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Technology for Business Assurance Copyright © 2010 ACL Services Ltd. ACL Business Case
Copyright © 2010 ACL Services Ltd. 2 ACL Services Ltd. Business Case Outline ACL Introduction Impact to the bottom line – Revenue leakage: Errors & Fraud Primary goals: Why ACL? ACL solution functional diagram –High level report Analytic packages: prebuilt scripts ACL client results Summary of savings Pricing Sequence of Events
Copyright © 2010 ACL Services Ltd. 3 ACL Services Ltd. ACL Industry Leader 21 Years of Business Assurance Solutions 11,000+ organizations in 150 countries Fortune % External Audit : Big 4 Audit firms 100% Global % Fortune % Commercial Public Sector Public Accounting / Business Services 200+ departments in 37 national governments 500+ regional, state and local governments Wells Fargo Foothill
Copyright © 2010 ACL Services Ltd. 4 ACL Services Ltd. Impact to the bottom line – Revenue leakage: Errors and Fraud Revenue Leakage Calculator
Copyright © 2010 ACL Services Ltd. 5 ACL Services Ltd. Primary Goals GoalACL Impact Proactively monitor risk exposureQuantify errors/revenue leakage through daily/weekly/monthly continuous monitoring. Recover money in a timely manner. Ability to fix controls before problem grows. Reduce time and resources spent on manual controls testing for SoX 404Certain repeated SoX controls testing can be performed by ACL on a continuous automated basis. Reduce time and resources spent on manual processes to report on financials or exceptions Today: Manual process from SAP to Access to Excel. Takes a day to report for each month. Data integrity can be lost due to Excel. Reduce other manual hours spent on error verification (i.e. Check matching to Vendor invoices) – receive error exception report before checks are sent. Automate data access from SAP and other data sources, run prebuilt tests within ACL, export results/exceptions to: centralized library notification dashboard report Results can be exported daily or run on adhoc basis, taking minutes – hours depending on complexity of test. Identify control weaknesses.Proactively identify control breaches i.e. split transactions, duplicate payments, transactions just below thresholds Take preventative measures to improve business process controls: Purchase to Payment | Payroll | Travel & Entertainment | Order to Cash | General Ledger Use proven prebuilt scripts that ACL clients have found the most revenue leakage and fraud in high risk areas. Alignment with internal and external auditInternal audit can leverage analytics and results for their audit plan. External audit can rely on ACL results, increase effectiveness of audit engagements. Utilize the same solution that the Big 4 uses and is familiar with.
Copyright © 2010 ACL Services Ltd. 6 ACL Services Ltd. Continuous Auditing Access virtually any data source and automate data feeds Automatically distribute exceptions found during data analysis testing to multiple business stakeholders Automation – Built-in Analytic Scheduler Server Analytic Processing Power Content Management – Any File Type Enterprise Data SQL ERP
Copyright © 2010 ACL Services Ltd. 7 ACL Services Ltd. High level report example
Copyright © 2010 ACL Services Ltd. 8 ACL Services Ltd. Analytics – Areas of Focus Package:Purchase to Payment (35 scripts) Category: RequisitionsPurchase OrdersReceivingPayablesPayments Bundles: Limits – single and split requisitions Authorization – creating and approving Data Validity – critical data fields Segregation of Duties – creator/modifier vs approver Purchasing limits – single and split PO Order Authorization – Unauthorized purchaser Data Validity – critical data fields Segregation of Duties – creator/modifier vs vendor master record creator/modifier Two Way Match – quantity variance: goods receipt vs PO Data Validity - critical data fields Segregation of Duties – goods receipts creator/modifier vs PO creator/modifier/approver Limits – single and split invoices Timing – retroactive POs Two Way Match – amount variance: PO vs Invoice Data Validity - critical data fields Segregation of Duties – invoice approver vs PO or goods receipt creator/modifier Suspect Vendors – prohibited, phantom vendor, unusual activity, 1 time vendors Unaccrued Liabilities – good receipt w/o invoice after period end, invoices after period end Two Way Match – amount variance: payment vs invoice Duplicate Payments - 6 different types Data Validity - critical data fields Segregation of Duties – payment approver vs PO creator/modifier Suspect Payments – manual payments, missing vendor information # of scripts:
Copyright © 2010 ACL Services Ltd. 9 ACL Services Ltd. Analytics – Areas of Focus Package:General Ledger (22 Analytics) Category: Validation & ProfilingJournal Entry Testing Bundles: Validation of Trial Balance Analysis of Month End Balances (SAS99) Validation of Control Accounts (SAS99) Profiling of Suspense Accounts (SAS99) Data Validity Duplicate Journal Entries Segregation of Duties Suspicious General Ledger Accounts Suspicious Journal Entry Dates Suspicious Journal Entry Amounts Suspicious Journal Entry Description Invalid Account Classification Period Close Cut-Off Reversed Journal Entries Temporary Accounts Unreconciled Journal Entries # of Scripts: 418
Copyright © 2010 ACL Services Ltd. 10 ACL Services Ltd. Analytics – Areas of Focus Package:Cost Management (23 Analytics) Category: Accounts PayableAccounts ReceivableEmployee Transactions Bundles: Vendor Payments Duplicate Payments Phantom Vendors Vendor Master Vendor Discounts Purchase Authorization Limits Customer Credit Sales Orders to Purchase Orders Payroll Travel & Entertainment Expenses Corporate Credit Cards # of Scripts: 1256 Starter Pack (10 Analytics) Utility Scripts Split Transactions Incorrect Totals Even Dollar Transactions Transaction Aging Fuzzy Name Matches Matched Join High Standard Deviation Transaction Volume Summary Duplicate Transactions Suspicious Date Range 10
Copyright © 2010 ACL Services Ltd. 11 ACL Services Ltd. ACL client results: Engineering & Construction firm: San Francisco, CA –Purchase to Payment, Travel & Entertainment –Six Sigma focus –Savings of $140K/year in labor hours –Control/process errors especially in T&E Manufacturing: Becton, Dickinson & Company –Purchase to Payment, Order to Cash and Payroll –First nine months – identified 4K duplicates worth $1.2M –Pre-controls monitoring 5000 control tests – reduced SoX compliance costs –Provided management assurance every procurement transaction subjected to 44 control tests
Copyright © 2010 ACL Services Ltd. 12 ACL Services Ltd. ACL client results: Biopharmaceutical: Talecris Biotherapeutics –P2P, T&E, Pcard, G/L, Payroll, Order to Cash –Manual processes, weak controls over cash mgmt –Found fraud rampant in troubled economy –5 out of 60 centers = ~ $2M in fraud found Manufacturing: Illinois –Updated all controls before ACL implementation; found $17K in duplicates first week –Found plant in China had employees reselling precious metals back to company (worth in millions) –Due to ACL analysis, putting GPS trackers in trucks to track total distance and travel time to ensure no drug trafficking
Copyright © 2010 ACL Services Ltd. 13 ACL Services Ltd. ACL client results: Thomson SA: France, EMEA –VAT tax team – existing spreadsheet software had limited file capabilties, slow calculation speeds, and did not provide Sarbanes-Oxley compliance capabilities. –ACL has revolutionized our audit methodology. We can now analyze large data files from SAP and cross-reference the information to find errors and controls gaps – VAT Manager
Copyright © 2010 ACL Services Ltd. 14 ACL Services Ltd. Summary of savings Year 1Year 2 (or Phase 2)Total Recovery of Errors (potential – on low end) Vendor Payments error % by industry + T&E payments error % by # of employees + Fraud % Ie. $ % of total potential = $90,500 Reduced manual labor hours – Excel reports Ie. 6 hours * $30/hour x 12 months = $2,160 Reduced manual labor on SoX controls testing Ie. 20 hours * $30/hour x 12 months = $7,200 Reduced manual labor hours – Check matching to Vendor invoices Reduced time extracting data for external auditors # hours to build and automate 45 control tests in Excel for Purchase to Payment, T&E, Payroll, Order to Cash, General ledger Total possible estimated soft & hard cost savings * Not including increased areas of scrutiny that are not monitored today Total ACL solution Total ROI (excluding full potential of errors/leakage found)
Copyright © 2010 ACL Services Ltd. 15 ACL Services Ltd. FREEDOM FROM DOUBT
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