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Financial Accounting Advisory Services Accounting policy manual solution May 2013

Accounting policy manual solution

Agenda

About EY 3

Accounting policy manual solution 5

Automated accounting policy manual 11

Appendix 20

Credentials 21

Contacts 22

About EY


EMEIA Sub-areas

EY Global

Countries worldwide

140

Employees worldwide

167,000

US$ revenue (2011-12)

24.4b

Africa Angola, Botswana, Republic of Congo, Equatorial Guinea, Ethiopia, Gabon, Ghana, Guinea, Ivory Coast, Kenya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Seychelles, South Africa, Tanzania, Uganda, Zambia, Zimbabwe

Belgium and Netherlands

Germany, Switzerland and Austria

Commonwealth of Independent States Azerbaijan, Belarus, Georgia, Kazakhstan, Russia, Ukraine, Uzbekistan

Central and Southeast Europe Albania, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, FYR of Macedonia, Malta, Moldova, Poland, Romania, Serbia, Slovakia, Slovenia, Turkey

France, Maghreb and Luxembourg France, Luxembourg, Algeria, Morocco, Tunisia

Financial Services Organizations Belgium, Channel Islands, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Switzerland, UK

India

London

Mediterranean Italy, Portugal, Spain

Middle East and North Africa Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Pakistan, Palestinian Authority, Qatar, Saudi Arabia, Syria, United Arab Emirates

Nordics Denmark, Finland, Norway, Iceland, Sweden

UK and Ireland UK, Isle of Man, Republic of Ireland


Birth Sustained operations Rebirth | evolution

Accounting policy need triggers Accounting policy need across the corporate life cycle

Major transaction: Driven by changes in capital structure, new regulatory oversight and other major organizational changes.

Remediation or improvement projects: Driven by a need to remedy risk events or improve efficiency in organizations. These can occur in any phase of the corporate life cycle.

Business as usual: Driven by changes in accounting standards, regulations and business processes throughout the corporate life cycle.

Organization and incorporation

IPOs and other capital

markets activity

M&A activity

Performance improvement: ► Shared service

center implementation

► Process improvement

Risk: ► Internal

audit ► ERM

Investments, divestitures, restructurings and M&A


How we view things Four pillars, many options

Policies Policy function

Rapid assessment Focus: library

Governance Focus: process

Optimization Focus: content

Education and deployment Focus: education

IT-based solution: automated accounting policy manual (AAPM)

► Does your organization have all the policies it needs?

► Are there redundant policies or gaps, or inconsistencies across geographic or business lines?

► Are internal customers satisfied with policies?

► How do your policies compare to those of industry peers?

► 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 with drafting?

► Do your organization’s policies comply with GAAP, IFRS, and/or prevailing regulatory requirements?

► Are they user-friendly? ► Are they the right length? ► Are they written in plain

language? ► Are they linked to standard

operating procedures (and desk instructions), to form a policy framework that supports the control environment?

► 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?

Corporate governance

Enterprise risk management


How we view things Four pillars, many options (contd)

Policies Policy function

Rapid assessment Governance Optimization Education and deployment

Key activities: ► Review policy library ► Conduct end-user interviews

and/or surveys ► Perform peer benchmarking ► Establish current state and

desired future state ► Communication on new or

revised standards and impact on policies or other aspects of your business

Deliverables: ► Project charter ► Interview or survey results ► Findings and

recommendations

Key activities: ► Identify key gaps related to

technical or regulatory adequacy, user-friendliness and overall structure

► Conduct interviews with process owners, technical accounting personnel and other stakeholders, to understand concerns and potential issues

► Develop policy prototype ► Draft new or refreshed policies

and procedures

Deliverables: ► Project charter ► Findings and

recommendations ► Policy prototype for approval ► New and refreshed policies

and procedures

Key activities: ► Review existing policy

governance framework and discuss leading practice governance

► Develop work plan to implement leading practice governance recommendations

► Draft new or refreshed policy on policies

► Create future state process flow

► Establish ongoing communications with company on new or revised standards and impact on policies

Deliverables: ► Project charter ► Findings and

recommendations ► New or refreshed policy

on policies ► Future state process

flowchart

Key activities: ► Develop work plan to implement

leading practice deployment, education and communication recommendations

► Determine whether manual or technology-enabled deployment is preferred

► Co-develop and deliver education sessions on recent accounting developments, regulatory areas of focus or the policies developed

Deliverables: ► Project charter ► Findings and recommendations ► New or revised training

materials, co-developed with management

► Education sessions and materials

► Listing of technology-enabled solutions for consideration

► Assistance in implementation of technology solution


Benefits Organizations can reduce costs

Organizations can reduce costs, improve efficiency and reduce risk by implementing clear and transparent accounting policies.

Benefits Why EY?

Critical success factors: catalyst for change, executive sponsorship, stakeholder buy-in, efficient and effective methodology, PMO and third-party support.

Outcomes: ► Accounting and finance policies remain current and in compliance

with rules, regulations and business processes. ► Accounting policies are applied consistently within the

consolidated, global group. ► Benchmarking with leading practices and peers when adopting

new policy positions. ► Design and deliver the most efficient and effective policy and

procedure framework to internal customers and stakeholders.

Value: ► Lower regulatory risk ► More effective financial statement close process:

► Reduced close time ► Fewer errors ► Lower costs

► Increased compliance and consistency ► Focus corporate energy on strategic and high-risk areas ► More educated and flexible workforce

Teaming and collaborative approach Our success with clients is attributable to our flexibility: ► We can be co-sourced with your team. ► We can operate with minimal disruption to you.

Strategic insights Our broad experience gained from other projects enables us to bring high-level strategic insights and a commercial approach.

Global network We use our global network and draw on the diverse and in-depth skills of teams in more than 75 countries.

Proven tools and methodologies Our robust methodologies and technology solutions allow us to hit the ground running, and provide tailored cost-effective strategies.


Leading practice policies Sample accounting policy contents

2

1

3

4

5

1. Table of contents

2. Scope and purpose

3. Hedge accounting requirements

Providing background of company and policy issue helps frame policy and provide context.

Policy includes “plain language” examples and definitions that are specific to the industry.

The audience is considered throughout the policy (i.e., does the audience have significant accounting expertise, or will additional examples be required to explain key concepts?).

4. Regulatory reporting consideration

5. Authoritative guidance

Leveraging GAAP and regulatory expertise during policy drafting and creation can assist in efficient incorporation of such information. Including relevant disclosure requirements can help financial reporting employees to meet GAAP and regulatory disclosure requirements.

Including authoritative guidance references helps users to bridge the gap between guidance and company finance policy.


Automated accounting policy manual


Automated accounting policy manual (AAPM)

► Web-based accounting policy manual ► Features views of client products and processes ► Cross-references between all areas and sites ► Easy-to-update content ► Non-sophisticated base technology ► Easy user and rights management ► Browse through profit and loss (P&L) and financial statement policies ► New way of presenting different dimensions of a company’s business ► Integration into existing ICS (internal control system)


Automated accounting policy manual

Highly customizable, up-to-date content, constant availability, easy access and low maintenance costs

A widely accepted, easy-to-use consistent manual

Offers a complete overview of the business

Search and find functionality

Simple intranet integration

No additional desktop-software (SaaS) needed

Cross-links to other programs

Reports to track and analyze the manual utilization

Benefits


Automated accounting policy manual Tool presentation

Overall entry page with the manifold possibilities: ► Quick references to all possible views ► Display recently modified pages ► Display recently visited sites ► Display own favourites

View of a statement of financial position structured in: ► Accounting policies ► Accounting instructions ► Affected IT systems ► Affected products ► Affected processes


Automated accounting policy manual Tool presentation (contd)

Products entry page: ► Quick references to all products

Manufacturing and revenue recognition of a specific product, including the following information: ► Posting records ► Affected balance sheet items ► Affected P&L items


Automated accounting policy manual Tool presentation (contd)

Changemode: ► Easily insert tables, images and documents ► Four-eyes principle ► Versioning

Reporting functionality to track and analyze tool utilization


Automated accounting policy manual Using simple, readily available technologies

EY delivers

Client SharePoint

EY provides a web-based platform which hosts the accounting manual for you, working with you to develop and update the content.

SharePoint makes it easy to store, synchronize and share important content. A simplified user experience helps streamline common tasks, and creates sites to keep teams in sync.

MediaWiki MediaWiki is a free wiki software application developed by the Wikimedia Foundation and others to power their websites.


Sustain

Project setup

Automated accounting policy manual Project schedule

Activity Department External support EY

Business IT

Tool

Content

Schedule

Resources and organization

Software selection

Check for integration in IT landscape

Scope of application

Source and format of existing content

Integration process Manually

Automatically

x

x

x

x

x

x

x

x

x

x

x

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Identify Diagnose Design Deliver


IT infrastructure

Automated accounting policy manual Project schedule (contd)

Installation

User management

Content Gathering

Input

Process Definition of further maintenance

Definition of content delivery

Preparation and processing

Rollout Testing

Workshop

Integration

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

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x

x

x

x

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x

Activity Department External support EY

Business IT

Sustain Identify Diagnose Design Deliver

Appendix


Financial Accounting Advisory Services credentials

Client Country Sector or industry Service Service description

Listed multinational

Italy Food and beverages

Accounting manual Improvement of internal processes and accounting systems, accompanied by the development of new accounting guidelines and reporting manuals.


France Oil and gas Accounting manual and benchmark analysis

Compilation of a complete accounting manual (collection of existing documentation, interviews with stakeholders, and benchmarks of companies in the oil and gas sector).


Netherlands Media and entertainment

Compliance analysis

Client redesigned its accounting manual and the accounting plan to reflect revenue recognition issues. We reviewed its IFRS compliance and tested its implementation in overseas subsidiaries.

Multinational – not listed

Germany Industrial products

IFRS conversion and related accounting manual

In the course of an IFRS implementation at the group, we supported the preparation of an accounting manual.


Financial Accounting Advisory Services contacts – EMEIA

Andreas Muzzu Partner [email protected] + 49 231 55011 22126

Dr. Detmar Ordemann Executive Director [email protected] + 49 711 9881 15438

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. © 2013 EYGM Limited. All Rights Reserved. EYG no. AU1784

EMEIA Marketing Agency 1000307 ED None 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

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