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executive report

Last Mile Of FinanceHow Organizationsare PerformingRecord to Report

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Foreword

Microsoft is pleased to partner with Financial Executives Research Foundation (FERF) and sponsor this “Last Mile of Finance” Executive Report.

The Last Mile of Finance continues to be a source of risk for many organizations today, due to fragmented processes, manual handoffs and an ever-changing regulatory climate. The “Last Mile” is defined as the work effort that begins with the finalization of the consolidation through to the financial reports and supporting schedules that go to the board of directors and regulators.

It is, by far, the principal area of opportunity for improved controls and processes within the Office of Finance. With that as a backdrop, FERF has interviewed senior executives at leading companies to identify the practices that they use to optimize their Last Mile of Finance process efforts. The results of those interviews, described in this report, highlight a number of extremely important insights you will want to consider.

Irrespective of the size of your organization, it is important to evaluate all aspects of the close and reporting processes. The risk of items falling through the cracks are great, and even more so for companies that incorporate shared service centers or distributed process into the financial close. A focus on internal controls and processes across the Last Mile is a critical component of a robust financial reporting organization.

We encourage readers to make it a priority to assess and remedy your Last Mile processes and consider enabling technologies and best practices from the wide range of options provided in this report.

We would like to thank Financial Executives International and FERF. We hope you find the insight and guidance contained in this document useful, timely and helpful.

Taylor Hawes General Manager, Financial Systems & Operations Microsoft Corporation

The Last Mile of Finance How organizations are performing record to report

William M. Sinnett Senior Director, Research

Financial Executives Research Foundation, Inc.

David Taylor Executive Vice President

Trintech

the source for financial solutions

1250 Headquarters Plaza West Tower, 7

th Floor

Morristown, New Jersey 07960 www.ferf.org

an affiliate of financial executives international

The Last Mile of Finance How organizations are performing record to report

TABLE OF CONTENTS

Executive Summary 1

Solving the Dilemma of the Last Mile of Finance 2

Best Practices for Optimizing the Last Mile of Finance 3

A Last Mile Best Practice Checklist 4

Company Stories Accenture 5 Cisco Systems 7 Halliburton 10 IBM 12 Intel Corporation 15 Lord Corporation 18 McDonald’s 21 Microsoft 23 Motorola Solutions, Inc. 26

About the Authors 28 About the Sponsor: Microsoft Corporation 28 About Financial Executives Research Foundation, Inc. 28

Executive Summary

Much progress has been made over the past 20 years in the Office of Finance. The “lights-out” processes imposed

by Enterprise Resource Planning (ERP), general ledger and consolidation systems have dramatically reduced human

errors and processing delays. However, the processes of reconciling, closing at local and group levels, and reporting

continue to burden the Office of Finance.

This “Last Mile of Finance,” has received significant coverage over the last six years particularly since the

administration and execution of these processes are quite often the source of errors, staff overtime and significant

management anxiety. The Last Mile, also known as the record-to-report (R2R) process in the Shared Services and

Finance & Accounting Business Process Outsourcing (F&A BPO) industry, is defined as “the final series of quality

assurance steps involved in preparing a company's financial results for public release and regulatory filings.” It

encompasses everything from the sub-ledger close in local entities to the group regulatory filing and annual reporting.

The Last Mile of Finance has recently gained elevated importance, due to the pressures on the finance organization:

To sustainably and continuously reduce costs and become lean;

To adapt to the ever-increasing volumes of compliance and regulation, on a global scale; and

To sustain and assure the organizations risk profile in an ever-changing and dynamic business environment.

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In telephony, that last mile of wire which connects homes and businesses to the grid is considered to be the most time consuming and complex job of all. The "Last Mile of Finance" is similarly complex, describing the final, cascading series of events which must occur in order to ensure the accurate and timely reporting of the financial results.

From "The Last Mile of Finance: Building Transformation Momentum with Technology", by KPMG (2012)

Solving the Dilemma of the Last Mile of Finance:

The Last Mile of Finance is the final process in a chain of processes which collects financial and non-financial data,

checks the integrity of the data, ensures appropriate controls in the preparation of information, and finally produces

the scorecard of the organization to the board of directors, regulators and investors. This vital process has historically

been performed manually by employees with various desktop automation tools, leading to unnecessary stress across

the organization and uncertainty about the quality of the results. However, this creates a significant opportunity for a

higher degree of global standardization and process agility.

The last mile is often filled with myriad costs, inefficiencies, complexities, and risks. While most organizations use automated systems to process and pull transactions into the general ledger, many processes become manual again during the last mile - and increasingly vulnerable to human error. In addition, finance organizations must also answer to new demands, including global expansion, mergers and acquisitions, and organic growth; all the while fulfilling greater regulation, accountability, transparency, and disclosure requirements. As if that weren't enough, finance professionals are being asked to do more with less, and in a shorter amount of time.

From "The Last Mile of Finance: Strategically Transforming Financial Governance", by Deloitte, 2012

Automating and improving established financial processes open up new opportunities for dramatic process

improvements and efficiency gains in the corporate finance organization. A good solution to the problem is for finance

to implement a production mentality that integrates the close, compliance, reconciliations and reporting processes,

enabled by process-enabling technologies, across the entire organization. There are business value opportunities by

taking a process management approach to the various activities across finance. This includes a system-administered

global process that encourages collaboration and transparency throughout the process, as well as detective quality

controls embedded in the process.

For example, in the close process, there is a significant risk of error, intentionally and unintentionally. Organizations

need to integrate timely efforts for reconciliation and controls management into overall financial close management.

To accomplish this, the organization will define the business rules by which it will operate the various steps, as well

as how to handle variances. Ideally, the solution will also automatically embed the required Extensible Business

Reporting Language (XBRL) tagging as a result of the process, resulting in a dramatic reduction in manual efforts and

errors across the board. Doing so enables the organization to enforce global standards and ensure predictable and

accurate results.

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Best Practices for Optimizing the Last Mile of Finance

Financial Executives Research Foundation (FERF) interviewed executives at nine large global companies to identify

and document best practices associated with the Last Mile process:

Accenture

Cisco Systems

Halliburton

IBM

Intel Corporation

Lord Corporation

McDonald’s

Microsoft Corporation

Motorola Solutions, Inc.

In the next section of this report, we highlight how these global companies excel at optimizing the Last Mile of their

unique finance organizations. Each initially focused their efforts on reducing the impact of ever-increasing regulatory

and compliance requirements through process orchestration. Moreover, each had previously faced challenges with

standardization, visibility and governance across the R2R process.

However, the project identified three critical success factors common amongst each company that has achieved

excellence with their Last Mile optimization efforts. The following three best practices apply to any organization,

regardless of their size or industry. They are:

1) End-to-end process orchestration of the Last Mile of Finance

It is critical that companies put aside their highly-fragmented set of manual Last Mile processes and instead

embrace task automation and collaboration through a well-orchestrated process that streamlines the entire

record-to-report (R2R) cycle. Areas of focus include comprehensive automation of the entire global R2R

efforts, including business and calendar rules to ensure that the organization maintains high-quality

deliverables while meeting the required timelines for delivery. The best companies focus their orchestration

efforts on the ability to define problem escalation and resolution rules so that issues are identified, prioritized

and resolved in a timely manner – ensuring minimal, if any, impact on the overall process. There are many

benefits to the Finance Organization, including eliminating whitespaces between departments and activities,

reducing handoffs and dramatically increasing visibility into the process as a whole.

2) Common deployment of enabling Financial Governance technology

To drive standardization and achieve success it is important to deploy state-of-the-art Financial Governance

technology. Leveraging technology enables companies to dramatically reduce manual activities and

disjointed point-solution handoffs. Dynamic scoping, scheduling, test and evaluation workflow, exception and

remediation workflow, automated XBRL tagging, management consoles, audit trail and ad-hoc reporting

capabilities are all needed to ensure success. The best companies embrace technology to create a central

chart of accounts, giving them both control and governance over the process, as well as to systematically

implement thresholds. They also embrace Web-based tools to make it easy to get the right information at

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the right time to those stakeholders who need it. Finally, technology dramatically simplifies enterprise

resource planning (ERP) rationalization for those companies that rely on multiple instances to run their

business.

3) Top-down visibility, transparency and governance

Companies that orchestrate all of the stakeholders and streamline all of the activities in their Last Mile

processes can more easily measure and manage the risk profile of their financial governance model. A by-

product of implementing technology is a senior management dashboard that provides real-time visibility into

every step of the process. In this way, executives can monitor the current status of the entire R2R process,

individual workflow, exceptions, key performance indicators (KPIs) and tasks – ensuring accuracy and

integrity. One ancillary benefit of this real-time data is that organizations can police their R2R practices to

ensure that they are managing them in a consistent fashion.

The combination of the three best practices noted above enables the Finance organization to finally drive automation

throughout their processes, eliminating much of the manual effort and complexity normally associated with the Last

Mile of Finance. Forward-thinking companies incorporate these best practices to shorten the record-to-report cycle,

minimizing their risk, resource needs and costs. They embrace the learning environment to continuously improve the

process and align themselves with a constantly changing business and regulatory environment.

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A Last Mile Best Practice Checklist

The executives interviewed for this project are all associated with large, multi-national corporations, and have access

to the latest technologies. Here is a checklist of some best practices that can be implemented by any size company:

One Standard Chart of Accounts

Eight of the nine companies interviewed use one global standardized chart of accounts. At Intel, any new accounts to

be added to the chart of accounts must first be reviewed by their Account Review Committee. Motorola Solutions

aligns its accounts to the line items of its external financial statements, and any new accounts must be approved by

the controller’s organization, to ensure that they align to an appropriate line item.

One Single Worldwide ERP Instance

Unless your company has made a conscious decision to remain decentralized, as does McDonald’s, the general

ledger close can be much more efficient if you use one global instance of an ERP (Enterprise Resource Planning)

software system. Four of the companies interviewed already have one global instance, and IBM is transitioning to one

instance of SAP by 2016.

A Standardized Close Calendar

Leading companies publish their close calendar, so that everyone knows the process and follows the guidelines.

Accenture describes its close process as “ruthless standardization.” At Cisco Systems, everyone involved in the close

process works from a single global close schedule, which shows exactly when every item should be booked. Intel

includes well-documented policies and processes

Close Scrutiny of Journal Entries

Manual journal entries are subject to error and provide opportunities for “earnings management.” At Halliburton, any

new journal entries after Day 3 must be approved by the Director of Internal Reporting, and anything under $250,000

will be rejected. At Intel, manual journal entries are only permitted if they are necessary and are a minimum of

$100,000. Intel actually monitors the number of manual journal entries, and their system will give a warning if one is

posted outside the limits. And at Microsoft, 98% of journal entries worldwide are processed through their user-friendly

Excel- and SharePoint-based general ledger interface, which uses business rules with detective controls.

Get a Head Start on the Reporting Process

The financial reporting process involved a lot of work, and it is not necessary to wait until quarter or year end to get

started. The assistant corporate controller at Accenture holds conference calls towards the end of the quarter with the

CEO, the COO and the Finance Directors of each operating segment to get trend and forward looking information.

They start drafting the 10-Q or 10-K before they even finalize the ledger close. Microsoft does a lot of pre-planning to

enable efficiency. They held their first meeting to plan their June 30 10-K on April 23, which was actually the day after

their third quarter earnings release. They pull as much work as possible forward into the quarter.

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Accenture

“We are able to close the books in four days, and are prepared to speak with the CFO on Day+5.”

- Penny L. Hughes, Assistant Corporate Controller, Accenture

Accenture is a global manufacturing consulting, technology services and outsourcing company, with

approximately 259,000 people serving clients in more than 120 countries. Accenture collaborates with clients

to help them become high-performance businesses and governments. Penny L. Hughes, Assistant Corporate

Controller, notes that Accenture employs a single instance of SAP.

GENERAL LEDGER CLOSE:

• Single worldwide instance of SAP

• Rigorous and standardized close calendar

• Close books on Day+4, and discuss with CFO on Day+5

• Automated reconciliations

“We use a very rigorous and comprehensive standard close calendar,” says Hughes. “My team developed the close

calendar, and got buy-in from the country controllers. We publish the close calendar, so that everyone knows the

process and follows the guidelines.”

Hughes describes Accenture’s close process as “ruthless standardization.” All finance teams know what to expect. By

the morning of Day+3, all finance teams have visibility to revenue and expense results for their segment of the

business and Corporate Controllership has a global view of results.

“We are able to close the books in four days,” says Hughes, “and are prepared to speak with the CFO on Day+5. The

members of my team are the only staff authorized to make journal entries on Day+5. No entries are booked after

Day+5 unless they are individually, or in aggregate, material to consolidated results. Any material unadjusted items

are raised to and tracked by Corporate Controllership to ensure we understand significance and can share with our

auditors. We have automated and standardized our reconciliations, using third party software to improve consistency

and clarity of our account reconciliations.”

CONSOLIDATION PROCESS:

• One global standardized chart of accounts

• Intercompany accounts reconciled by Day+4

“We have developed a standardized general ledger, using one standard global chart of accounts,” says Hughes. “We

use the SAP business consolidation module to consolidate our results, uploading our ledger data from SAP to this

module to get very timely consolidated results. We have a very disciplined and rigorous intercompany posting

process and related procedures to ensure our intercompany balances eliminate prior to the ledger close on Day+4.”

Hughes says that the countries are given a listing of key disclosure deliverables and related due dates well in

advance of the quarter close, so that they can finalize the footnote schedules in a timely manner.

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REPORTING & ANALYSIS:

• Conference calls with CEO, COO and Finance Directors of operating segments to get trends and forward

looking information

• Start drafting MD&A and 10-Q before general ledger close

• Day+6, first draft of financials

• Day+8, full financials and tables for earnings release

• Web-based tool for countries to upload balance sheet info

“Each quarter, toward the end of the 3rd month of the quarter, I hold conference calls with the CEO, the COO and the

Finance Directors of each operating segment to get trend and forward looking information,” says Hughes. “These

discussions provide us with topics to include in MD&A and help us to draft the 10-Q/10-K document before we even

finalize the ledger close.”

“On Day+6, we issue the first draft of the financial statements,” she reports. “Two days later, we have full financial

statements and the earnings release financial tables. This gives us time to analyze the financial results and decide on

key messages and trends for our Earnings Release and SEC quarterly filing.”

Hughes says that Accenture uses a Web-based reporting tool for the countries to upload balance sheet information.

“All countries are required to enter details in this database for any material balances in other current and non-current

asset and liability accounts. Corporate Controllership is then able to analyze and review this information to identify

any issues. If the balance sheet is correct, there is a good chance that the P&L is correct.”

“We hold a joint call with our executive officers and executive management of our operating segments to get sign-off

on the final 10-Q/10-K document and also hold a review call with the Audit Committee of the Board prior to our

Earnings Release to get sign-off on our Earnings Release and SEC filing. We work with our Legal group’s regulatory

reporting team to finalize our SEC filings and routinely file our 10-Q’s and 10-K’s well in advance of SEC filing

deadlines. For instance, for our fiscal second quarter, ending February 29, 2012, we did our earnings release on

March 22 and filed our 10-Q on March 23.”

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Cisco Systems

“Management reporting is based on accountability, and accountability is driven by what is controllable.”

- Prat Bhatt, Vice President and Corporate Controller, Cisco Systems

Cisco Systems is a global corporation with several hundred legal entities, which are consolidated in the

financial close process. Cisco has one set of accounting policies worldwide, one chart of accounts and one

instance of Oracle.


• Single worldwide instance of Oracle

• Cisco developed a virtual one-day close 10 years ago, and continues to refine the process

• Everyone involved in the close process works from a single global close schedule that shows exactly

when every item should be booked

• Cisco expects any issues to be raised early so that there are no surprises at the end of the close

• Cisco uses My Close Space, which is based on its Webex collaboration tool

“Cisco developed a virtual one-day close 10 years ago,” explains Prat Bhatt, Vice President and Corporate Controller,

“and we continue to refine the process. Our virtual close is based on two basic principles. First, our close is based on

precise internal timing, with no deviations. We can close in three hours, and every process is measured in minutes.

We use a 4-4-5 quarterly cycle, and quarter end is Saturday night at midnight, San Jose time. By 8:15 a.m. Sunday

morning, we develop a flash report for the entire company, which we send at 9:00 a.m., and we are closed by 11:00

a.m. that morning. Everyone knows what is expected of them, and when, and if there are any deviations, we ask why.

If we can answer why, we can identify potential opportunities to improve the process.”

“Second, the financial close is integrated with the external reporting process, which results in the earnings release

and the filing of our 10-Q or 10-K processes run in parallel. Everyone involved in the close process works from a

single global close schedule, that shows exactly when every item should be booked. Each monthly close is treated as

a hard year-end close. We expect any issues to be raised early so that there are no surprises at the end of the close.

If there are any surprises, we want to know why. So we hold a rigorous post-mortem. If there were any issues, we

want to know what they were and why they occurred.”

Cisco uses My Close Space, which is based on its Webex collaboration tool. “My Close Space provides a single

portal for everyone involved in the financial close,” says Bhatt. “It is a community forum with an embedded calendar

and workflow management that indicates when each process needs to be completed, when each piece of data needs

to be submitted and by whom. Cisco sells the Webex collaboration tool, so we use and leverage what we sell.”

All reviews of sensitive accounts are addressed before the close by a robust forecasting process. Cisco’s planning

staff monitors changes in accounts such as the Allowance for Doubtful Accounts, and they have insight at a relatively

low dollar threshold. Accounting staff have access to this forecasting information and can set reserves prior to close,

and validate post close.

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For the best collaboration, Cisco focuses on key linkages, such as:

• Accounting and Planning, to assess reserves and judgmental areas

• Accounting and IT, for the entire close process

• 24/7 phone line for any issues that arise during the close process


• One set of accounting policies worldwide, one chart of accounts and one instance of Oracle

• Several hundred legal entities are consolidated in the financial close process

• Management reporting is based on accountability, and accountability is driven by what is controllable

Cisco Systems has one set of accounting policies worldwide, one chart of accounts and one instance of Oracle.

Cisco has to consolidate several hundred legal entities, which are consolidated in the financial close process.

“Management reporting is based on accountability,” says Bhatt, “and accountability is driven by what is controllable.

We have aligned processes to provide information when it is needed. For example, business unit managers are

responsible for market share, but we only need to calculate market share once a quarter. On the other hand, sales

revenues measured by orders are updated real time, every 15 minutes.”

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Halliburton

“Halliburton uses a regional variance commentary system, which is a web-based tool. Each country has

a threshold for variances. My group reviews variances of actual versus expectations and accumulates

major variances in order to determine fact pattern of the current activity.”

- Slava Abramiants, Director, External Reporting & Accounting Research, Halliburton

Founded in 1919, Halliburton is one of the world’s largest providers of products and services to the energy

industry. With more than 70,000 employees in approximately 80 countries, the company serves the upstream

oil and gas industry throughout the lifecycle of the reservoir – from locating hydrocarbons and managing

geological data, to drilling and formation evaluation, well construction and completion, and optimizing

production throughout the life of the field.


• Halliburton uses one instance of SAP globally

• SAP is closed on Day 3

• Halliburton uses Hyperion Financial Management (HFM) for consolidations and Hyperion Financial Data

Quality Management (FDM), which provides automatic checks and validation controls

• After Day 3, all new Journal Entries must be approved by the Director of Internal Reporting and

Consolidations, and anything under $250,000 is rejected

Halliburton has a well-defined financial close and reporting process. Halliburton’s management advocates effective

methods that bring attention to and improve the close process. For example, beginning on Day 1, Halliburton’s

financial reporting group automatically e-mails Flash reports to management and finance twice a day. This strategy is

integral to Halliburton’s financial close process in that it drives the focus on review, and gives management a

continuous look at company results and variances throughout the close.

In order to expedite the close process, Halliburton has created several efficiencies by developing automated

processes in SAP, including global accruals, real estate charges, and asset accounting depreciation. Additionally,

each employee involved in the SAP close process strictly adheres to a standardized checklist.

SAP is closed for general input at 12:00 p.m. on Day 3. Then an automated global allocation process is run, and the

results are posted in SAP for final closure at approximately 6:00 p.m. Automated jobs extract SAP data for loading in

HFM via FDM. Halliburton has rigorous controls, checks, and validations in place that ensure data integrity.

After Day 3, all new Journal Entries must be approved by the Director of Internal Reporting and Consolidations, and

anything under $250,000 is rejected. “There is a defined process for determining materiality for journal entries, and

during close, a daily e-mail distribution details all approved and posted journal entries,” explains Debra Tower,

Director, Internal Reporting & Analysis. She also notes that Halliburton uses FDM, a tool that provides automatic

checks and validation controls.

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• Consolidation is done in Hyperion Financial Management

• SAP data and financial data from new acquisitions not yet on SAP are loaded into HFM

• Operating income closed on Day 7, balance sheet and income statement rendered on Day 9

“Halliburton uses one global chart of accounts worldwide,” says Tower. “Consolidation is done in Hyperion Financial

Management (HFM). We load SAP data and financial data from new acquisitions not yet on SAP into HFM. This is an

automated process, with no non-standard consolidation adjustments.” While awaiting deployment on SAP, all

acquisitions are required to “map” the legacy chart of accounts to relevant or like accounts in Halliburton’s chart of

accounts. For larger, more complex acquisitions, FDM is used to automate the data mapping and HFM load process.

As it is with the SAP Close, each employee involved in the consolidation process strictly adheres to a standardized

global checklist and timeline. The checklist has been developed over time, with each step providing additional value,

such as efficiency or integrity. Only a few individuals in the consolidation group have security authorization to post

approved journal entries in HFM. This security ensures that data updates and changes are tightly controlled.

Halliburton closes operating income on Day 7, and renders a balance sheet and income statement on Day 9.


• Regional Variance Commentary System (RVCS) is a web-based tool

• Each country has a threshold for variances

• The External Reporting group controls the earnings release process

“Halliburton uses a Regional Variance Commentary System (RVCS), which is a web-based tool,” says Slava

Abramiants, Director, External Reporting & Accounting Research for Halliburton. “Each country has a threshold for

variances. My group reviews variances of actual versus expectations and accumulates major variances in order to

determine fact pattern of the current activity. My group then prepares a draft earnings release, which we review with

the CFO, the CEO and Investor Relations. We initiate the earnings release process from the data we aggregate

during the review of the RVCS.”

“We control the process that populates the tables in the earnings release and the 10-Q,” explains Abramiants. “We

send forms by e-mail to all managers world-wide, requesting specific information by specific dates (for 10-Q and 10-

K). My group then reviews the forms as they are returned for completeness and accuracy. When finalized, the

external auditors also review these forms.”

Abramiants describes Halliburton’s earnings release process. “For the quarter ended June 30, the earnings release

was Monday, July 23. We met with the CFOs and other executives on Friday, July 20 to review the earnings release.

Form 10-Q is worked on concurrently with the earnings release. We usually have two drafts with two rounds of

comments from many managers in the field and other corporate departments. A disclosure committee is held before

a draft is sent to the board of directors. We sent the 10-Q to the members of the board of directors before that Friday.

We then filed the 10-Q on Friday, July 27, four days after the earnings release. It was reviewed by the chairman of

the board, and CAO and CFO had a call with the chairman a day before filing.

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IBM

“IBM maintains comprehensive financial data warehouses, which store extensive detail for management

reporting and internal analysis. The warehouses permit a more streamlined consolidation process as

less detail is pushed into the consolidation tool. As an example, account reconciliations are done on the

data in these warehouses, and not in the downstream applications

- Gregg Nelson, Vice President, Accounting Policy & Financial Reporting, IBM

International Business Machines Corporation, or IBM, is a multinational technology and consulting services

corporation headquartered in Armonk, New York. IBM manufactures and sells computer hardware and

software, and it offers IT infrastructure, hosting and consulting services in areas ranging from mainframe

computers to nanotechnology.


• A comprehensive close calendar

“IBM utilizes a calendar year for financial reporting, with a year end of December 31 and four reporting quarters,” said

Gregg Nelson, IBM’s VP for Accounting Policy & Financial Reporting. “The operational accounting close takes from

seven to eight working days depending on the calendar. During the first to the seventh day, accountants prepare

general ledgers, trial balances and preliminary financial statements. On the eighth working day, we start a series of

reviews and analyses. Earnings are announced on the fifteenth or sixteenth working day. The date of the earnings

announcement can vary, because generally we will not make the announcement on a Friday, a Monday or on a

holiday. We usually target Tuesdays for earnings announcements.”

“On the date of the earnings announcement, we issue a press release, which provides the financial statements,

segment reporting and some commentary. The CFO and the VP of Investor Relations host a webcast meeting with

analysts at 4:30 ET. The webcast includes prepared remarks from the CFO, followed by a Q&A session.”

“There are internal reviews of the 10-Q, held with the Chairman/CEO, the CFO and the Disclosure Committee. We

file the 10-Q on the last Tuesday of the month after quarter-end. The entire process is tied to this date which is the

date when our Audit Committee and Board of Directors meet. One exception would be for the 10-K, in which case we

would have these meetings on the last Tuesday of February.”

“As an example, the Q2 filing for 2012 was on July 31. On that last Tuesday of the month:”

• The Audit Committee met to review the 10-Q in the morning. The Chief Accountant and the Controller led

the discussion

• The full Board met next, in which the CFO reviewed the 10-Q with the members

• The 10-Q and accompanying XBRL exhibits were filed after the Board meeting, generally early in the

afternoon

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Therefore, the Board and the Audit Committee both have an opportunity to comment on the 10-Q before we file. To

facilitate these reviews, we provide the entire Board with a draft of the 10-Q several days before the Board and Audit

Committee meetings.”

“July 2012 provided five weeks for the entire cycle, because there were five Tuesdays. However, the review cycle can

be as much as a week shorter. For example, April 2012 only had four Tuesdays, and the last Tuesday was April 24.

We built our 10-Q process to be able to comply with the shorter calendar cycles.”


• One global standardized chart of accounts

• Transition to one instance of SAP by 2016

• Comprehensive financial data warehouses, which store extensive detail for management reporting and

analysis

“Over the past 15 plus years, IBM has been focused on centralizing and standardizing its accounting processes,”

explains Nelson. “We have one worldwide chart of accounts, though we currently have multiple ERP instances. We

do have a corporate project underway to transition to one instance of SAP by late 2015 or early 2016.”

Organizationally, IBM’s finance function is centralized, with all staff, both finance and accounting, reporting through to

the corporate CFO while supporting individual business units or corporate staff functions. IBM has accounting centers

around the world that execute most of the transactional accounting, including:

• Bratislava, Slovakia for Europe

• Buenos Aires, Argentina for South America

• Kuala Lumpur, Malaysia for Asia

• Somers, New York for North America

All accounting centers use the single worldwide chart of accounts, harmonized accounting processes and common IT

tools.

“IBM maintains comprehensive financial data warehouses, which store extensive detail for management reporting

and internal analysis,” says Nelson. “The warehouses permit a more streamlined consolidation process as less detail

is pushed into the consolidation tool. As an example, account reconciliations are done on the data in these

warehouses, and not in the downstream applications.”

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• IBM purchased Clarity and implemented Cognos FSR for SEC and statutory reporting

• Cognos FSR has improved the quality and efficiency of financial reporting

• Each quarter, IBM tests all 56 processes which comprise its key controls over financial reporting, of which

the SEC external reporting process is one

“The overall company strategy is clearly defined in management’s discussions with investors and in the Annual

Report and 10-K,” says Nelson. “Business analytics is a key element of the company’s strategy, which is supported

internally by the company’s IT strategy. Within Finance, we use BA tools extensively in many of our processes,

including accounting.”

IBM uses what it sells. “When IBM purchased Clarity Systems,” explains Nelson, “we kicked off a project to

implement Cognos FSR (previously Clarity FSR) for SEC and statutory reporting. Cognos FSR has improved both the

quality and the efficiency of our financial reporting process.”

The MD&A is an important part of the preparation of IBM’s 10-Q and 10-K. “We believe that all external

communications should have a consistent message,” says Nelson, “so we collaborate with Investor Relations on the

earnings release, the analyst call and the MD&A in the 10-Q. This consistency helps the senior management review

process, which includes the Controller, the CFO, the Chairman/CEO, and, as a result of this consistency, we get very

few changes from senior management prior to filing date.”

As part of its compliance with Sarbanes-Oxley, IBM has identified 56 processes which make up its key controls over

financial reporting, of which one is the SEC external reporting process. “We test all these processes each quarterly

period,” says Nelson.

Nelson schedules two meetings of IBM’s Disclosure Committee each quarter:

• Before the earnings release and

• Prior to the filing of the 10-Q

The Disclosure Committee is co-chaired by the Controller and Chief Counsel, and includes:

• Chief Accountant

• Treasurer

• VP Tax

• VP Investor Relations

• General Auditor

• Chief Risk Officer

These individuals are all voting members of the Disclosure Committee. There are also two non-voting members, who

act as advisors:

• VP, Accounting Policy & Financial Reporting (Nelson)

• A senior counsel, who is an SEC attorney

15

Intel Corporation

“We have developed a Risk Rating Process, which rates risks as High, Medium and Low, based on total

dollars at risk and corporate liquidity, and helped Trintech develop a similar module. We do not permit

non-reconciled accounts, and our ineffective reconciliations are at an historic low.”

- Vicky Espiasse, Controller, Global Close and Reporting, Intel Corporation

Back in 1968, two scientists, Robert Noyce and Gordon Moore, founded Intel with a vision for semiconductor

memory products. By 1971, they had introduced the world’s first microprocessor. Since then, Intel has

established a heritage of innovation that continues to expand the reach and promise of computing while

advancing the ways people work and live worldwide.


• Each group involved in the financial close has the close calendar, which includes well-documented

policies and processes

• Each group has its own checklist, which are detailed and SOX-controlled

• Manual journal entries are only permitted if they are necessary

• Intel has been on a five year journey to automate and standardize reconciliations

• Intel has developed GLARE (General Ledger Reconciliation Excellence), a self-audit for SOX certifications

“Each group involved in the financial close has the close calendar, which includes well-documented policies and

processes,” explains Vicky Espiasse, Intel’s Global Close and Reporting Controller. “Each group has its own checklist,

which are detailed and SOX-controlled.”

“We close the General Ledger on Workday plus three,” says Espiasse. “Our Late Journal Entry policy states that after

Workday plus three, no one else may post any journal entries under a $100,000. We rarely make any adjustments.”

“We have published materiality guidelines for manual accrual and correction journal entries,” says Espiasse. “Manual

journal entries are only permitted if they are necessary and are a minimum of $100,000. Journal entries are

configured so that the system will give a warning when one is posted outside the limits. We monitor the number of

manual journal entries that are made.”

“There is a significant rotation of employees in operations finance every 18 months,” says Espiasse, “so this can

become a training issue, yet we have stringent documentation requirements.”

“We have been on a five year journey to automate and standardize our reconciliations,” says Espiasse.

“We have used Trintech AssureNET since 2009, and the entire company is required to use that platform. We have

developed GLARE (General Ledger Reconciliation Excellence), a self-audit for SOX certifications. GLARE sets

standards for balance sheet reconciliations, and reconcilers and reviewers have to certify within the tool that they are

executing to those standards. We include audit results of all our reconciliations in a report that goes to the CFO and

16

the CEO. The CEO and CFO rely on this self-audit process to assure that all accounts are reconciled to our

standards. We have also developed a Risk Rating Process, which rates risks as High, Medium and Low, based on

total dollars at risk and corporate liquidity, and helped Trintech develop a similar module. We do not permit non-

reconciled accounts, and our ineffective reconciliations are at an historic low.”


• One version of the General Ledger is based on one standardized chart of accounts

• Any new accounts to be added to the chart of accounts must first be reviewed by the Account Review

Committee, which includes staff from corporate finance and IT among others

• Six Sigma projects have been developed over the past three years for intercompany processes

• The General Ledger is closed on Workday plus 3

• Late Journal Entry policy states that after Workday plus 3, no one may post any journal entries under

$100,000

• On day five, Intel has its revenue number

“Intel has just one version of its General Ledger, which is based on one standardized chart of accounts,” explains

Espiasse. “Any new accounts to be added to the chart of accounts must first be reviewed by the Account Review

Committee, which includes staff from corporate finance and IT among others. Data integration is automated.”

“We developed Six Sigma projects over the past three years for intercompany processes,” says Espiasse. “As a

result, we have few, if any, intercompany imbalances. We have benchmarked our intercompany policies and

procedures, and we are in the top quartile of participating companies. We emphasize the importance of Business

Process Management (BPM).We educate other departments on BPM, and monitor their adherence to corporate

processes.”

“My External Reporting team is responsible for all processes and procedures from close to earnings release and

disclosure,” adds DawnDee Hankel, Intel’s External Reporting Controller. “On Workday plus three, my team looks at

the data. On day five, we have the revenue number. Our auditors rely on our normal quarterly close procedures.”

Intel’s Corporate Planning Group takes responsibility for budgets and planning. The External Reporting team

prepares analytics comparing current year’s actuals to past year’s actuals, and current year’s actuals to current year’s

expectations.

The majority of the data for Intel’s financial statement disclosures come from accounting groups such as Treasury

Accounting or from finance partners working closely with operations. For disclosure data requirements, people are

notified of data requirements and due dates by e-mail. Their submissions are tracked in Excel and monitored for

quality, timeliness and accuracy. The External Reporting team provides scorecards to the business units and

accounting business partners for footnote disclosures.

17


• Implemented FSR to save time on roll forwards of SEC documents as well as for XBRL tagging

• External Reporting team historically spent 200 to 300 hours per quarter on XBRL reporting, and they have

met their goal to get this down below 100 hours per quarter

• Intel has made changes to the CEO/CFO certification process. It has gone to a change-based model, which

involves just discussing any changes since the earnings release, plus new disclosures and any SOX

Section 404 deficiencies

Two years ago, Intel started using Clarity FSR, a Last Mile reporting tool. “We implemented FSR to save time on roll

forwards of SEC documents as well as for XBRL tagging, explains Hankel.

The External Reporting team is comprised of Hankel and seven other professionals. “Our strategy is to continuously

streamline processes to be more efficient,” says Hankel. “We have become very efficient around our XBRL reporting,

and PricewaterhouseCoopers tells us that we are ahead of the curve. We spend one week reviewing the XBRL

financial statements after Intel’s quarterly earnings release. Our team was spending around 200 to 300 hours per

quarter on XBRL reporting, and we have now met our goal to get this down below 100 hours per quarter. XBRL has

been an obstacle in our goal to reduce the number of days to file, but we expect to find more efficiencies in the filing

process in 2012.”

Intel has also made changes to its CEO/CFO certification process. “In the past, we gave a presentation on our full

financial statements and disclosures to senior management on Day 21,” says Hankel. It required a lot of time and

effort for the team to prepare for this certification review. So we asked, ‘What information are our executives missing

that we didn’t share with them through the earnings release process?’”

“We went to a change-based model, which involves just discussing any changes since the earnings release, plus new

disclosures and any SOX Section 404 deficiencies. This change has reduced a six hour meeting to a one hour review

focusing on what they need to know."

Intel’s External Reporting team coordinates the Earnings Release with Investor Relations. “We provide management

with a management reporting package on Workday 10, the Friday before the Tuesday earnings release,” says Hankel.

For Forward Looking Statements, the Corporate Planning Group vets our business outlook with management. “We

will review any risk factors with legal, with consideration of any changes in the economy, the business landscape or

other significant trends because the SEC is interested in how companies describe the risk factors associated with

their business,” explains Hankel.

18

Lord Corporation

“We changed our planning process several years ago. Rather than working from a budget, we develop

a top down plan, with targets established on critical sales, costs and spending items. We review this

plan quarterly, and look at trends from a top-down basis and regionally.”

- Jon Kline, Director of Accounting and Corporate Controller, Lord Corporation

Lord Corporation is a privately-held multi-national company, founded in 1924. Its corporate headquarters are

in Cary, North Carolina. Lord designs, develops and manufactures products primarily in specialty adhesives

and chemical products along with products for noise vibration and motion control. Customers are primarily

in the transportation, aerospace and construction industries. Its three primary businesses are Aerospace

and Defense, chemical products and industrial products. Lord has over 40 entities with a number of foreign

subsidiaries. All but one are wholly owned. Lord has 15 manufacturing facilities and 10 Research &

Development centers in eight countries. Lord also has over 100 sales offices in fifteen other countries and

regional headquarters in the U.S., Hong Kong and Geneva, Switzerland. Lord has bank debt, but no public

debt. Per its bank covenants, debt holders receive an annual report and quarterly financial statements.


• Each location worldwide loads their financial information into Hyperion Financial Manager (HFM) for legal

and U.S. GAAP reporting

• Lord uses one global chart of accounts, which is mapped into HFM

• Lord publishes a global close calendar, which includes due dates

• Global information is loaded into Lord’s SharePoint site

• Lord has a standardized global process for all journal entries

• Most journal entries are automated, and our global close calendar has due dates for manual journal entries

• All procedures, both global and local, are housed on the same Intranet site

• Lord uses an automated workflow and approval process for updating policies and procedures

Lord has more than one general ledger. “The U.S. and Mexico use SAP ERP systems,” explains Jon Kline, Director

of Accounting and Corporate Controller. “SAP Business 1, a smaller version of SAP, is used in some other foreign

countries. SAP Business 1 was first acquired several years ago, and it is being implemented on a country-by-country

basis. Some of our smaller foreign locations use a third party for bookkeeping.”

Lord uses Hyperion Financial Manager (HFM) as a consolidation tool. Each location worldwide loads their financial

information into HFM for legal and U.S. GAAP reporting. “We use one global chart of accounts, which is mapped into

HFM,” says Venus Mitchell, Lord’s Manager, Corporate Reporting.”

Lord publishes a global close calendar, which includes due dates. Global information is loaded into its SharePoint site.

“Determining due dates around foreign national holidays involves a negotiation process,” explains Kline. “For

example, holidays in some Asian countries can be lengthy. I get information on foreign holidays from our regional

19

managers and then negotiate due dates. We identify foreign holidays well in advance. For example, I had a final

holiday schedule for calendar 2012 in October 2011.”

“In our monthly close calendar, we review commentary by work day seven, and complete our financial statements by

the tenth working day of the month at the latest,” says Kline. “Our year end closing calendar is just as tight as that of

a publicly-held company. The books are closed and the annual report is audited by week six, and is ready for review

by the Board of Directors by about week seven. The Board of Directors meeting is scheduled for the third week of

February, and the auditors sign-off on the financial statements on the morning of the Audit and Finance Committee

meeting.”

“We have a standardized global process for all journal entries. Most journal entries are automated, and our global

close calendar has due dates for manual journal entries. Reconciliations are completed globally on a continuing basis.

Global financial information is loaded on HFM twice a day during the closing process. Financial statements are

consolidated for review by regional managers worldwide.”

Internal audit reviews all high risk areas of the financial close processes during the year, and provides feedback. “Our

close policies and procedures are global, and are available on our Intranet,” explains Mitchell. “Materiality levels are

set on a country-by-country basis. All procedures, both global and local, are housed on the same Intranet site. We

use an automated workflow and approval process for updating our policies and procedures. Once a policy or

procedure is updated, we inform everyone that it has been updated.”


• A disciplined intercompany process

• All intercompany charges have to be approved by the 15th of the month, and recorded before the end of

the month

• One global chart of accounts includes all intercompany accounts, providing detail by country

• HFM has helped to automate the intercompany reconciliation process, and does the intercompany

eliminations

“We have a disciplined intercompany process,” says Jon Kline. “I get a request from Accounts Payable for any global

intercompany charges. All intercompany charges have to be approved by the 15th of the month, and recorded before

the end of the month.”

“Our one global chart of accounts includes all intercompany accounts, providing detail by country,” explains Venus

Mitchell. “We expect any two parties with intercompany charges to reconcile their intercompany accounts on a

monthly basis. HFM has helped to automate the intercompany reconciliation process, and does the intercompany

eliminations.”

“We post adjusting journal entries at year end,” says Mitchell. “Some of the most significant adjusting journal entries

involve employee incentives based on financial results. We have to close local books before we consolidate financial

statements at the corporate level, but we won’t know final financial results until after incentives are posted at the local

level. So we give estimates to the locals to post before they close their books.”

20

“We collect a lot of performance metrics data in our automated reporting package. Metrics collected at corporate and

the three regions (Asia, Americas and Europe) are similar. Safety is a big issue here, so we track metrics on safety

results. We also track working capital metrics and information on headcount.”


• The management team owns the financial statements with accounting

• The financial reporting package has been automated as much as possible

• The reporting package leverages the ERP system and BI (Business Intelligence, as part of SAP)

• Rather than working from a budget, Lord develops a top down plan, with targets established on critical

sales, costs and spending items

• Our automated annual reporting process is linked to HFM and starts early in the fourth quarter

• Lord uses a third party to help us comply with FIN 48 (to analyze uncertain tax positions) and actuaries to

draft the pension disclosures

“We work with the management team to develop the financial reporting package,” explains Jon Kline. “We review

financial results with our Corporate Officers once a month. The management team owns the financial statements with

accounting.”

“The financial reporting package has been automated as much as possible,” explains Kline. “The reporting package

leverages the ERP system and BI (Business Intelligence, part of SAP), which is loaded globally. The reporting

package reports on value streams and industries. Variances to prior month, prior year and plan are investigated and

documented and included in the financial package for the officer review.”

“We changed our planning process several years ago,” Kline reports. “Rather than working from a budget, we

develop a top down plan, with targets established on critical sales, costs and spending items. We review this plan

quarterly, and look at trends from a top-down basis and regionally.”

“Our automated annual reporting process is linked to HFM and starts early in the fourth quarter. We use a third party

to help us comply with FIN 48 (to analyze uncertain tax positions) and actuaries to draft the pension disclosures. In

most cases FASB standards are delayed one year for privately-held companies, so we have a one year deferral

before the required implementation. However all upcoming standards must be noted in the annual report along with a

description of the impact they will have on the Company.”

“We prepare reports for our loan covenants on a quarterly and annual basis. The only certification required of

privately-held companies is the representation letter in the annual report that is signed by the CFO, the CEO and the

Director of Accounting (Kline). The only filings that we are responsible for are the debt covenants and ERISA.”

21

McDonald’s

“The Financial Reporting team prepares an Earnings Release Binder that is distributed to senior

financial management and Investor Relations. This binder contains both consolidated and segment

comparative income statements, as well as analytical support for each line of the income statement. The

binder also includes various supporting schedules and analyses, such as an EPS roll-forward and

reconciliation, support for the earnings outlook, foreign currency analysis, margin analyses and a

summary of key business metrics. The binder has been an invaluable resource.”

- Meredith Devereux, Director, Financial Accounting and Reporting, McDonald’s

McDonald’s is one of the world’s leading food service retailers, with more than 33,000 restaurants serving

nearly 68 million people in more than 119 countries every day.


• McDonald’s is a decentralized company with a decentralized accounting structure

• McDonald’s has implemented various analytical tools and procedures to standardize reporting that work

well in their decentralized environment

“McDonald’s Corporation is a decentralized company,” explains Tony Peters, Senior Director – Corporate Controller

Group, “so it has a decentralized accounting structure. We consolidate 50 markets around the world, and each

market closes its own general ledger. Today, McDonald’s corporate accounting system is on an Oracle platform. One

other market is on an Oracle platform, but the other 48 markets have their own legacy systems.”

“We have implemented various analytical tools and procedures to standardize our reporting that work well in our

decentralized environment,” explains Dennis Verdico, Director – Area of World Reporting. “Within our internal intranet,

we have all relevant data, including accounting policies, chart of accounts, standard global definitions and standard

analytical tools. We publish a very detailed calendar with all pertinent due dates from the markets of all information

requirements to ensure clarity and compliance with reporting deadlines. Analytical tools have been developed to

enhance reporting coming in from the markets, which provide insights to Management and Investor Relations.”

22


• Developed a file transport mechanism tool to permit markets to enter data and projections

• Converting to a new file transport system

• Taken steps to improve the intercompany chargeback process

Data integration is not automatic, because McDonald’s has a decentralized accounting structure, and most of the

international markets have their own legacy systems. “We developed our own file transport application,” explains

Greg Elser, Manager of Financial Systems. “The application allows markets to submit a formatted data file to

Corporate, which is then validated and loaded into the financial consolidation system. When we get all markets on an

Oracle platform, data integration can be more automated.”

Dennis Verdico, Director - AOW Reporting, says that McDonald’s has taken a number of steps to improve their

intercompany chargeback process. “We are changing the cutoff day from month end to mid-month to allow more time

to process charges. We now require detailed information for all charges in order for the receiving entity to book the

charge, and we are implementing a formalized dispute process to settle any charges that have been challenged. We

have developed scorecard reporting to track progress of the various stakeholders in the process.”


• Timely and collaborative meetings with Cross-Functional Representatives

• Quarterly Earnings Release Binder

Meredith Devereux, Director – Financial Accounting & Reporting, describes the meetings with cross-functional

representatives. “As soon as consolidated financial results are finalized at quarter and year-end, the financial

information is reviewed in a cross-functional meeting that includes the Financial Reporting team, Senior Financial

Management, Investor Relations, Legal, Tax, and finance representatives from each business segment. This meeting

has proven to be an effective and efficient method for reviewing financial results and collaborating on the discussion

of the financial results for the Earnings Release. Subsequent and regular meetings are held with the Financial

Reporting team, Investor Relations, and Legal to review drafts of the Earnings Release and 10Q or 10K. This practice

has resulted in timely sharing of information, clear and consistent disclosures in our external reporting, and most

importantly, best thinking amongst the team.

Devereux then describes how the “Earnings Release Binder” is prepared. “The Financial Reporting team prepares an

Earnings Release Binder that is distributed to senior financial management and Investor Relations. This binder

contains both consolidated and segment comparative income statements, as well as analytical support for each line

of the income statement. The binder also includes various supporting schedules and analyses, such as an EPS roll-

forward and reconciliation, support for the earnings outlook, foreign currency analysis, margin analyses and a

summary of key business metrics. This binder has been an invaluable resource to the cross-functional team in

meeting their specific needs, including preparation of the earnings release and 10Q or 10K, senior management’s

quarterly and annual earnings calls, and investor and analyst calls. This binder enables all parties to obtain a deep

understanding of drivers of results.”

23

Microsoft

“In the past, Microsoft used to assemble a two inch binder of documents to support our financial

disclosures. We now provide an electronic ‘binder’ on-line using OneNote. Steve Ballmer (Microsoft’s

CEO) can write his notes directly into the electronic binder. The electronic binder with his notes can then

be uploaded back to our SharePoint site. This electronic process has saved us time and effort at a

critical point in the close process.”

- Bob Weede, Assistant Corporate Controller, Microsoft

Microsoft is a multi-national technology company motivated by how their customers use their software to

find creative solutions to business problems, develop breakthrough ideas, and stay connected to what's

most important to them.


• Single world-wide instance of SAP

• Tools have been developed in-house to interface with SAP

• 98% of JEs worldwide processed through Excel- and SharePoint-based G/L interface, which uses business

rules with detective controls

Microsoft uses a single worldwide instance of SAP for its ERP system. “We have a reporting data warehouse,” says

Robert (Bob) Weede, Assistant Corporate Controller. “It is a SQL data base, which provides the reporting

infrastructure from which we develop our financial reports. We have front-end tools that have been developed in-

house to interface with SAP. One tool allows users to produce and review financial statements, and another tool

helps us do account reconciliations.”

“We perform a centralized general ledger close in our corporate center,” adds Alice Jolla, Senior Director, Corporate

Accounting. “We have a consistent close rhythm, which allows the business groups to sign off on their P&L on day

four, which is sooner than day five in the past. To keep to this timetable, we do a very robust review of any late

journal entries.”

“We built our close process around SAP’s Line of Business applications,” explains Weede. “98% of journal entries

worldwide are processed through our user-friendly Excel- and SharePoint-based general ledger interface. This

interface uses business rules with detective controls. For example, if there is problem with a currency conversion, the

interface will reject the journal entry and it will not post. The tool presents accountants with standing journal entries

and enables close checklist functionality.”

“We always look for opportunities to improve the account reconciliation process,” says Jolla. “We use a Trintech tool

for reconciliations, which we customized to help us decide which accounts to reconcile.”

24


• One global chart of accounts worldwide

• Rigorous process to monitor intercompany balances


• Pull as much work as possible forward into the quarter

• SharePoint is used as collaboration tool for the financial close

• Paperless process for CEO/CFO certifications

• By using SharePoint and OneNote, Microsoft has saved 500 hours per quarter, or one man year per year

“We do a lot of pre-planning to enable efficiency,” says Bob Weede. “For example, we had our first meeting to plan

our June 30 10-K on April 23, which was actually the day after our third quarter earnings release. We pull as much

work as possible forward into the quarter. We also include legal and Investor Relations in the reporting process.”

Microsoft uses a paperless process for the CEO/CFO certification. “In the past, Microsoft used to assemble a two

inch binder of documents to support our financial disclosures,” explains Weede. “We now provide an electronic

‘binder’ on-line using OneNote. Steve Ballmer (Microsoft’s CEO) can write his notes directly into the electronic binder.

The electronic binder with his notes can then be uploaded back to our SharePoint site for research and resolution.

This electronic process saves us time and effort at a critical point in the close process.”

“We use Microsoft SharePoint as a collaboration tool for the financial close process,” adds Alice Jolla, Senior Director,

Corporate Accounting. “It becomes a central repository for all shared documents, and provides a quality control

process. We set up a new web site for each quarterly close. This web site includes a complete calendar with

milestones, indicating who needs to complete each task and when. The calendar also includes all review meetings,

and who is requested to attend each meeting, as well as the final Audit Committee meeting and the CEO Certification

meeting. This calendar integrates with everyone’s e-mail calendar.”

“The calendar identifies from 250 (quarterly) to 300 (annual) tasks. Each task has a due date and time, who is

responsible to do the task, and who is responsible to review the task. With this functionality, everyone knows what to

expect, and when.”

“All reviewers have real time access to the same version of each document, but you can limit access at either a

document or task level. SharePoint security is based on the reviewer’s profile, again at either a document or a task

level. To document the review process, SharePoint shows each comment and each response to each comment.

SharePoint will send an Alert to each pre-assigned individual every time a change is made to any document.”

“For quality control purposes, every number in each document is hyperlinked to the tag that supports that number,

and shows where it came from, so we have a tight control on how each document is refreshed. Again, if any number

is changed within a supporting document, an Alert is sent to all pre-assigned individuals. After all documents have

been reviewed, and all changes have been made, we do a final tie-out. The final document is then sent to the printer,

and the review process is locked out.”

25

“Using OneNote on SharePoint for the CEO Certification was our last step to get rid of paper in the financial reporting

process. By using SharePoint and OneNote, we have saved 500 hours per quarter, or one man year per year. The

value of SharePoint is that people can work in parallel. For example, the external auditors can work in parallel with

Microsoft staff using SharePoint.”

With SharePoint, the external auditors have full view access to all documents. “Deloitte, Microsoft’s external auditors,

has said that SharePoint has improved the efficiency of the audit process on a timely basis,” says Weede. “The

SharePoint site is the one-stop shop. Our auditors have access to the site to support their need for required PBC

(Provided by Client) schedules and documents. We do not have to provide them separate documents or spend

valuable time responding to requests for supporting information.”

26

Motorola Solutions, Inc.

“The structure of our external reporting team is different than the traditional model. Rather than having a

full-time external reporting team, we have only one professional dedicated to external reporting, our

external reporting manager. We do this by leveraging the rest of the finance organization (primarily

accounting, FP&A, treasury and tax) by embedding responsibility for preparing and editing disclosure

and footnote in their responsibilities.”

- Andrew Hudgens, External Reporting Manager, Motorola Solutions Inc.

Motorola Solutions is a leading provider of mission and business critical communication infrastructure,

devices, software and services. Their communications-focused products and services help government and

enterprise customers improve their operations through increased effectiveness and efficiency of their mobile

workforce.


• Publish and strictly follow a close calendar

• Utilize other software tools to maintain close calendar and accounting policies

“We publish and strictly follow a close calendar,” says Andrew Hudgens, External Reporting Manager. “After Work

Day+2, only entries approved by the assistant controller and controller are posted to the general ledger and only at

pre-defined thresholds.”

“Motorola Solutions uses Oracle and Hyperion Financial Management (HFM). In addition to these tools, we utilize

other software tools to maintain our calendar and accounting policies,” explains Hudgens. “For example, we use a

balance sheet account reconciliation tool in which account reconciliations are performed using standard formats with

integration into our general ledger with evidence of manager review and tracking of when reconciliations are

completed and signed off.”


• One standard chart of accounts worldwide

• Simplifying the general ledger and the chart of accounts by cleaning up the account structure

• External reporting drives the chart of accounts, and the chart of accounts is based on line items in the

external financial statements

“We have one general ledger and one global chart of accounts,” says Andrew Hudgens. “We align our chart accounts

to our external statement lines. Changes to or additions of new statement lines are rigorously controlled by the

controller’s organization. All new general accounts must be approved by the controller’s organization to ensure it

aligns to the appropriate statement line. In addition, we routinely clean up and simplify our account structure by

closing accounts that are unused for a specified period of time, and consolidating accounts with similar activity.”

27


• Rather than having a full-time external reporting team, there is only professional dedicated to external

reporting

• External reporting has developed a large matrix of every number that appears in the 10-Q

• Assign ownership of numbers in 10-Q to professionals in operations

“The structure of our external reporting team is different than the traditional model,” explains Andrew Hudgens.

“Rather than having a full-time external reporting team, we have only one professional dedicated to external reporting,

our external reporting manager. We do this by leveraging the rest of the finance organization (primarily accounting,

FP&A, treasury and tax) by embedding responsibility for preparing and editing disclosures and footnotes in their

responsibilities.”

“To improve our certification process and, we’ve recently reviewed all financial disclosures and compared against the

required internal certifications. As a result we have developed a large matrix of every financial disclosure that appears

in the 10-Q. In this matrix, we have assigned the following to each disclosure in the 10-Q:

• The owner of the disclosure

• The individuals responsible for certifying the disclosure to the Disclosure Committee

• Where the support for the disclosure is located

“Ownership and certification of financial disclosures is aligned to operations, not just finance. For example, while

corporate accounting may book entries and prepare disclosures related to stock-based compensation, the HR

organization is also responsible for reviewing the disclosures and certifying their accuracy to the Disclosure

Committee.”

“We recently migrated our SEC reporting and document preparation to WebFilings, which has been very useful in

reducing the time it takes to file our periodic reports after the end of a reporting period, through using extensive

linking throughout the document, along with concurrent XBRL tagging and review capabilities.”

28

About the Authors William M. Sinnett is Senior Director, Research for Financial Executives Research Foundation, Inc. (FERF). He

received his Masters of Business Administration degree from the University of Pittsburgh. Prior to joining FERF, he held positions in financial management with Mellon Bank and Carnegie-Mellon University in Pittsburgh. Bill can be reached at [email protected] or (973) 765-1004. David Taylor, ACMA, MBA, is Executive VP Strategy & Global Business Development for Trintech Inc, where he is

responsible for Strategic Planning, Corporate Business Development, Quality, Process Improvement and Product Strategy. He is an Associate Chartered Management Accountant (ACMA), and an International Associate of the AICPA. David is a member of the Dallas Chapter of FEI, and Vice Chair of FEI’s Committee on Finance & IT (CFIT). He studied at Cork Institute of Technology, Ireland, and the University of Texas Dallas, holds a Bachelor’s degree in Accounting and an MBA in Global Leadership. David is currently serving on the Research Advisory Panel with the Chartered Institute of Management Accountants. About the Sponsor: Microsoft Corporation

Microsoft is the worldwide leader in software, services, and solutions that help people and businesses realize their full potential. For more information, visit www.microsoft.com

About Financial Executives Research Foundation, Inc.

Financial Executives Research Foundation, Inc. (FERF) is the non-profit 501(c)(3) research affiliate of Financial Executives International (FEI). Its mission is to advance the profession and practices of financial management through research and education. FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and non-members alike, in a variety of publication formats. The Foundation relies primarily on voluntary tax-deductible contributions from corporations and individuals. The views set forth in this publication are those of the authors and do not necessarily represent those of the Financial Executives Research Foundation Board as a whole, individual trustees, employees, or the members of the Advisory Committee. Financial Executives Research Foundation shall be held harmless against any claims, demands, suits, damages, injuries, costs, or expenses of any kind or nature whatsoever, except such liabilities as may result solely from misconduct or improper performance by the Foundation or any of its representatives. This and more than 120 other Research Foundation publications can be downloaded by logging onto http://www.ferf.org. Copyright © 2013 by Financial Executives Research Foundation, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means without written permission from the publisher. International Standard Book Number 978-1-61509-114-0 Printed in the United States of America First Printing Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by Financial Executives Research Foundation, Inc. provided that an appropriate fee is paid to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923. Fee inquiries can be directed to Copyright Clearance Center at 978-750-8400. For further information please check Copyright Clearance Center online at http://www.copyright.com.

http://www.microsoft.com/

http://www.ferf.org/

FINANCIAL EXECUTIVES RESEARCH FOUNDATION, INC. would like to acknowledge and thank the following companies

for their longstanding support and generosity

PLATINUM MAJOR GIFT | $50,000 + Exxon Mobil Corporation Microsoft Corporation

GOLD PRESIDENT’S CIRCLE | $10,000 - $14,999

Abbott Laboratories, Inc. Dow Chemical Company

The Boeing Company

General Electric Company Cisco Systems, Inc.

SILVER PRESIDENT’S CIRCLE | $5,000 - $9,999

Apple, Inc. Comcast Corporation Corning Incorporated

Credit Suisse AG Cummins Inc.

Dell, Inc. Duke Energy Corp.

E. I. du Pont de Nemours & Company Eli Lilly and Company

GM Foundation Halliburton Company

The Hershey Company IBM Corporation

Johnson & Johnson Lockheed Martin, Inc. McDonald’s Corporation Medtronic, Inc. Motorola Solutions, Inc. PepsiCo, Inc. Pfizer Inc. Procter & Gamble Co. Safeway, Inc. Sony Corporation of America Tenneco Tyco International Mgmnt Co. Wells Fargo & Company

1250 Headquarters Plaza | West Tower, 7th Floor

Morristown, NJ 07960 | 973.765.1000

www.ferf.org

Last Mile The Of Finance -...

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