The client (a major transportation company) required an acceleration of its monthly closing and the creation of a monthly reporting package for its three subsidiaries. As a result of an internal project, the number of days needed for the preparation of the monthly closing was reduced to 10 working days from the end of the month. The management and shareholders required that the monthly closing be completed within six days of the end of the month, which the accounting department considered unrealistic. The target defined above (and the scope of the project) refers to three separate monthly closings in three subsidiaries, including adjustments under IFRS. The project did not include the follow up consolidation.
In order to ensure the optimum skill set both in project management and understanding of accounting principles and policies, the Deloitte team included two consulting professionals and one auditor. The project was divided into four phases:
- Phase I – a detailed comparison of the existing procedures with the target state and the preparation of the project plan (ie the preliminary identification of problematic areas that are necessary to focus on and a rough outline of the time schedule necessary for completing the monthly closing within the required time).
- Phase II – designing changes in the monthly closing process - allocating responsibilities for individual steps to specific employees, the preparation of a time schedule, the design of changes in certain processes in order to make them simpler and faster (increased recognition of estimates, setting up certain automated data transfers, improving and accelerating communication with departments that provide supporting documentation, accelerating the invoicing process, automated accounting for certain transactions, etc).
- Phase III – the implementation of new monthly closing processes and a test closure.
- Phase IV – employing the processes in every-day operations, the successful preparation of monthly closing, and the delivery of the completed project.
Deloitte’s Added Value
The Deloitte team helped the client accelerate the monthly closing process by several days, which had previously been unsuccessfully attempted and considered unrealistic. The key benefits included the following:
- Having a detached view of the company’s existing processes provided by an external consultant and having the possibility of comparing the existing processes with the “best practice”;
- Managing internal communication processes from the point of view of an independent entity, allowing for better communication between the accounting department and the departments that provide supporting documentation (the accounting department in itself is not authorised to demand from other departments any changes in terms of the quality of the provided documentation and the time period in which it is provided);
- The setting up of clear responsibilities and a time schedule for the preparation of financial statements;
- Assistance with the simplification of certain steps regarding data input (automated data loading to SAP); and
- The simplification of certain protracted accounting operations (eg greater use of estimated balances in order to eliminate the need to await incoming invoices or the supporting documentation for the issued invoices to be completed, etc).
Benefits For the Client
- The financial statements were prepared within a few days of the end of the reporting period
- Timely information for decision making: the management, shareholders and all other users have the financial statements promptly at their disposal
- Prompt reaction to changing economic conditions and financial results
- Predictable cash flow (ie potentially cheaper funding)
- More time for an interpretation of results, analysis of variants, and planning and forecasting