FINANCE

Close, Consolidate, Report: A New Performance Blueprint from Cognos, an IBM company, and Deloitte

August 30, 2006

Companies value their finance departments – they play a key role in enhancing strategic decision-making, business performance, and shareholder value. They're also the center of operations when it comes to meeting regulatory mandates.

Unfortunately, collecting and processing certified financial information puts a lot of stress on people and systems, simply because the tools aren't up to the task. The result is lots of manual workarounds, data searching, and long hours to provide even a small amount of critical detail. And finance ends up being a cost center more than anything else. Not to mention the regulatory concern over unreliable data and controls, errors, and risks, which further impact the business.

Compliance is not about to go away anytime soon. So the question is: How can finance both drive business value and meet financial consolidation and reporting mandates?

A blueprint for consolidation

The Close, Consolidate, Report Performance Blueprint provides a roadmap, tools, and templates to implement a successful controls-focused consolidation system. It's a framework for identifying gaps, strengths, and opportunities to shorten the close cycle. The Blueprint works because it combines two things: best practices and technology, to address both business process improvement and the tools that support it.

Better best practices

In terms of best practices, the Blueprint leverages the extensive risk and control knowledge gained by Deloitte, experts in accounting, planning, reporting, and performance management.

First, Deloitte assesses the current state of a company's CCR process and lays out a roadmap to identify gaps and opportunities. Next, it delivers a set of processes and activities to optimize efficiency and effectiveness in the close cycle. Then, each step in the CCR process is mapped to control activities that achieve over 30 regulatory control objectives based on the COSO framework. Finally, Deloitte delivers proprietary configuration templates that support critical controls.

Better technology

Underlying the process is the technology: Cognos 8 Controller. The Web-based software provides streamlined financial reporting and consolidation. It offers built-in financial intelligence and advanced analytics to provide timely, accurate information, improved decision support, and rigorous regulatory compliance.

Cognos 8 Controller supports IFRS, FASB, Basel II, and Sarbanes-Oxley requirements, as well as multi-jurisdictional GAAP reporting. It also enables individual segment reporting by customer, product, or market. And it generates an extensive audit trail to satisfy the needs of external and internal auditors.

As a simple example, the Audit Log tracks any changes made in the system. So if a company structure is updated, it shows what existed before the change and what changes were made. An online sign-off form also speeds the management approval process, and provides evidence for auditors that the change was authorized.

"This joint work represents leading practices compiled from related engagements with hundreds of clients," says Ray Pineda, Enterprise Applications – Performance Management Leader, Deloitte. "Applying the Blueprints best-practices and control activities to streamline this process shortens the close cycle and reduces the risk of material misstatements in financial reporting for customers."

Turning challenge into business value

The ability to combine technology, best practices, processes, and controls brings value to the business on three fronts. First, automated process and application controls enhance data quality and improve process efficiency by reducing human intervention. Shortening the close cycle also allows management to focus on value-added activities that enhance business performance.

Finally, compliance costs can be reduced by 50 percent or more-simply by focusing on the right controls design and configuration, comprehensive documentation, and exception reporting. Process improvements better align companies with auditor expectations and reduce the risk of errors and material misstatements.

Summary

Deloitte and Cognos understand the pressures finance departments face in meeting both compliance and performance needs. The CCR Blueprint aligns controls best practices with financial reporting and consolidation technology to help organizations address regulatory mandates. The result is a streamlined and accurate close cycle. And that leaves more time (and money) for finance to focus on strategic and value-added activities that improve the business.