improve while you comply leverage financial reporting compliance initiatives to build new business...

Improve while you Comply

Leverage Financial Reporting Compliance Initiatives to Build new Business Opportunities

OMB Circular A 123 & 133, Sarbanes-Oxley, SAS 104 to 112 and

International Financial Reporting Audit Standards

Kent Busse, PresidentTransition/1

Transition/1

Integrating People, Process and Technology with Strategy

Transition/1 Software


Leverage With Your Implementation Methodology Integrated

• Market to Companies that have Compliance Requirement.– Shorten Sales Cycle– New Business - no or limited competition if new system is required.– Get paid to identify opportunities.– Build relationships with local CPA firms to build future pipeline

• Improve Implementation Success, Profitability and Customer Satisfaction.

– Improve Consistency.– Get new staff up to speed quickly.– Monitor project status (Stay in scope)– Leave clients with documentation of their system with the way it works.

• Built In Continuous Revenue Streams.– Help clients automate high value processes and controls (Value billing)– Enhance “Trusted Advisor” Status.– Process Improvement– Compliance Assistance



First: The Compliance Opportunity

• Target market– Non-Accelerated filers (public companies < 75M in market cap– Private companies getting audits– Any business doing business with government– Non-Profits– CPA firms with audit practices

• Positioning– Open door as internal control expert– Document compliance efficiently – Improve the business

• Results– New Business opportunities – Long Term Strategy– Enhance existing relationships– Set’s YOU apart from the competition

(if the competition even get in).



It Started with Sarbanes-Oxley - SOx

• All of these standards require Companies to provide auditor with:– Management’s Risk Assessment of financial reporting controls– Documentation of effective control environment

(Risk Control Matrix and Narrative)– Proof key financial reporting controls are designed and

operating effectively. (Testing Results)– Auditor will now issue audit opinion on financial reporting

controls – can cause qualified opinion

• The Value Proposition if Done Right:– Good controls hit the bottom line quickly– You can leverage compliance to help improve the business

operation– Automating controls save valuable resources audit expense– Achieve quick wins and quick payback

Trickle Down ImpactCompany Type

Compliance Standards all Point To:

COSO

Public Companies SOx – Sarbanes-Oxley

Private companies getting audits

Statement of Auditing Standards (SAS 104 to 112)

Non-Profits Statement of Auditing Standards (SAS 104 to 112), OMB Circular A123 & 133

Companies Receiving Governmental Funds

Statement of Auditing Standards (SAS 104 to 112), OMB Circular A123 & 133

Governmental Agencies (Federal, State and Local).

OMB Circular A123 &133A

Who’s next is the question?



All Financial Reporting Standards are using the COSO Framework



5 Easy Steps to Compliance\ and Beyond!!



Step 1: Lay Out Your Control Environment Framework

Identify the framework and methodology to use.– COSO – Committee of Sponsoring

Organizations of the Treadway Commission Recommended by the AICPA

– ERM – Enterprise Risk Management

– CobiT Control objectives for information and

related Technology Capture the Entity Level Risk

Process Grouping– Business Cycles / Functional Areas

Cycle/Functional Objectives



Step 2: Identify Key Processes

Identify Key Processes– Define Purpose, Scope, Policies– Identify People (Process Owner) Authors, Reviewers and

Approvers– Identify Goals and Objectives

• Control and Performance Objectives • Risks• Control Activities

– Map the activities and tasks– Identify Systems that generate financial transactions.– Identify Performance/Compliance Indicators



Step 3: Establish Control Objectives

• What are the desired outcomes?• Types

– Financial Reporting– Operational– Governmental Compliance– Confidentiality– Strategic

• Perspectives– Financial– Customer– Employee/Learning– Innovation– Compliance

• Align with High Level Goals and Objectives

Common Assertions

TimelinessCompletenessAccuracyAuthorizationConsistencyReliabilityFinancialPredictability

QualityEtc.



Step 4: Risks/Process Assessment

Risk – What can go wrong?– Inherent Risk – Before applying

Control Activities– Residual Risk – After applying

Control Activities

Assessment– Probability– Significance– Impact

Remediation– Reduce Probability and

Significance– Cost vs.Value

Risk Impact

Financial Reporting• $$$

Operational effectiveness or efficiencies

• $$$• Quality• Safety

Governmental Compliance

Strategy

Assess the value of avoiding or detecting the Risk



Step 5: Identify, Test, Evaluate and Report on Key Control Activities

• Types– Preventative

– Detective

– Corrective/Reactive

• Technology vs. Manual

• Satisfy Control Assertions

• Evaluate through testing

– Designed Effectiveness

– Operational Effectiveness

– Criticality

• Identify Remediation and Improvement Activities



Automated Sign-offs: Risks, Controls and Testing



Tools to Review Control Effectiveness and Impact

• Risk Control Matrix

– Do we have adequate controls?

• Preventative• Detective• Reactive

– Are the controls:• Designed

Effectively?• Operating

Effectively?• Are they Key

or Critical Controls?

– Have we covered adequate assertions?



ePM Web Web Version – Add-on



Leading Material Weaknesses Companies - Revenue < $100 Mil.

• Information technology

• Competency and training of accounting personnel

• Design of controls/lack of compensating controls

• Revenue recognition

• Financial close process

• Inadequate account reconciliation

• Consolidation, mergers and inter-company accounts

• Control environment

• Treasury and Equity

Published in the Journal of Accountancy – August 2007 Study by Lord& Benoit, a firm specializing in Sox compliance



• Complete Process Documentation– Documentation align to “How the Process Works”– Flow chart for walk-throughs– Identify Key Controls

• Implementation and Scope Built In– Reduce Project Risk– Stay on track

• Budget Built In• Client Commitments Built In• Priorities• Real-Time Status for Weekly Meetings

Improve Implementation Success



Status At Your Fingertips



Use Wizards to create Consistent Documentation



Manage Methodology Plan

Methodology Implementations

Software Implementations Change Management

Business Assessments Improvement Initiatives

Audits Sarbanes-Oxley

ISO COSO



Improving Operational Performance

• Moving to the “Trusted Advisor Status”– Helping Clients Improve the Business– Reduce Issues

• Continuous Revenue Model– Monthly or Biweekly Improvement Meetings– Why would the client stop if you are adding to the bottom line?

• Value Billing– If you can solve a monthly 25K Issue and it took 4 hours would

you bill $800 or $10,000?



What Does Financial Reporting Compliance and Business Improvement have in Common?

0%20%40%60%80%

100%

F inance IT

Operations

S ales

Human Resources

MarketingOther

C lient S urvey

% C ompaniesImpacted

In an effective control environment over 80% of the financial reporting controls are implemented within the operations.

Departments impacted by SOx work



…and Beyond! Process Improvement



Helping Owners, Shareholders and

Managers Gain control of

the operation

ePM33 Building Blocks

Continuous ImprovementContinuous ImprovementMonitoring and ReactingMonitoring and Reacting

Performance ManagementPerformance Management(Align People & Processes, using Technology,(Align People & Processes, using Technology,

to the Corporate Strategy)to the Corporate Strategy)

Key ProcessesKey Processes(Control Objectives, Risks (Control Objectives, Risks

and Activities)and Activities)

Strategic Strategic Goals & ObjectivesGoals & Objectives

Identify Entity RisksIdentify Entity Risks

VisionVisionMissionMissionCultureCulture

The Business Management Framework



Beyond: Identify Key Performance Indicators

What to Measure– Input

– Throughput

– Output

Alignment– Process– People (Accountability) – Perspective (Customer, Financial,

Innovation, Employee or Compliance)– Objective (Assure the process is

meeting the objectives)

All KPIs need to be measured within the same period

Scorecard– Process Scorecard

– Strategy/Objective Scorecard

– Perspective Scorecard

– People-Management/Position Scorecard

Periodic Review– Weekly

– Monthly

– Quarterly



Compliance Performance

Scorecards

KPI’sKey Performance Indicators



Automate Controls and Workflow

Data captured at a step can be passed to the sub-step

Update Add, Modify or Delete



Data Sources& Processes

Act/AdjustAct/Adjust

Transaction Systems Daily Activities

OTHEROTHER

Manage &Monitor

DataMiningPerformance &Compliance Indicators

Automated Email AlertsCompliance &Performance IssuesAction Items

ScorecardsLeading Indicators,Trending

COSO Elements ReviewStrategy, Operational effectiveness,Financial reporting reliability & Gov regulations

• Non-compliance alerts

• Efficiency Alerts• Automated workflow• KPI measurements & scorecards

• Action ManagementCompliance and Improvement

FrameworkAssess RiskInternal ControlsFinancial Reporting ImpactOperational EfficienciesGovernmental CompliancesStrategy

Increased Visibility, Alignment & Performance Improvement

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Identify, Define& Align

Documentation & AlignmentBusiness Units/Business Cycles/Functional AreasKey ProcessesPosition/RolesObjectives//Risk/Performance

BusinessTransparency

Visibility

LEGACYLEGACY

ePM Compliance & Performance FrameworkAutomate Controls to Improve the Business

Feedback LoopFeedback LoopManagement Management (Owners)(Owners)

eProcessManager® Framework

ERP & CRMERP & CRM

SCM, HRSCM, HR

eProcessMonitor®


Templates Make the Process Easy!!



Compliance - Open the Door to CPA Relationships

• CPA’s that do audits will cherish this relationships.– Auditor cannot document controls and then audit them.– Auditor cannot provide consulting services to audit clients.– Are they going to want another CPA firm in their client?– How many of these small to medium size business can do

this on their own?– Using word and Excel will never get an return on their

investment

• Where will they look if a client has a poor financial reporting systems and controls.– Relationships worked and marketed right will provide you future

new revenue opportunity for SAGE Products.



Leverage With Your Implementation Methodology Integrated

• Improve Implementation Success.– Improve Consistency.– Get new staff up to speed quickly.– Monitor project status– Leave clients with documentation of their system with the way it works.

• Built In Continuous Revenue Streams.– Help clients automate high value processes and controls (Value billing)– Enhance Trusted Advisor Status.

• Market to Companies that have Compliance Requirement.– Shorten Sales Cycle– No or limited competition if new system is required.– Get paid to identify opportunities.



Helping You Make It Happen

• Premier Authorized Partners– Cendowski Advisors

• Is the leading CPA Firm in fraud deterrence and internal control implementations.

– MIS Group USA • Sage Leading VAR

– RBSM CPA Firm• SEC Registered audit Firm for publicly traded companies.

• SAGE SIP – Successful Implementation Program



Offer Solutions from $5,000

Description Estimated Pricing

Documentation Starter Solution

Includes Software, Template and Maintenance From 5,000.00

Services Implementation From 5,000.00

Ongoing Services Open

Enterprise Solution

Includes Software, Template and Maintenance From 18,000.00

Services Implementation From 10,000.00

Ongoing Services Open

Ask about: Our Zero Net Cost Partner Program

CPA Referral Partner Program



Reseller Promotions:

Description Pricing Webinar Special

Gold Program - - 10 Internal NFR Licenses - 40% & 30% MarginseProcessMonitor

$5,995.00

$2,000.00

$1,495.00Through next

Friday$1,200.00

Investment Retail Credit (Must sell within 90 days) maintenance required

List Price Credit = to Investment

Free

Class (3 day) Irvine, CA – 18 spotsSep 15 – 17 – 2 Days Training & 1 Day Implementation (2nd Person $795)

2,195.00 995.00

Sage Templates 1,495 to 2,495 500

COSO Business Template – All cycles and built in risk assessment questionnaire

2,495 500

We are an endorsed partner so you can use your SAGE Marketing Coop Dollars for marketing.

Invest Today$4,590

Get paid back on first sales



Questions?

• Updated Power Point visited:• www.t1mas.com/sage

This will be posted by Monday.

User: SAGEVAR

Password: sage2008

Phone 866 590-4ePM

Sharon, Aggie, or Kent

improve while you comply leverage financial reporting compliance initiatives to build new business...

Documents

financial reporting

president transition1

financial reporting

business operation

compliance requirement

key business processes

strategy slide

sales cycle new business