Trintech KPMG Finance Transformation 2012 06 07

© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 45975DAL

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Finance Governance and Transformation with KPMG and Trintech

June 7, 2012


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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


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Presenters and Guest Speakers

Presenter Biography

Charles K Muldoon KPMG LLP

Charlie is a Director in the KPMG Management Consulting Practice and has over 25 years of finance and consulting experience. His focus is on Finance Transformation, Planning, Forecasting & Budgeting, Financial Consolidation and Enterprise Performance System integration.

David Taylor Trintech, Inc

David is with Trintech for over 11 years, and brings a wealth of knowledge from the Office of 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 BlackRock, Inc

Kevin is the Director of BlackRock’s Corporate Control & Consolidation group and has been 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.


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Finance Transformation with KPMG and Trintech Today’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


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Finance Transformation with KPMG and Trintech Evolving Role of Finance and Governance

Strategic Decision Support

Low Cost Provider

Catalyst Governance

Finance

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 Data Analytics Scenario Analysis Profitability Analysis

(customer, product, business unit, region)

Turning data into business insight

Merger Analysis Capital Planning Transaction Support Investment Analysis

Standard Global Processes Common ERP Lean Organization Structure Leverage low cost delivery

countries Economies of scale Simplified business structure Continuous Improvement Automated processes

Centralized management reporting

Task management Effective master data

governance Process KPIs Rationalize and continually

monitor controls BPO Monitoring Controls (if

using outsourcer)


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Finance Transformation with KPMG and Trintech Characteristics 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


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Finance Transformation with KPMG and Trintech Key trends – Finance transformation marketplace summary

Companies are increasingly leveraging hybrid finance models, integrated financial systems, customized talent strategies, streamlined global organizations/governance structures and processes to reduce cost and increase quality.

Transformation Dimension Key Observations

Planning/Decision Making

Systems/Tools

Service Delivery/Operating Model

Process Design/Ownership

Talent/People

Companies are using a hybrid approach, combining shared services and outsourcing delivery models

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

Best of Breed work flow tools help to support the Finance Function

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 Incentives/penalties for accurate forecasting are being employed by Companies Dedicated business partners and analysts are key components for planning and

decision making

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 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


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Finance Transformation with KPMG and Trintech Finance levers to drive improvement

Attributes of Leading Finance Functions

Typical Cost Drivers in Finance Functions Key Causes of Cost Drivers

Unnecessary Commercial and Business Complexity

Poor organizational discipline – Spans, Layers and Scope

High Incidence Rework, Errors or Manual Intervention

Business wide Data inefficiency

Ineffective Demand Management

Inadequate focus on Process, System and Control Optimization

Complex and redundant legal entity structures Large volumes of inter company charges Sales / procurement driven back office costs – e.g. use of POs

Reliance on data downloading and spreadsheet manipulation Focus on detail and report generation not linked to business value High error rates driving manual intervention and re-keying

Key stakeholder requirements not clear or understood Inability to say no to continual demand for reports / analysis Lack of clarity on role of finance

Corporate , Regions and Divisions duplication People overpaid / overqualified for their role Duplication between shared services and retained finance

High incidence of processes not standardized or automated Lack of robust process ownership and governance Opportunities for automation such as workflow or automated matching not

exploited

Inconsistent and unreliable data quality – data hierarchies not aligned to business structure

Volumes of data but no information High incidence of reconciliations at month end

Finance has the right level of influence. The business

avoids complexity arising from business decisions.

Lean organization, aligned to business requirements

populated by the “right” people

Integrated systems supported by good control process,

performance managed and fully trained people

All relevant processes and controls subject to continuous

improvement and optimized from a cost and risk view point

Data ownership and management embedded,

outputs trusted, technology optimized

Stakeholder requirements understood. Effective

prioritization, planning, and delivery to agreed service

levels


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Finance Transformation with KPMG and Trintech Finance Functions and Record to Report overview

KPMG helps provide clients with a framework analyze their issues and define root causes

Organization and People (e.g., structure, roles, responsibilities)

Regulatory

External

Quality Close / Record to Report

Time to Close Time to Report Time to Consolidate

Process (e.g., policies, procedures, controls, chart of accounts)

Information Systems/Technology

Internal

Non-Financial Information

General Ledger Close

Consolidation Process

Purchase to Pay

Order to Cash

Human Resources and Payroll

Governance

Transaction processing

Fixed Assets and Capital


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6.0 Financial Data Consolidation

Process

Total number of “top-side” journal entries booked

Total number of manual Consolidating journal entries booked

Total number of Consolidating journal entries booked

Materiality cut-off for journal entries

Days to consolidate financial data

Days to Close (thorough)

KPI Metric6.0 Financial Data Consolidation

Process

Total number of “top-side” journal entries booked

Total number of manual Consolidating journal entries booked

Total number of Consolidating journal entries booked

Materiality cut-off for journal entries

Days to consolidate financial data

Days to Close (thorough)

KPI Metric

Consolidation

Process 6.0 - Financial Data Consolidation

Sys

tem

Cor

pora

te

Yes

Yes

No

Changes required ?

Research change and

action required to correct

Consolidated financial

statements

Change trial balance?

Controller reopens

accounting period in GL

Draft notes to financials using

prior period’s notes as template

Consolidated financial

statements with accompanying

notes

Complete Disclosure and

GAAP Checklist

Review financial

statements, including variance analysis

Update financial

statements as required

Consolidation

To 4.0 GL Close

Run consolidated

financial statements

To 7.1 Management

Reporting

From 6.2 BU Data

Consolidation

6.3 – Consolidated Financial Statements6.1 – Consolidation Calendar Development & Communication6.2 - BU Data Consolidation

6.5 – Financial Statement Adjustments6.4 - Financial Statement Review

From 6.1 Consolidation

Calendar Development & Communication

To 7.4 Quarterly/Annual Filings &

Shareholder reports

No6.4.1 6.5.1

Connector

Control Reference

8.0Continuous

Improvement

7.0Reporting

6.0Financial Data Consolidation

5.0Preliminary Financial

Statements

4.0General Ledger

Close

3.0General Ledger

Accounting

2.0Allocations

1.0Feeder System

/Sub-ledger Accounting

9.0Accounting

System Maintenance

5.3Management Adjustments

5.1Trial Balance

Review

4.4Post-close Meeting

4.3Cut-off/

Post Sub-systems

4.2Pre-close Meeting

4.1GL Close Calendar

Development & Communication

3.3GL account

Reconciliations

3.1Process Journal

Entries

2.2Process

Allocations

2.1Allocation

Set-up

1.3Sub-ledger to GL

Reconciliation

1.2Sub-ledger Data Transfer to GL

1.1 Transaction

Posting to Sub-ledger

8.1Identify

Improvement Opportunities

7.4Quarterly/ Annual

Filings & Shareholder

Reports

7.3Notes to the Financials

7.2Prepare

Statements for the Board

6.4Financial

Statement Review

6.3Consolidated

Financial Statements

6.2BU Data

Consolidation

6.1Consolidation

Calendar Development & Communication

8.2Accounting Research

9.2Regular System

Upgrades

8.4Improvement

Implementation

8.3Evaluation of Improvement Opportunities

Data Recording/Accounting Period Close Consolidation Reporting Communication and Governance

Process

3.2 Intercompany Transactions

5.2 Preliminary Financial

Statement Review

9.3 Chart of Account

Maintenance

6.5 Financial Statement

Adjustments

7.5 Regulatory

Reports

7.1 Management

Reporting

9.1Feeds Connection to General Ledger

Regional SAP System Processes

Consolidation System Processes

Close Governance Processes

Sub-ProcessDescription Implementation

Impact

Effort A Standard Close calendar focuses on

redesigning the period close, consolidation and reporting timetable, while enabling a real time environment to support management decision making.

Among other benefits, a standard close calendar helps support the ability to decrease the number of days to close

Low Medium High

Low Medium High

Recommendations

Perform detailed close process review Balance speed vs. precision Eliminate the unimportant / unnecessary Gain top-level support

Risk Low Medium High

Benefits

Reduced days to close Streamlined, less complex process Standardized processes and outputs More focus on analysis, less on transaction

processing

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.

Sample Client Deliverables

Key Performance Indicators by Process

Tools & Templates

Process Flow Repository Leading Practices & Insights

Process Decomposition

(1) Yes = 1, No = 5

Same

level

Do you

understand where

we are in the G&A

Finance Project?

Are you

confident that

the G&A

Finance

Project will

succeed?

0,1

0,2

Not

improved

improved Segment 1

Segment 2

Segment 3

Germany

Europe

Americas

Asia - Pacific

Yes More yes

than no

1 2

Partly

3

More no No

than yes

4 5

Yes More yes

than no

1 2

Partly

3

More no No

than yes

4 5

Ø = 2,5 (1) Ø = 2,4 (1)

Assess Current State Define Future State

Finance Transformation with KPMG and Trintech Record to Report / Quality Close Deliverables

**Certain aspects of the service described herein is not permissible for KPMG audit clients and their affiliates

Trintech –Optimizing the Last Mile of Finance

www.trintech.com

Optimizing the LAST MILE of

FINANCE

Optimizing the Last Mile of Finance-roadmap for continuous improvement

David Taylor, ACMA CGMA Executive Vice President

Last Mile of Finance Process Timeline

Week -1 Week 1 Week 2 Week 3 Week 4

GL Closed

General Ledger Closed

Controller & CFO Reviews

Drafting of SEC Report

Drafting of Earnings Release

Financial Statement Analysis

Disclosure Committee Meeting

CEO Certification

Audit Committee

10Q Filed; ER

Published

Distribution of Drafts Week 4-5

Reconciliations

Internal Controls Review (ICFR)

Consolidations

Outsourced XBRL

Filing

The Last Mile – Resource Optimization

Work Load

100%

February March

80%

1 Cost

Reduction

1 - Eliminate manual work a) Right first time – reduction of corrections

performed during peak load b) Automation - cost reduction if the targeted

activity is performed during the peak load

2 – Evenly distribute the work load Moving activities from the peak load enables cost reduction and reallocated time to improve quality

2 2

Address bottlenecks to Improve Quality and Increase Efficiency

Sprint

Run

Crawl

Walk

Last Mile of Finance Maturity Model

Manual Process Improvements

• (Manual) detective controls & procedures

• Manual process improvements

• Legacy apps • Heavy spreadsheet

use • Email, Word, shared

drives

Semi-Automated Process

• Semi-automated controls

• Point solutions for collaboration (e.g. SharePoint), process management and compliance

• Lack of controls across data streams

• No single view into close and reporting process

Manual Processes

• Disjointed processes • Legacy apps • Heavy spreadsheet

use • Email, Word, shared

drives

Fully-Automated & Optimized

• Best practices • (Automated)

preventive controls embedded into business process

• Consolidated view into close & reporting process

• Fully integrated with XBRL, close, exception mgt, reconciliations, and compliance

• Automated and collaborative global workflow

• Real-time process optimization

Effic

ienc

y, T

rans

pare

ncy,

Qua

lity

Cost of Finance, Risk

Software solutions for Record to Report (RtoR)

Optimizing the “Last Mile” of Finance

Transactional Systems

Regulatory Authority

Reduce the Cost of Finance as a % of Revenue

17:

Production Platform ensures process discipline

Scope, Schedule

Monitor/Record

Manage

Report

Plan

Perform

Repeatable Sustainable

Transparent

Universal Oversight of the Last Mile

Entity Hierarchy View

Close Calendar Management

Pro-active, scheduled delivery of tasks

21:

Integrated Last Mile of Finance Timeline

Week -1 Week 1 Week 2 Week 3 Week 4

GL Closed

General Ledger Closed

Controller & CFO Reviews

Drafting of SEC Report

Drafting of Earnings Release

Financial Statement Analysis

Disclosure Committee Meeting

CEO Certification

Audit Committee

10Q Filed; ER

Published

Distribution of Drafts Week 3-4

Reconciliations

Internal Controls Review (ICFR)

Consolidations

Integrated XBRL

Filing

Shortened Cycle and Cost

Savings

Managing With AssureNET • Dashboards & Reporting

– Real time view of processes – Advanced Reporting

• Account Reconciliations – Auto/Bulk Reconciliations – Best Practices Templates

• Workflow – Configurable schedules, roles – Attachment enabled

• Dynamic Acct Maintenance – Stratify accounts to gain

efficiency – Eliminate manual rating

exercise

• Quality Assurance Review – Automate compliance testing – Flexible selection criteria – Standardized checklist

GL Balances GL Transactions

SL Balances FX Conversion

Software Solutions For Those Who Seek To….

Institutionalize financial best practices Centralize close tasklist, updated real-time as work is performed Self document controls during execution Identify, escalate, and track issues through resolution Achieve fully documented, paper-less close process from record to reporting

Blackrock Case Study: Process Improvement using Finance Governance Technology

www.trintech.com

Transforming the LAST MILE of

FINANCE

BlackRock Case Study: Process Improvement using Finance Governance Technology Kevin Buckley

Director of Accounting

The Organization

BlackRock, with more than $3.5 trillion under management, is the world's largest money manager. The firm specializes in equity and fixed income products, as well as alternative and multi-class instruments, which it invests in on behalf of institutional and retail investors worldwide; it does not engage in proprietary trading. Clients include pension plans, governments, insurance companies, mutual funds, endowments, foundations, and charities. BlackRock also provides risk management services through BlackRock Solutions and is a leading provider of exchange-traded funds (ETFs) through iShares. BlackRock has offices in some 25 countries.

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

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

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

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 • Don't underestimate balance load / tie-out challenges

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 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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Thank you

All information provided is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

Trintech KPMG Finance Transformation 2012 06 07

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