Client Deliverables Assess Current State Define Future State Key Performance Indicators by Process Process KPI Metric 6.0 Financial Data Days to Close (thorough) Consolidation Yes More yes PartlyMore no than no than yes No Days to consolidate financial data 1 2 3 4 5 Materiality cut-off for journal entries improved 0,1 Segment 1 Segment 2 Total number of “top-side” journal entries booked Same level Segment 3 Total number of Consolidating journal entries booked 0,2 Not Germany Total number of manual Consolidating journal entries booked improved (1) Ø= 2,5 (1) Ø= 2,4 Europe Are you Americas Do you confident that understand where the G&A we are in the G&A Asia -Pacific Finance Finance Project? Project will succeed? (1) Yes = 1, No = 5 **Certain aspects of the service described herein is not permissible for KPMG audit clients and their affiliates© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 10member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.45975DAL
  11. 11. Trintech –Optimizing theLast Mile ofFinance
  12. 12. Optimizing the LAST MILE of FINANCEOptimizing the Last Mile ofFinance-roadmap for continuousimprovementDavid Taylor, ACMA CGMAExecutive Vice President www.trintech.com
  13. 13. Last Mile of Finance Process Timeline 10Q Filed; Week -1 Week 1 Week 2 Week 3 Week 4 ER PublishedGeneral Ledger ClosedReconciliationsConsolidationsFinancial Statement AnalysisController & CFO ReviewsDrafting of SEC ReportDrafting of Earnings ReleaseDisclosure Committee MeetingCEO CertificationAudit CommitteeOutsourced XBRLFiling GL Closed Distribution of Drafts Week 4-5Internal Controls Review(ICFR)
  14. 14. The Last Mile – Resource Optimization 1 - Eliminate manual work 2 – Evenly distribute the work load a) Right first time – reduction of corrections Moving activities from the peak performed during peak load load enables cost reduction and b) Automation - cost reduction if the targeted reallocated time to improve quality activity is performed during the peak loadWorkLoad 2 1 2100% Cost 80% Reduction February March Address bottlenecks to Improve Quality and Increase Efficiency
  15. 15. Last Mile of Finance Maturity Model Efficiency, Transparency, Quality Sprint Run Fully-Automated & Optimized • Best practices • (Automated) Walk Semi-Automated preventive controls Process embedded into • Semi-automated business process Manual Process • Consolidated view into controls Crawl Improvements • Point solutions for close & reporting • (Manual) detective collaboration (e.g. process controls & procedures SharePoint), process • Fully integrated with • Manual process XBRL, close, exception Manual management and Cost of Finance, Risk improvements compliance mgt, reconciliations, Processes • Legacy apps and compliance • Lack of controls across• Disjointed processes • Heavy spreadsheet • Automated and data streams• Legacy apps use collaborative global • No single view into• Heavy spreadsheet • Email, Word, shared workflow close and reporting use drives • Real-time process process• Email, Word, shared optimization drives
  16. 16. Software solutions for Record to Report (RtoR) Optimizing the “Last Mile” of FinanceTransactional Regulatory Systems Authority Reduce the Cost of Finance as a % of Revenue
  17. 17. Production Platform ensures process discipline PlanScope,Schedule Report Repeatable Sustainable Perform Manage Monitor/Record17: Transparent
  18. 18. Universal Oversight of the Last Mile
  19. 19. Entity Hierarchy View
  20. 20. Close Calendar Management
  21. 21. Pro-active, scheduled delivery of tasks21:
  22. 22. Integrated Last Mile of Finance Timeline 10Q Filed; Week -1 Week 1 Week 2 Week 3 ER Week 4 PublishedGeneral Ledger ClosedReconciliationsConsolidationsFinancial Statement AnalysisController & CFO Reviews ShortenedDrafting of SEC Report CycleDrafting of Earnings Release andDisclosure Committee Meeting CostCEO CertificationAudit Committee SavingsIntegrated XBRLFiling GL Closed Distribution of Drafts Week 3-4 Internal Controls Review (ICFR)
  23. 23. Managing With AssureNET• Dashboards & Reporting – Real time view of processes – Advanced Reporting• Account Reconciliations – Auto/Bulk Reconciliations – Best Practices Templates• Workflow – Configurable schedules, roles GL Balances – Attachment enabled GL Transactions• Dynamic Acct Maintenance SL Balances – Stratify accounts to gain FX Conversion efficiency – Eliminate manual rating exercise• Quality Assurance Review – Automate compliance testing – Flexible selection criteria – Standardized checklist
  24. 24. Software Solutions For Those Who Seek To….Institutionalize financial best practicesCentralize close tasklist, updated real-timeas work is performedSelf document controls during executionIdentify, escalate, and track issues throughresolutionAchieve fully documented, paper-less closeprocess from record to reporting
  25. 25. BlackrockCase Study:Process Improvementusing FinanceGovernanceTechnology
  26. 26. Transforming the LAST MILE of FINANCEBlackRock Case Study: ProcessImprovement using Finance GovernanceTechnologyKevin BuckleyDirector of Accounting www.trintech.com
  27. 27. The OrganizationBlackRock, with more than $3.5 trillion under management, is the worldslargest money manager. The firm specializes in equity and fixed incomeproducts, as well as alternative and multi-class instruments, which it investsin on behalf of institutional and retail investors worldwide; it does not engage inproprietary trading. Clients include pension plans, governments, insurancecompanies, mutual funds, endowments, foundations, and charities. BlackRockalso provides risk management services through BlackRock Solutions and is aleading provider of exchange-traded funds (ETFs) through iShares. BlackRockhas offices in some 25 countries.
  28. 28. 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
  29. 29. 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
  30. 30. 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
  31. 31. 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• Dont underestimate balance load / tie-out challenges
  32. 32. Q&A and PanelDiscussion
  33. 33. Thank you© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 33member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  34. 34. All information provided is of a generalnature and is not intended to address thecircumstances of any particularindividual or entity. Although weendeavor to provide accurate and timelyinformation, there can be no guaranteethat such information is accurate as ofthe date it is received or that it willcontinue to be accurate in the future. Noone should act upon such informationwithout appropriate professional adviceafter a thorough examination of theparticular situation.

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