Professional Documents
Culture Documents
Building a Financial
Close Process
Acceleration Roadmap
Giovanni Perone
PwC
Copyright 2013
Wellesley Information Services, Inc.
All rights reserved.
Disclaimer
PwC is pleased to offer this educational presentation regarding
multi-national companies and their use of the SAP General Ledger.
Certain matters that will be discussed today represent services that
PwC may be prohibited from providing to our audit clients. In those
instances, the information is being provided to inform you of options
as you assess your companys approach to tools such as SAP G/L.
Independence rules are complex and we recommend discussing all
services in advance to ensure they are designed within the context
of independence rules.
Thank you for joining us today.
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In This Session
Context Reaction
Constant struggle
Consequence: Finance function is in a constant struggle to
achieve goals by aligning close process between reporting
units and corporate consolidated financial statements
And balancing competing internal and external reporting
requirements
Often, only limited time available to analyze and decide how to
leverage technology to facilitate the close process by
automating time-consuming accounting activities
Results: Requirements and time constraints, leading to
mushrooming of auxiliary spreadsheets outside SAP systems
These spreadsheets are used to produce the financial close
and related analysis
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Context Solution
Remediation
In this session, we are going to discuss how to replace the
spreadsheets with SAP functions to bring back accounting in
your SAP system
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Overview
Typical finance functions operate at over 40% higher cost than
top quartile performers (previous year 60%)
Top performers spend less, while sustaining high levels of
insight, control, and efficiency
2012 showed an increase of 7% in finance efforts for insights
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Overview (cont.)
Around 60% of participants still rely on manual spreadsheet
manipulation for reporting
Only around 30% of participants have a formalized strategy to
align technology to business needs
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Insight
Top performing finance teams take just seven days to produce
their forecasts. The typical function needs 19 days.
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Efficiency
Leading finance teams employ nearly 40% more people in
business partnering roles
And pay around 25% more than typical functions to help attract
quality professionals
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Controls
Leading finance teams have automated 70% more of their key
controls than typical functions
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Interpretation
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B.
C.
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Min.
1.0
1.0
1.0
Max.
30.0
63.0
270.0
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Objective
Standardization and automation of processes has a higher
degree of efficiency with lower total cost of administration
How do you assess your finance organization in regards to
efficiency and effectiveness?
Days to Close
Sub-optimal
Good
Practice
Best
Practice
Cost of Close
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Sub-optimal
Financial close takes longer than average
Limited strategic financial vision
Significant amount of manual entry
Processes subject to numerous adjustments
Non-standardized business processes
Heavy dependency on overtime and heroics each month
Certain management reports are not available, and therefore,
need to be developed ad hoc
No insight or data modeling
Limited automation
Unmanaged, multiple versions of the truth
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Good practice
Financial close is at or below average
Financial strategic vision set
Manual entries are manageable, near average
Some business process standardization
Automation of targeted areas
Staff spends time on close and analytics
Business insight on spreadsheets
Some business modeling
Monthly management reports assembled
Multiple versions of truth, but managing
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Best practice
Close process near top quartile
Finance vision aligned with corporate strategy
Staff focused on continuous improvement
Finance serves as true business partner
Business processes are standardized
Automation of time-intensive processes
Business insights and scenario-based modeling
Single version of the truth
Monthly management report packages address management
needs
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25
26
27
28
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-1
Payroll
-1
Inventory
-1
Material Close
Accounts Payable
Fixed Assets/Depreciation
Cash
SG&A Accruals
Revenue
2-3
Operational Costs
2-3
Accounts Receivable
2-3
Intercompany
Close Process
Close Activity
3-4
4-5
Management Reporting
7-8
WD5
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32
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35
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Outline
For this exercise, assume the close and consolidation
process does not meet the needs of the business
People
Controllers resources were primarily centrally located in
Corporate Headquarters
Resources were involved in the close and consolidation of
multiple manufacturing operations
Close process was characterized by tight deadlines, numerous
manual adjustments, and excessive use of spreadsheets
A series of complex reports are produced for both management
and external purposes
37
Organization
Tasks within the close-to-report process are not efficiently
sequenced
Produces many post-close adjustments and a confusing
number of financial statement versions
Estimates and accruals are difficult and time-consuming
Insufficient time is available for review and reconciliation,
leading to inaccuracies in the first reporting package
Significant reliance on spreadsheets produces multiple
versions of the truth
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Technology
Current systems environment includes both SAP and a
planning/forecasting tool
Significant issues arise from manual system interfaces and
inconsistencies of data between systems
SAPs capabilities are under-utilized
An assessment of the SAP functionality in use and a gap
analysis to leading practices is expected to reveal significant
opportunities for improvement
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Goal
Enhance the close-to-report cycle to improve the quality of
financial reporting
Objectives
Streamline and automate manual tasks, utilizing SAP
functionality where appropriate
Reduce or eliminate errors and post-close adjustments
Reduce reliance on spreadsheets and improve standardized
reporting
Identify and implement Quick Wins during and throughout
the work
Re-sequence close schedule activities so that more time can be
focused on Analytical Review of results
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People opportunities
Standardization and automation
SAP end-user training
44
Process opportunities
Move forward closing activities that are not strictly tied to the
closing date
Harmonize data sources and formats
Organisation
45
Technology opportunities
Automate existing interfaces for data transfers and uploads,
and eliminate source of errors at the data source
Monitor regulatory and IFRS developments in regards to
technological solutions for early adaption and continuous
process improvement
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Possible Benefits
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Your Turn!
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