Accounting Frontier Series: Automated Reconciliation - 17 September 2020 - Deloitte
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Accounting Frontier Series: Automated Reconciliation 17 September 2020
Housekeeping
• This is a live session and all lines have been muted.
• If you have any questions, please hold on till the end of the presentation.
There will be a Q&A section at the end. However, please feel free to
leave any questions you have during the session using the Q&A box at
the bottom of the screen.
• Webinar materials and recording will be made available after the session.
• If you encounter any technical difficulties do feel free to request for help
in the Q&A box and my colleague will assist you.
• Recommended Browsers:
− Internet Explorer 10 or higher
− Chromium Edge 80 or higher
− Google Chrome 53.0.2785 or higher
− Safari 10.0.602.1.50 or higher
− Firefox 76 or higher
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 2
Today’s Speakers
Deloitte BlackLine Deloitte
Anson Mak Paddy Chan Christopher Brown
Accounting Operations Assurance Senior Solution Consultant Asia Pacific Controllership Center
Associate Director of Excellence
Director
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 3
Contents
01 Overview of Reconciliation 05 Case Study
02 Common Reconciliation Pitfalls 06 How Deloitte Can Help
03 Transforming Reconciliation 07 Q&A
04 Automated Reconciliation Solution
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 4
01 Overview of Reconciliation © 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 5
What is reconciliation?
Reconciliation is the substantiation of an account balance at a point in time. It is the activity of proving the composition
(not the movement) of an ending balance in the source system (e.g. General ledger) to an independent verifiable
information in order to prove that the whole balance is accurate and complete.
Composition of the Account Balance
Substantiated
Balance
Ending Balance
in the Source
System
Errors / Fraud
Temporary
Differences
Account in the Source System Independent Verifiable Information Differences to be Investigated
(e.g. General ledger) (e.g. Sub-ledger, Bank Statement, (e.g. Unpresented Cheques, Early
Supporting invoice, Contracts, etc.) Cutoff, Inaccurate Provision, etc.)
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 6
Why should you bother with reconciliation?
Reconciliation is arguably the most critical control in the financial close and reporting process, as it helps ensuring the
integrity of the financial information. Without effective reconciliations, financial information could be misstated, causing
embarrassment to Finance, penalty from regulators or worse, wrong business decisions from management.
Detect errors and fraud
Reconciliations require all discrepancies / exceptions
to be investigated, and very often, errors and/or
fraud are uncovered during the investigation.
Ensure financial information is reliable Identify process inefficiencies / deficiencies
Reconciliations ensure account balances are Process issues are often exposed when reviewing
substantiated by quality evidence and the reconciliations (e.g. inefficient process, complex
information reported is complete and accurate. chart of account, system integration issues, etc.)
Core Benefits of
Account Reconciliation
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 7
What needs to be reconciled?
This may surprise many executives, but reconciliations are embedded throughout your organization. Besides month-end
reconciliations, business units and other functions also reconcile their data during daily operations (e.g. with external
parties, between different systems, etc.). A lot of resources are spent on reconciliations – way more than you think.
Finance Human Resources Procurement
Bank Balances Payroll Purchasing
Cash Employee Benefits P-cards
Accounts Receivable T&E Reimbursements Inventory (e.g. GR/IR, GIT, etc.)
Accounts Payable
Sales Industry Specific
Fixed Assets Sales (e.g. POS, Credit Cards, etc.) Client Money / Assets
Intercompany Transactions Commission Insurance Premium
Prepayments & Accruals Gift Cards & Coupons Interest Receivable / Payable
Tax CRM Data Investment
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 8
02 Common Reconciliation Pitfalls © 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 9
Understanding pain points from a user perspective
Despite the importance of reconciliations, the reconciliation process is often plagued with a number of deficiencies and
inefficiencies. Let’s take a quick user journey to understand the common pitfalls of reconciliation!
Kelly Anthony Mary James
Accountant Finance Manager Financial Controller Auditor
(Reconciles accounts) (Reviews reconciliations) (Oversees the financial close) (Audits the financial statements)
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 10Reconciling accounts
We spend a lot of late nights on reconciliations! There are tons of accounts to reconcile, and the process is highly
manual. It takes forever to download, pivot and match the data before any investigation or analysis.
Our pain points include:
Too many accounts to Manual intensive Little time left for Unclear reconciliation
reconcile process investigation / analysis protocol
Work many late nights to Need to manually Spend more time on data No formal framework on
reconcile all the accounts download data, roll gathering/ manipulation how reconciliation
before G/L close, even forward accounts and then the actual should be done and what
those with no-to-limited match high volume of investigation; rarely have needs to be reported/
movement or immaterial transactions to find out the time to dig deep into adjusted. It’s all based on
balances the discrepancies the root causes personal judgement
30-45 minutes 100-150+
spent on data gathering, Accounts needed to be
Kelly manipulation and reconciled per legal
Accountant matching per account entity
(Reconciles accounts)
Source: Based on past projects
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 11Reviewing reconciliations
When reviewing the reconciliation, I have to track reconciliation progress, status of reconciling items and issues
identified via back-and-forth emails, I sometimes feel very lost!
Our pain points include:
Reconciliations done Inadequate investigation Manual follow-up and Disconnect with
incorrectly / explanation / analysis lots of back-and-forth adjustments
Reconcile incorrectly Fail to explain the Need to manually track Unclear whether all
(e.g. wrong cutoff date, reconciling items (e.g. the reconciliation status, reconciling items that
balances not tied to G/L, unclear explanation, chase overdue items and need to be adjusted have
file G/L transaction list as present unexplained confirm adjustments via been adjusted or which
evidence without any differences on a net lots of back and forth adjustments are resulted
breakdown/analysis, etc.) basis, no evidence, etc.) emails from reconciliations
6-8 hours per month 1 in 6
spent on tracking status, reconciliations noted
Anthony chasing overdue items and with some errors /
Finance Manager confirming adjustments exceptions
(Reviews reconciliations)
Source: Based on past projects
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 12Overseeing the financial close
Reconciliations are such basic work, yet my teams fail to do so properly. I often got late adjustments because of
this. I have no visibility on the reconciliations progress or whether the reconciling items have been cleared timely.
Our pain points include:
No visibility on Delay on reconciliation Limited access & slow Inaccurate / inconsistent
reconciliations with late adjustments responses financial information
Unclear which entities Fail to reconcile accounts Have no access to Cause embarrassment to
have not completed their before the G/L close reconciliations of foreign the finance team, as
reconciliations, which and/or escalate issues on subsidiaries (unclear information is found to
accounts are more prone a timely manner, leading whether they are doing it be wrong or inconsistent
to errors and what items to late adjustments at properly or not) with with other source due to
need to be adjusted the top-side slow response on queries the lack of reconciliations
9-10 days per month 41%
The time needed for 36% of Of finance executives are
Mary the respondents to identify and not confident with the
Financial Controller correct errors accuracy of their financials
(Oversees the financial close)
Source: Based on past projects
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 13Auditing the financial statements
Quite a few of my clients either never complete reconciliations or perform them very poorly. This leads to a few
rounds of queries and re-work. It is the responsibility of management to ensure reconciliations are done correctly.
Our pain points include:
No or improper Delay the audit with Unexplained reconciling Lack of audit trails and
reconciliation tons of late adjustments items / adjustments segregation of duties
Either the client has not The clients fail to We often find presence It is often difficult to
done any reconciliations reconcile before we go of long-standing trace adjustments back
or fail to do them on site (delaying the “mysterious” variances / to the reconciling items
properly, requiring audit progress) and very adjustments that cannot and the person who
significant help from us often resulting in late be explained with no prepares and reviews is
adjustments supporting documents the same person
1-2 weeks 800+
In average delay on audit Unexplained top-side
James due to untimely / adjustments noted in the
Auditor improper reconciliation worst case
(Audits the financial statements)
Source: Based on past audit experiences
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 14Impacts of an inefficient and ineffective reconciliation
Due to the importance of reconciliations, any inefficiencies or deficiencies in the reconciliation process could have
pervasive impact to your organizations:
Lost Productivity Cost Inefficiency Higher Risk
Manual process use lots of staff time Inefficient, manual-intensive process Inability to reconcile properly exposes
that could otherwise be spent on more results in higher processing costs per you to higher risk of errors, non-
value-add activities reconciliation compliances and fraud
Damaged Goodwill Lower Staff Morale No Visibility
Wrong / inconsistent information will Manual reconciliation process is Ineffective reconciliation limits Finance’s
damage Finance’s reputation, limiting generally not welcome by younger staff visibility on the health of its process/
its business partnering capability today, which could lead to lower morale data, preventing it from further
improvement
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 1503 Transforming Reconciliation © 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 16
How do you transform the reconciliation process? To successfully transform the reconciliation process, you need to address the common pitfalls and automate the processes as much as possible. This requires you to achieve the following strategic priorities: 01 02 03 04 Standardize Streamline Automate Control © 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 17
01 Standardize
Establish a standardized reconciliation process and templates that can help enforce proper governance, effective
workflows and consistency
01 03 05
Determine balances to be Investigate and query the Clear and resolve all
reconciled and their templates, root causes of any reconciling items in a timely
frequency and timing reconciling differences manner
Scoping Agreeing Investigating Monitoring Clearing Reporting
02 04 06
Gather relevant data and agree Monitor the reconciliation Report any significant issues
the balance from the system to progress and aging & regarding the reconciling
an independent source status of reconciling items items to management
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 1802 Streamline
Streamline the reconciliation process by leveraging various improvement levers, such as the leading practices below, to
reduce the effort required on lesser risk items and realize the economies of scale
Grouping Centralization
Group accounts / transactions that are Centralize the reconciliation activity via a
related in nature and reconcile them 01 03 shared service environment to realize the
together (i.e. to avoid reconciling every economies of scale (i.e. specialized,
single account individually) improve quality and reduce FTE)
02
Risk-based
Adjust the reconciliation frequency, timing and level
of scrutiny according to the level of risks and
materiality of the accounts / transactions (e.g. higher
risk accounts should be reconciled more frequently)
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 1903 Automate
Leverage technologies to integrate the end-to-end reconciliation process and automate reconciliation activities as much
as possible to minimize manual efforts and accelerate the reporting process
Real-time analytics of Automated data extraction
reconciliation process, & manipulation from
reconciling items and issues different source systems
Central management of journals Automated agreeing of
and automated posting of balances and certification of
correcting adjustments Automated immaterial / dormant accounts
Reconciliation
Automated tracking the Automated transaction matching,
reconciliation progress and roll-forward of prepaid/ accrual and
the status of reconciling items alert on differences for investigation
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 2004 Control
Strengthen the controls and visibility across the whole reconciliation process, enabling management to minimize risks
while quickly identifying and correcting any systematic issues
01 02 03 04
Role-based Workflow Documentation & Traceability Performance Visibility Continuous Improvement
• Assign clear roles on • Require all reconciliations to • Develop a dashboard to • Debrief with staff members
reconciliation (i.e. prepare, be substantiated with track the reconciliation on the issues and root
review, oversee & audit) supporting documents process, issues identified causes noted, and develop
• Establish role-based • Store supporting documents and actions taken solutions to improve the not
workflows to ensure properly and enable easy • Regularly review the only the reconcile process
segregation of duties and access and subsequent reconciliation process and but also the underlying
proper review / approval review follow up on entities / finance processes / data on
accounts / staff that are an ongoing basis
• Make clear reference /
linkage between the subject to higher rate of
reconciling items and errors or delays to identify
resulting adjustments root causes
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 21Introducing BlackLine: A One-stop Automated Reconciliation Solution
Instead of developing your own platform with robots and analytic tool to connect the disparate systems and automate
the different reconciliation tasks, we have found an elegant solution, BlackLine, which enables all the leading practices
and covers most of the technology needed in one integrated platform to automate your reconciliation process.
Standard
Templates
General
Ledger Auto Data Auto Certify
Extraction & Matching Certified Account
Sub- Balances
Different Entities / Locations
Data Integration
ledgers
Errors / Irregularities
Outputs
Bank BlackLine / Exceptions
Reconciliation
Correcting
POS Platform Adjustments
Warehouse Resolution Plan
Process Evidence &
Visibility Commentary
CRM
Exception
Monitoring
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 2204 Automated Reconciliation Solution © 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 23
05 Case Study © 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 24
Case Study: State Owned Energy Distribution and Retail
Client Profile: Situation:
• Power/Utilities In preparation for an SAP S/4 transformation program, the client sought to improve governance, control and automation of
• 6,500+ Employees the finance month end close:
• 4 Finance teams operating
from separate cities Highly Manual Process Lack of consistency No Visibility of Finance Close
• 600+ Monthly Highly manual, intensive nature of Inconsistency in reconciliation policy, Disparate systems, and lack of
Reconciliations reconciliations and data matching, the quality, format and completeness reporting or visibility across the
• 100,000 monthly with high reliance on excel of the supporting documents across reconciliation and matching process
transactions entities. delays delivery of financial results
Solution: Results:
To address the Finance Close issues, we have assisted the We have successfully implemented BlackLine for the and
client to: below are highlights of the project results:
Develop a robust Reconciliation policy to support 90% matching success rate in daily and monthly
01 implementation of consistent leading transaction matching and reconciliation processes
reconciliation practices across the organization
Implement BlackLine to manage and automate 50% faster finance month end close
02 the Reconciliation and Matching process and
drive compliance Increased capacity in finance to support the
growing business without an increase in headcount
Establish a roll-out plan, provided training and Gained real-time visibility over the finance
03
support change management to drive adoption close and reconciliation process
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 25Case Study: Private Childcare Provider
Client Profile: Situation:
• Private childcare provider Treasury team needs to reconcile thousands of treasury transactions across all 470+ centres on a daily basis and they are
• 470+ centers across multiple facing a number of challenges:
cities
• 4 team members in the Highly Manual Process Limited Time for Other Activities No Visibility
treasury team Treasury team spends significant time With most time used on Restricted visibility as reconciliations
downloading and pivoting bank and reconciliation, treasury team has and issues are managed via separate
G/L data, and matching the limited time left for other treasury Excel workbooks across the 470+
transactions to identify issues activities centers
Solution: Results:
To address the Treasury reconciliation issues, we have We have successfully implemented BlackLine and below are
assisted the client to: highlights of the project results:
Identify and define reconciliation and matching 80% matching success rate in matching treasury
01 transactions across all 5 payment categories
logics across the different payment methods
50% reduction in team to complete reconciliation
Implement BlackLine to manage and automate
02
the treasury reconciliations Increased capacity in treasury team to provide
more treasury advisory analytical support
Establish a roll-out plan, provided training and Gained real-time visibility over the treasury
03
support change management to drive adoption reconciliation by transaction and center level
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 26Case Study: Waste Management Company
Client Profile: Situation:
• Waste management Finance teams in different locations are performing reconciliations differently (and often incorrectly), and central team has no
• 90+ finance staff members visibility on the status of the reconciliation and the issues noted. Some major pain points include:
• 80+ legal entities
• Businesses across the No or Incorrect Reconciliation Highly Manual Process Lack of Visibility over Reconciliation
Greater China region Finance team is either not doing any Finance teams need to manually Finance executives have no idea
reconciliation at all or doing it download, map, pivot and match the about the reconciliation status and
incorrectly (e.g. circular reconciliation, data with little time left for are unclear of the health of their
no supporting documents, etc.) investigation finance process and data
Solution: Results:
To address the reconciliation issues, we have assisted the We have successfully implemented BlackLine and below are
client to: highlights of the project results:
Developed a robust policy to standardize the Standardization of the reconciliation process and
01 related exception handling
reconciliation and exception handling process
Automated substantial part of the reconciliation
Implemented BlackLine to centrally manage and process (extracting, mapping and agreeing the data)
02
automate the reconciliation process
Efficiency improvement opportunities identified
(e.g. risk-based approach, grouping, data issues, etc.)
Establish a roll-out plan, provide training and Gained real-time visibility over the
03
support change management to drive adoption reconciliation process, issues and adjustments
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 2706 How Deloitte Can Help © 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 28
How can Deloitte help?
From our experiences in supporting countless growth companies to go IPO and helping over 60+ clients in deploying
BlackLine and robotics technology to automate their reconciliation process, we have developed a tried and tested
approach to help you optimize your reconciliation process. To help you through your journey, we can assist you on:
Our End-to-end Support on Reconciliation Why Deloitte?
Reconciliation Diagnostic • Extensive knowledge in reconciliations
(Gained extensive knowledge in all the good, bad and
Help you to assess the current state of your reconciliation process, ugly of reconciliation through countless audits and IPOs)
identify deficiencies / inefficiencies, and formulate improvement plan
• Rich reconciliation automation experiences
(Completed 60+ BlackLine implementation, more
Reconciliation Policy & Process Development BlackLine implementations than any other service
providers in APAC with 80+ certified specialists)
Assist you to develop policy and future workflow to ensure a
streamlined, standardized and robust reconciliation process and controls • Codified, repeatable approach on reconciliation
(Established standard approach & toolkits to ensure
rapid delivery, optimize processes and improve user
adoption)
Reconciliation Automation
Support you in deploying technology solutions (e.g. robotics, BlackLine, • Accountants with technology capability
etc.) to automate and better manage your reconciliation process (Not only we understand accounting, but are capable in
using technologies (e.g. robotics, data analytics,
BlackLine, etc.) to solve your issue)
Reconciliation Training & Support
• Virtual office of finance
Support you in providing reconciliation training, clearing reconciliation (Capability to set up a truly automated finance
backlogs / issues and on-call accounting support operations)
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 29Deloitte is at the forefront of defining, researching and transforming the accounting function today. If
you’re ready to move from abstraction to action:
Ted Ho Christopher Brown
Let’s talk Partner
Email: teho@deloitte.com.hk
Director
Email: chrbrown@deloitte.com.au
Phone: +852 2852 6489 Phone: +61 7 3308 7255
Anson Mak
Associate Director
Email: ansmak@deloitte.com.hk
Phone: +852 2852 6738
© 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 3007 Q&A © 2020. For information, contact Deloitte China. Accounting Frontier Series: Accounts Payable Automation 31
About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as “Deloitte Global”) and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. Deloitte Asia Pacific Limited is a company limited by guarantee and a member firm of DTTL. Members of Deloitte Asia Pacific Limited and their related entities, each of which are separate and independent legal entities, provide services from more than 100 cities across the region, including Auckland, Bangkok, Beijing, Hanoi, Hong Kong, Jakarta, Kuala Lumpur, Manila, Melbourne, Osaka, Shanghai, Singapore, Sydney, Taipei and Tokyo. The Deloitte brand entered the China market in 1917 with the opening of an office in Shanghai. Today, Deloitte China delivers a comprehensive range of audit & assurance, consulting, financial advisory, risk advisory and tax services to local, multinational and growth enterprise clients in China. Deloitte China has also made—and continues to make—substantial contributions to the development of China's accounting standards, taxation system and professional expertise. Deloitte China is a locally incorporated professional services organization, owned by its partners in China. To learn more about how Deloitte makes an Impact that Matters in China, please connect with our social media platforms at www2.deloitte.com/cn/en/social-media. This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication. © 2020. For information, contact Deloitte China.
You can also read
