Accounting policy and governance

Transcription

1 October 2015 Financial Accounting Advisory Services Accounting policy and governance From principles to practice A number of triggers can turn a lingering worry about the effectiveness of your policies and governance process into a critical need for immediate diagnosis and repair. The most common triggers are company-specific, typically involving changes to an organization s operating model. They can also stem from transformational events, such as IPOs, restructuring and M&As. A lack of standardized policies may cause global companies to experience weak controls and missed reporting deadlines. Other triggers may be industryspecific, encompassing regulatory change and shifts in the business environment or more widespread triggers, such as the convergence projects between the FASB and IASB. Accounting policies and procedures are central to an organization s financial controls. When they are clear, consistent and up to date, they strengthen not only the control function, but also the relationships among management, employees and investors. They help connect and align cross-functional and geographically dispersed operations. However, when they fall short of these goals, they reduce an organization s efficiency and effectiveness, and increase risks. Policy and procedural overhauls can look daunting after all, there are always other priorities and constraints on resources. Revisions are often made in a piecemeal fashion, leading to inconsistency. Sometimes, revisions are not made at all. The need to stay up to date is essential, given the internal changes that continually reshape an organization s operating model and the waves of external change affecting accounting guidance and industry regulations. The speed of accounting and regulatory change is unprecedented as organizations are challenged to do more with less. Transactions, risk events and transformational changes are on the rise, yet the mandate for the CFO and finance teams remains: reduce costs, improve controls and provide timely financial information to management, investors and regulators. Robust accounting policies and procedures are a cornerstone for success in these challenges. EY can help you address these challenges. In addition to our experience supporting the development of the policies and procedures, we can also advise and assist you in introducing a web-based tool to help you implement, share and monitor these policies and procedures.

2 Critical questions to ask Do you have the right policies? Rapid assessment Does your organization have all the policies it needs? Are there out-of-date and duplicate policies? Are there gaps or inconsistencies across geographies or business lines? Are internal stakeholders satisfied with your policies? How do your policies compare with industry peers and best practices? Are your policies effective? Governance and control Does your organization have a policy on policies that defines when to create, revise or decommission policies; identifies process owners; and sets approval requirements? How is consensus and stakeholder alignment achieved? How are policy changes communicated to the organization and implemented? When are external resources used to aid drafting? Optimization Do your organization s policies comply with GAAP, IFRS and any other applicable accounting framework and prevailing regulatory requirements? Are they user-friendly? Are they the right length? Are they written in plain language to bridge the gap effectively between rules and business practices? Are they linked to standard operating procedures and desk instructions to form a policy framework that supports the control environment? Education and deployment Are your policies centrally accessible to employees? Is training provided? Is employee learning monitored? When are external resources brought in to assist in the creation and delivery of training? Any of these situations could demand either modest updates or a complete overhaul of an accounting policy and related internal procedures. Without the personnel, time or experience to conduct such a review, your organization may be exposed to unnecessary risk and delay. EY s approach Our Financial Accounting Advisory Services (FAAS) professionals provide a full range of GAAP and IFRS accounting policy services, from manual diagnostic assessments (i.e., policy rationalization) and advising on leading practices to advising clients on, and the creation of, manuals or individual policy updates. EY professionals may also advise clients on the design and implementation of policy governance processes, as well as finance and accounting policies, processes and standard operating procedures. 2 Accounting policy and governance October 2015 To be confident that you have accounting policies and processes in place that are right for your business, you need to identify and assess the needs of your finance function. We provide a range of services, from a quick assessment and analysis of your existing accounting policies to the creation of a completely new and customized accounting manual, along with deployment and training support for your team. Each of these services may be executed as independent, stand-alone engagements or together as one holistic, end-to-end transformational project.

3 How can we assist? Within EY, our FAAS professionals have experience of working with a broad range of organizations to help them manage their accounting, finance and treasury policies. By offering advice and practical strategies, we can help you to confirm that your policies and procedures comply with current rules and regulations, and continue to meet the demands of your changing business. We focus on the following four key areas: 1. Rapid assessment Review current policy library Conduct end-user and stakeholder interviews or surveys Identify the needs of finance function members to help determine whether enhancements meet those needs Compare policies with those of your peers 2. Optimization Identify any key policy gaps related to technical or regulatory requirements, userfriendliness and overall structure Conduct interviews with process owners, technical accounting personnel and other stakeholders, to understand concerns and potential issues Check the links between your user manual, policies and standard operating procedures Develop a policy prototype Create an accounting manual format that all team members can easily use 3. Governance and control Develop work plans to support the implementation of policies, and the creation of systems and processes for the adoption of new or revised policies Align policies and procedures after M&As Identify when external resources should be used to assist with the governance process Assist with all phases of a global or local policy transformation Draft new policies and procedures (including manuals) or update existing ones Develop white papers Advise on the impact of new accounting standards or regulatory requirements 4. Education and deployment Support the dissemination of the policy manual through monitored training, helping to determine whether policies are used consistently across the organization Provide company-specific alerts as to when policies need updates Accounting policy and governance October

4 Potential benefits 1. Cost reduction Up-to-date accounting policies and procedures improve efficiency, effectiveness and productivity all the while reducing risks by helping organizations standardize and streamline practices. 2. Cost prevention Compliant policies and procedures help eliminate control deficiencies and costly remedial measures, which may include restatements to correct errors. 3. Operational synergies Global accounting policies help create synergies and alignment among cross-functional, geographically dispersed teams, improving productivity and results. 4. Governance and control Clear, transparent accounting policies strengthen the control function and key relationships between management, employees and investors, while helping management comply with regulatory rules and requirements. Policy and procedure framework: driving consistency through the automated accounting policy manual Enterprise Risk Management Accounting Policy Wiki Policies Standard operating procedures Our focus Assess Optimize Govern Desk instructions Deploy Accounting policy manuals are often collections of unrelated information that lack customization. They are typically available in hard copy and are not user-friendly. Therefore, updating their content is often time consuming and costly. When the focus turns to the effectiveness of accounting policies and procedures, a finance executive should ask: How can I increase the awareness and acceptance of my company s policies and governance? How can I deploy new accounting policies efficiently to all my users worldwide? How can I integrate my company s policies into its ERP system? How can I facilitate the user access to my company s policies? How can I reduce the cost of maintaining and updating my company s accounting policies? 4 Accounting policy and governance October 2015

5 The EY advantage Accounting Policy Wiki Drafting new or updated policies is not just a mere content exercise. Day-to-day accounting requires an efficient way to address the following challenges: Deploying new accounting policies efficiently to all users worldwide? Integrating your organization s policies into your ERP system. Facilitating the user-access to your policies? Reducing the cost of maintaining and updating your (accounting) policies? We believe that with technology comes convenience and cost effectiveness. We are glad to complement our accounting policy and governance services with a web-based Accounting Policy Wiki (APW) as a way to manage and share your policies with your teams. The APW is a unique, web-based tool that enables the integration of the key information of an accounting policy manual with a web-based deployment process. It stores all of your policies and enables you to track and monitor their use, make updates and share those updates across your team. This tool offers many benefits: It provides easy browsing and intelligent search functionality that makes it more user-friendly. It facilitates integration of processes across the internal control environment. It supports policy deployment across the organization. It can link policies to other organizational processes. It is easy to update and is customized to suit your specific requirements and processes. It shows information about your different products and services, and related accounting guidelines. It utilizes cost-effective technology (SharePoint, MediaWiki) with simple user-rights management. It has print features and allows access through mobile devices. Our Accounting policy WIKI allows a company to enhance accounting policy deployment process, increase user friendliness link the accounting policy manual information to the company s processes and products. Accounting policy and governance October

6 Our experience We have supported many organizations globally to create and review their policies. Below are some examples: Client Service Service description A listed multinational in food and beverages A leading multinational in oil and gas A listed multinational in media and entertainment A leading industrial product company Accounting manual Accounting manual and peer comparison analysis Compliance analysis IFRS conversion and related accounting manual Improvement of internal processes and accounting systems, accompanied by the development of new accounting guidelines and reporting manuals Compilation of a complete accounting manual (collection of existing documentation, interviews with stakeholders and comparisons with policies of other companies in the oil and gas sector) IFRS compliance review of the accounting manual and the accounting plan (which were redesigned by the client to reflect revenue recognition issues), and testing of its implementation in overseas subsidiaries Supporting the preparation of an accounting manual, in the course of an IFRS implementation at the group 6 Accounting policy and governance October 2015

7 Why EY? Teaming and collaborative approach Our success is attributable to our flexibility: We can work with your team. We can operate independently with minimal disruption to you. Strategic and sector insights Our broad experience gained from other projects enables us to bring high-level strategic insights and a commercial approach. Our professionals have worked on multidisciplinary engagements and bring a depth and breadth of sector and technical experience. Global network We use our global network to draw on the diverse and in-depth skills of teams in more than 75 countries. This globally connected, multidisciplinary and locally delivered model will help you to meet your business objectives. Proven tools and methodologies Our robust methodologies and technology solutions allow us to provide tailored cost-effective strategies, efficiently. Accounting policy and governance October

8 EY Assurance Tax Transactions Advisory Contacts: Andreas Muzzu Accounting Policy and Governance Dr. Detmar Ordemann Accounting Policy and Governance 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 EYGM Limited. All Rights Reserved. EYG no. AU3544 BMC Agency GA 0422_02463 ED None In line with EY s commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com