Today’s CFOs are challenged with meeting tight deadlines, operating with limited resources and serving in more strategic roles. In this session you will discover how leveraging technology and automating traditionally manual accounting processes, like account reconciliations, can help optimize the financial close process and free up some of the critical time needed from accounting and finance teams. You will learn how your organizations can virtually eliminate spreadsheets and the errors and headaches that come with them; increase control and visibility; facilitate timely, accurate and documented communications between all stakeholders; gain exceptional ROI in a very short time; improve the accuracy and timeliness of compliance reporting; define responsibility and process ownership; and manage compliance while serving multiple locations. Speaker: Michael Gilmartin, Solution Consultant Manager, BlackLine Systems Presentation delivered at ProformaTECH 2014 - http://www.proformatech.com Track: Change Anticipation & Readiness | Session: 2

1. Automating
Account
Reconciliation
to Mitigate
Compliance Risk
Michael Gilmartin
Manager, Solution Consulting
BlackLine Systems
Gina DeBernardi
Executive Director – Client
Services
MGM Resorts International

2. Are Your Reconciliations in Good Shape?
• Are all reconciliations completed in a timely manner?
• Do you have old reconciling items?
• Do you have any material write-offs?
• Can you easily provide documentation?
• Do you have standard procedures?
• Are there manual steps in the process that could be automated?
• Do you have to reconcile multiple standards?
2
© 2014 Proformative

3. Agenda
• Current Regulatory Environment/Impact
on Finance Organization
• Importance of Account Recs/What
to look for in an Automated Solution
• Client Case Study – TBD
• Q&A
3
© 2014 Proformative

4. CURRENT REGULATORY SITUATION
• Accounting standard setters, including the European Financial Reporting
Advisory Group (EFRAG), the FASB
in the United States and the IASB (its international counterpart), are
enforcing multiple standards that companies must adhere to
• Accounting rule makers also are mandating international
alignment on reporting rules and requirements
• Restatement of corporate earnings worldwide more common than ever due
to new and changing rules, tax credits, etc.
• Convergence of standards and guidelines causing confusion among
CFOs/CEOs about what is required and how to comply
4
© 2014 Proformative

5. ACCOUNTING-SPECIFIC
CHANGES
• Several projects underway to align U.S. and international standards on
revenue recognition, leasing, financial instruments and insurance
• SEC setting new policies for how U.S. companies will adopt International
Financial Reporting Standards (IFRS)
• COSO Framework revamped in 2013, adding more stringent mandates on
internal controls for large corporations
• Regulators in the United States and Europe are considering a rule requiring
public companies to switch their auditing firms every several years
5
© 2014 Proformative

6. WHAT DOES ALL THIS MEAN FOR
THE CORPORATE FINANCE DEPT?
• CEOs/CFOs have to be more meticulous than ever in enforcing company reporting
policies and procedures; more training will be required
• Number of reconciliations, tasks, journals, etc., is multiplied for each set of books
maintained
• Maintaining multiple sets of accounting standards, including IFRS, GAAP, and
Statutory accounts, will create significant resource constraints and challenges for
companies when closing the books each month
• By leveraging technology, a company can automate its reconciliation process and
link accounts across different standards to minimize the amount of manual labor
required for each financial close
• Just as account reconciliation is a key control in producing accurate financial
statements, proper IFRS reconciliation will be key, as well – a process must be put in
place to ensure this is done effectively
6
© 2014 Proformative

7. NEW RULES CAUSING CONFUSION, WEAKNESSES IN THE
CLOSE PROCESS
•
Lack of visibility
•
Little/no standardization of reconciliations
•
Too many manual processes
•
Unclear ownership of tasks
•
Too much room for human error
7
© 2014 Proformative

8. © 2014 Proformative

9. Common Close
© 2014 Proformative

10. Agenda
• Current Regulatory Environment/Impact
on Finance Organization
• Importance of Account Recs/What
to look for in an Automated Solution
• Client Case Study – TBD
• Q&A
10
© 2014 Proformative

11. 11
© 2014 Proformative

12. EXISTING METHODS FOR HANDLING ACCOUNT
RECONCILIATIONS
•
Doing manually
•
Excel/spreadsheets
•
Internally developed tool/system
•
Automated technology/software tool
•
Others?
12
© 2014 Proformative

13. WORLD-CLASS PROCESS
•
POLICIES AND PROCEDURES
•
STANDARDIZATION
•
CONTROL
•
TRAINING
•
AVAILABILITY
•
?
13
© 2014 Proformative

14. WORLD CLASS PROCESS
14
© 2014 Proformative

15. WORLD CLASS PROCESS
15
© 2014 Proformative

16. Data Consistency & Integrity
Automated Interfacing between
Data Sources and Software
Functionality, Modules
16
© 2014 Proformative

17. SPECIFIC FUNCTIONALITY TO LOOK
FOR SURROUNDING ACCOUNT RECS
• System that can be used for entire balance sheet:
pre-paids, accruals, bank, subledger, debt, equity, etc.
• Auto-certification of low risk reconciliations
• Templates-based process for standardization and quality
• Supporting documents – can be saved/accessed from
within the system
• Approval workflow – multiple levels with flexible scheduling
• Automated e-mail alerts for proactive notification/monitoring
• Reporting for real-time status updates
• Centralized, global access – anywhere, anytime
• Easy integration with existing ERP, GL systems
17
© 2014 Proformative

18. SHOULD WE MAINTAIN IN-HOUSE
OR HOST “IN THE CLOUD”?
BENEFITS OF GOING WITH A CLOUD/SaaS
SERVICE PROVIDER:
• No hardware or software to purchase, install, or maintain
• Lower upfront costs/minimal capital outlay at onset
• Pay as you go, only for the users who need access
• Reallocation of internal IT resources to more strategic projects
• Quick implementation, even for multiple locations
• When using world-class hosting partner (such as Verizon/Terremark):
• Higher level of uptime guaranteed
• Hot disaster recovery built-in
• Security is No. 1 priority
• 24/7 access to superior customer service/support team
• Anytime access from anywhere with an Internet connection
18
© 2014 Proformative

19. OTHER CONSIDERATIONS/
QUESTIONS TO ASK
• Who is the hosting provider?
• What specific security, back-up processes
and technologies do they have in place?
• Will the solution (whether in-house or hosted) integrate easily with my existing ERP, GL systems?
• Does the solution offer an SAP Connector?
• What security standards reports has the provider AND hosting partner completed to ensure the
security of my data?
• Do they have an SSAE 16 and/or
ISAE 3402 under their belt?
19
© 2014 Proformative

20. IMPORTANCE OF SSAE 16/ISAE 3402
• Internationally recognized auditing standards
developed by the AICPA and IAASB on control
effectiveness for service organizations
• The AICPA’s SSAE 16 effectively replaces the prior
Statement on Auditing Standards No. 70 (SAS 70) as the
authoritative guideline
• Completion of the ISAE 3402 audit shows that the
company also has the proper controls and processes in
place to meet international audit and accounting
reporting standards as set forth by the IAASB
• Important that both the application and data
center/hosting company have gone through successful
SSAE 16/ISAE 3402 audits
20
© 2014 Proformative
“Adherence to guidelines
set forth by worldwide regulatory
organizations such as the AICPA
and IAASB is becoming
increasingly important as more
companies move to SaaS where
sensitive corporate data is hosted
by third parties.”
Chris Kradjan, partner, Moss
Adams LLP

21. Agenda
• Current Regulatory Environment/Impact
on Finance Organization
• Importance of Account Recs/What
to look for in an Automated Solution
• Client Case Study – TBD
• Q&A
21
© 2014 Proformative

22. Agenda
Client Case Study – MGM Resorts International
• Company Overview:
• Expansion and Growth
• Finance Consolidation
• Compliance Weaknesses – pre-automation
• Compliance – post Blackline implementation
22
© 2014 Proformative

23. Company Overview – Expansion and Growth
Expansion and Growth:
• Mandalay Resort Group Merger – 2004
• CityCenter – 2009
• Rapid expansion expected 2014-2016
Resulting in:
• 234 company numbers
• 10,882 account reconciliations
• 24,000 average journal entries per month
• 3,000 monthly control tasks
• 15 million matched transactions daily
23
© 2014 Proformative

24. Company Overview – Consolidation
12/31/03
Implement LV Strip
Accounts
Payable
12/31/04
12/31/05
12/31/06
Detroit
BR
12/31/07
12/31/08
12/31/09
Corp
Vendor
portal
Mandalay resorts
Payroll
Consolidate
"Hub" structure
Non-gaming
Acct. and Audit
Standardize/
Kronos rollout
Design
Standardize
F&B Audits
Chart standardization
General
Accounting
Implement
LV Strip
Design
Implement
LV Strip
"Hub" structure
Accounts
Receivable
Design
Design
Casino Acct.
and Audit
TO BE DETERMINED
Financial Planning
and Analysis
Systems
"Infrastructure"
Mandalay
Infinium
MANDALAY MERGER
Cognos Ent.
Planning
Fixed assets
conversion
Cognos
Reporting
FDR development
Cognos 8 and Cubes
TI SALE
CITYCENTER OPEN
24
12/31/10
© 2014 Proformative

25. Compliance Weaknesses – Pre-Automation
Accountability:
• Assignment tracking / issue resolution
• Deadline compliance
• Proper evidence of review
Transparency:
• Inaccessible to senior leaders and auditors
• Vulnerable to loss or destruction
Accuracy:
• Manual processes subject to human error
• Incomplete risk ratings
• Inconsistent policies and procedures
25
© 2014 Proformative

26. Compliance – Post Blackline Implementation
Reconciliation Metrics:
• 99% deadline compliance rate on average
• 98% required adjustments corrected within policy
• 100% reviewed in accordance with policy
Transparency increased:
• Accessible to senior leaders and internal/ external auditors
• Electronic signature capture
Accuracy increased:
• Consistent policies and procedures
• Risk ratings drive frequency and effort
• Templates populate with automated data
26
© 2014 Proformative

27. &
27
© 2014 Proformative

28. Michael Gilmartin
BlackLine Systems
Michael.gilmartin@blackline.com
818-746-4809
Thank You For Attending
Automating
Account
Reconciliation
to Mitigate
Compliance
Risk