Reinventing Record to Report For Worry-Free Governance

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2 Reinventing Record to Report For Worry-Free Governance Session 402 IASA 86 TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW

3 Background Syril Mathai, CPA Trintech, Inc. VP Global Services and Partner Enablement 15 years Corporate Accounting Experience 5 years Consulting (Management and Implementation) Former Customer for Trintech (6 years)

4 Gaining Complete Confidence in your Numbers: Reinventing the Record-to-Report Process

5 AGENDA Why Record-to-Report? Record-to-Report Challenges Reinvention Approach Solution-in-Action: Case Study Summary & Next Steps 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

6 Out of intense complexities intense simplicities emerge. Winston Churchill

7 Improving the Record-to-Report Process Focus relentlessly on driving Process Simplification & Standardization to combat increasing business & regulatory complexity. Invest in Integrated Close to differentiate from peers relative to business performance & financial reporting Broad organizational value (through reliable information and business directed focus) provided by efficient and effective consolidation and close process. Integrated Systems & Single version-of-the-truth are critical to success for R2R process; enterprise-wide data standards & associated governance are requisite foundations. All Top Performing R2R organizations leverage technology extensively as an important component of the Integrated Close 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

8 Gartner View on R2R Market Adoption Accelerating for Financial Solutions Gartner continues to define Financial Governance as a whole and also in two subsections, with a strong emphasis on Financial Governance Suites. Financial Governance Suites Advantage 0 to 2 This is an emerging area and financial governance suites offer a strategic solution with new solutions entering the market in the last year. Evaluate against disclosure management and close management solutions. Disclosure Management Choice 0 to 2 If your current disclosure processes are manual and rely on spreadsheets, evaluate within the next 12 months. These offerings are maturing in depth and scope. Close/Reconciliation Management Choice 2 to 5 If your current close processes are manual and rely on spreadsheets, evaluate within the next 12 months. Evaluate the whole close process. Try to avoid tactical purchasing of reconciliation management solutions. Source: Gartner IT Market Clock for Financial Management Applications, August Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

9 Chief Accounting Officers Challenges Our goal is to remain on the constant improvement curve because there will be persistent cost pressure on finance. Intel CAO What I do not know (unknown risk) and lack of communication between key departments General Motors Controller and CAO Risks of things falling through the cracks as things are handed off between shared service centers J&J VP, Controller and CAO Changing regulatory environment Best Buy SVP, Controller, CAO 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

10 The CFO s Perspective Evaluating Record-to-Report risk & performance: 1. Manage Risk What is our R2R risk? Do our processes complement our risk appetite? 2. Increase Effectiveness Are we doing the right things in the right order? Are we missing critical steps? Are these steps auditable? Are they sustainable? 3. Increase Efficiency Are we doing things right? Are we leveraging technology, people and processes for maximizing value and ROI? 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

11 What s Really Going On? Myth: Highly educated finance personal are working on value added activities Reality: Many expensive controllers/fp&a professionals spending 2/3 of their time or more on low value information activities

12 The Approach THE COMPLETE APPROACH Reduce Risk RISK RISK RISK RISK 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

13 The Complete Approach Reduce Risk RISK Increase Effectiveness 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

14 Transformation & Process Improvement Regulatory Deadline Regulatory Deadline The Complete Approach RISK Reduce Time & Mitigate Risk 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

15 Transformation & Process Improvement Regulatory Deadline The Complete Approach Reduce Time & Mitigate Risk 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

16 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

17 How the R2R Process Often Works 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

18 How the R2R Process Often Works SAP Close Cockpit Legacy Systems Outsourced External 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

19 How the R2R Process Often Works SAP Close Cockpit Legacy Systems Outsourced External 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

20 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc. How the R2R Process Often Works SAP Close Cockpit Legacy Systems Outsourced External

21 How Trintech Helps The first, unified financial governance solution to reinvent the entire Record-to- Report process 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

22 To improve is to change; to be perfect is to change often. Winston Churchill

23 BALANCE SHEET Quantitative and Qualitative steps synchronized Provides transparency for all activities Immediate view to Balance Sheet progress, by Financial Statement Line Item Status of activities by criticality and due date 23

24 R2R SUMMARY MANAGES ALL CLOSE RELATED FUNCTIONS Transparency for all Close Task related activities: Journal Entry Reconciliations Disclosures Compliance Analytical Technical Organized by Close calendar, Entity 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc. 24

25 CERTIFICATION MANAGES ALL GENERAL LEDGER RECONCILIATION PROCESSES Provides transparency for all reconciliation-related activities Activity & Issue status filtered by Entity and day-of-close Activity & Issue status filtered by: Individual roles / assigned permissions Entity and day-of-close (or date) 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc. 25

26 COMPLIANCE MANAGES ALL COMPLIANCE PROCESSES Provides transparency for all Compliance-related activities Controls linked to task execution Activity & Issue status Progress of remediation Exception management 26

27 COMPLETION MANAGES REPORT CREATION Preparation of documents required for regulatory and statutory reporting. A collaborative platform to create, update, edit, review and finalize documents Embedded XBRL tagging 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc. 27

28 CADENCY VISIBILITY AT A SINGLE VIEW Understand the status of R2R in a single combined view Drill down into status within organization across process See the impact of one process to another within R2R 28

29 Accomplishments Through Improvement Full awareness of required activities within the R2R effort Reduction of close-day cycles through removal of non-value added activities in close cycle Increased quality in reconciliations through risk based approach Reduced effort in monitoring compliance initiatives by leveraging test data from shared controls Structured and controlled journal entry processes through standardized journal forms, automated approvals and postings Collaborative approach for Disclosure Management with full visibility back to supporting processes Efficient Controls Testing Collaborative Disclosures Full Awareness of R2R Effort Reducing Close Days Efficient G/L Recons R2R Process Improvement Controlled Journals 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc. 29

30 Summary Cadency reinvents, transforms and shortens the entire R2R cycle By establishing a repeatable Rhythm of Finance through orchestrating all stakeholders, activities and interoperable processes in a collaborative, real time workflow environment Cadency reduces costs & improves efficiency enterprise-wide By optimizing resources, costs, risks and activities across the entire finance organization worldwide through: Transparency and control across the governance model for the R2R cycle Empowering continuous process improvement methods across the entire cycle Cadency enables controlled agility By facilitating easy realignment for an ever-changing business and regulatory environment 2014 Trintech, Inc. All rights reserved. Cadency, ReconNET and Rhythm of Finance are registered trademarks of Trintech, Inc.

31 W&SFG Case Study Improved Compliance through an Effective and Efficient Close Process

32 Background Wade M. Fugate, CPA Western & Southern Financial Group AVP & Assistant Controller 10 years Corporate Accounting Experience Responsible for GAAP and statutory close, analysis, consolidation, internal management reporting and external regulatory reporting Responsible for Investment Accounting and Reporting and Variable Annuity Accounting and Reporting Responsible for expense budget and cost allocation processes and analysis Ernst & Young LLP 6 years external audit experience auditing life insurance companies

33 Western & Southern Financial Group Company History Founded in Cincinnati in 1888 (The Western and Southern Life Insurance Company). Provides life and health insurance, annuities, mutual funds, investment management, broker-dealer services, and real estate investment and property management through member companies across 50 states. Fortune 500 company with assets owned and managed in excess of $68 billion (March 31, 2014). Financial Strength Ratings* for Western & Southern's six life insurance subsidiaries. AM Best A+ Superior Standard & Poor s AA Very Strong Fitch AA Very Strong Moody s Aa3 Excellent

34 The Challenge Change in team members and expectations Aging workforce - knowledge Gaps in the business and the need for knowledge transfer Associate Engagement in the business (Career vs. Job) The Speed of Change Changes in processes, people, technologies Regulation Disclosure changes Statutory and Federal regulation

35 Timeline and Implementation Strategy Standardize Components of Financial Accounting and Reporting across Insurance Companies Build relationships and gain buy in through improvement opportunities in business units (Reconciliation Implementation) Enhance Control Structure Leverage technology to improve financial reporting and enhance team member flexibility and knowledge (Close Implementation) Drive Financial Reporting efficiencies in direct business partner processes Efficiently monitor and test on-going control structure Leverage technology eliminate data gathering and testing redundancies

36 Recon Implementation Objectives and Results Preliminary State of Reconciliations Manage reconciliations across approximately 14 business units Execute approximately 1000 monthly reconciliations (1800 quarterly) Reconciliation process was extremely manual and not scalable Update Reconciliation Result Standardized, scalable process implemented within 4 mos. ReconNET Efficiency Results Rec. Type # of trans level recons Ave. Mo. Transaction s Ave. Mo. Match % Bank/Susp. ~50 dly/wkly ~130k ~80% Standardized Management Reporting Standard measurable metrics to reduce risk of inaccurate financial reporting

37 Benefits for Corporate Accounting Process Enhancements Creation of enhanced monitoring and communication control structure Eliminate redundant control execution and testing Elimination of wire account validation process due to more timely reconciliation execution Drive Management and Business Partners to Action Create account reconciliation execution accountability and provide visibility and transparency to business unit senior management Develop specialized teams responsible for reconciliation, root cause analysis, and process improvement.

38 Close Enhancement Project Close Overview Approximately 30 individuals directly managing close activities Manage the close and consolidation for six insurance entities and multiple non-life insurance entities. Initial process was manually intensive and managed through individual spreadsheets and checklists for each entity. Initial State of the Close Process Limit direct management oversight into real-time close status Lack of visibility into true status of close completeness Many business partners do not understand important of task timing or level of urgency related to close tasks. Inefficient process to monitor process enhancements or roadblocks

39 Accountability and Education Accountability Goals and development plans All users can see status of the monthly close Monthly reporting on the status of close tasks and late tasks Daily coordination and escalation of late tasks Education All tasks have description including objective of the task Detailed instruction and reference materials to allow for transferability Tasks to track analysis issues and procedural changes Engagement in management tasks

40 Close Results Process Replacement Approximately 2000 tasks added in first six months Replacement of all checklist related activities involved in close Installation for entirety of Comptroller s Department (Acct, FR, Inv.) Management Engagement and Transparency Improved discipline related to communication of non-routine items Improved flexibility through Co-management of team member inboxes and responsibilities to ensure appropriate prioritization (leverage queues) Manage by Exception Escalation of late tasks to management responsible for function Reconciliation Monitoring at an aggregate risk level Close Enhancements Improved timing and completeness of close Enhanced accountability in operational areas related to financial reporting responsibilities Better leverage accounting resources to analyze data vs. routine non-complex task execution.

41 Enhanced Compliance through Close Standardization Aligns to our MAR Strategy Partnership between Comptroller and all business units Similar user base to share ownership and responsibility. Leverage ease of use and understanding from other products Expect to eliminate approximately 1000 hours of redundant and administrative efforts. Align close task execution that impact financial reporting to compliance related controls. Control Savvy Management Team Challenge and Develop Talent to not only own and understand tasks, but also control environment It s Good Business

42 Please Complete the Session Evaluation Form on the Conference App and Include Your Conference Registration ID# to be Included in a Drawing for a Free Conference Registration for the 2014 Annual Conference! NOTE: Your Conference Registration ID# is Located at the Bottom Left Hand Corner of Your Badge. IASA 86 TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW