Fast close enablement. Financial reconciliation with business insights Advisory, India Analytics

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1 Fast close enablement Financial reconciliation with business insights Advisory, India Analytics

2 Fast close enablement Finance/controllership within organizations is increasingly prompting towards the automation of repeatable activities for periodic book closing. The focus of these groups has shifted to analysis of financial data to provide actionable business insights in key revenue and expense provisioning activities. The goal of fast close enablement solution is to provide an efficient mechanism for faster book closing. Need for fast close enablement The book closing process often poses barriers to timely completion for the following reasons: The activity is manual, time consuming and susceptible to accuracy-related issues. The provisioning process is complex due to: Do you know the exact date when you can publish the operating results of your company? Are periodic book closing processes taking too much time? Lack of leading practices and Paucity of right tools and technology. Typically, book closing processes involve analysis and collation of data through multiple spreadsheets. In the backdrop of new audit demands and additional regulatory reporting requirements, closing takes more than a week. Does your organization have systems and procedures in place for reproducibility of results for Audit purposes? Fast close enablement Is the month / quarter / year end book closing activity dependent on certain individual employees? Fast close enablement is a framework of business rules created to automate period close activities using workflow technologies with following benefits: Reduction in turnaround time Fast close enablement improves operational efficiency by providing the following benefits: Cycle time reduction in periodic book closure activities Automation of data extraction and transformation System dependent, rather than a people dependent process Better business insights The solution provides reporting and analytics platform for: Adhoc and guided analytics One view of financial data for better decision making Scenario analysis or what-if analysis Increased accuracy The solution has sophisticated data management features: Maker-Checker mechanism with audit trail capabilities Historical data storage User management Fast Close Enablement requires engagement of cross functional stakeholders : Identify key business processes: Recommendations on key business processes automation Control mechanism and data security: Establish maker-checker mechanism for better control and data security End-to-end automation: Recommendations on providing end-to-end automation Visibility and reporting: Visualization, reporting and data management 2 Companies Act

3 The following chart contains activities for book closing in the IT consulting industry: Illustrative Provision Classification Expense Revenue Employee Vendor Product Services Onsite Claims Visa Rentals Provision for Doubtful debts Offshore Claims Health Leasing Inventory Provision Employee Referral Food Coupon Reinventorization Final Settlement Recruitment Inventory Provision Companies Act 3

4 Business Insights Ilustrative insights Provision for Doubtful Debts (PDD): PDD for organizations, is modelled based on ageing receivables and historical default patterns using the percentage of receivables method. The distribution of PDD across geographies provides vital information about which areas to focus on for better financial management. Use Case: Fast close enablement Business need : Controllership groups within organizations face several challenges in their periodic book closing activities. The activities are time consuming, people intensive, and need high levels of senior management scrutiny. In effect the processes are error prone and inefficient. Additionally, lack of systemic capabilities and leading practices make it cumbersome to analyse and estimate provisional amounts that form the basis for their financial planning & book closing activities. Proposed Solution: The Analytics team worked closely with Finance/ Controllership groups in order to Identify opportunities for enablement, Ex.- Expenses and revenue provisioning. Track historical data and enable audit trail and analytics capabilities. Re-inventorization: This refers to trend analysis of reversal of cost entries for undelivered/returned products or services. The trending report is useful to identify the trend of reinventorisation levels across months. Suggest and enable tool set like.net, SQL server, TIBCO Spotfire for the fast close enablement application and user interface. Value Proposition: Technology enabled platform to automate financial book closing. Significant cycle time reduction and process efficiency resulting in saving critical time and providing audit trail capabilities. Enable management to make informed decisions using the reports with visualisation. Opportunity to standardize processes & leverage solution across subsidiaries. 4 Companies Act

5 Fast close enablement roadmap: A blueprint of typical phases in a fast close enablement engagement. Requirements Build Testing Validation UI Integration Support Transition Understand business requirements for provisioning and data analytics Developement of scripts as per the Business Requirements Document after the sign-off Unit test the scripts for desired results Perform a parallel run to compare the output with current practices and get it validated by business users Migrate the scripts to production and user interface integration Support the client during the analytics enablement Fast close enablement benefits Cycle time reduced from 4 days to 6 hours Audit trial with maker-checker mechanism for any historic reporting needs Data integrity and security since the business users do not work on data extracts Scenario analysis. For example, exchange rate fluctuations in provisioning Data Analytics - trending, identification of data swings and granular data views Why EY: our key differentiators Our understanding and commitment The approach and operational model is geared towards achieving an accelerated value capture, ROI and productivity EY s commitment to client engagements will have the highest priority from the beginning a pre-built onboarding plan + comprehensive workplan + a problem solving approach Our approach and resource model A lean, high performing, yet scalable team One unified EY team: EY s resources will be on the ground working alongside clients Sufficient subject matter knowledge in business, technology and analytics Knowledge capital and tools Process specific data dictionaries, data models, visual analysis and reporting templates Proven analytics scripts and rule based engines Range of analytics capabilities EY s Data Analytics team has wide ranging analytics capabilities in descriptive and fraud analytics EY s deep insights into process/performance improvements in business analytics Companies Act 5

6 NOTES 6 Companies Act

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8 Ernst & Young LLP EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP is one of the Indian client serving member firms of EYGM Limited. For more information about our organization, please visit Ernst & Young LLP is a Limited Liability Partnership, registered under the Limited Liability Partnership Act, 2008 in India, having its registered office at 22 Camac Street, 3rd Floor, Block C, Kolkata Ernst & Young LLP. Published in India. All Rights Reserved. EYIN This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Ernst & Young LLP nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. EY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited