1. 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, President Transition/1 Integrating People, Process and Technology with Strategy

2. Transition/1 Software 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

3. Transition/1 Software Transition/1 Software 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).

4. Transition/1 Software Transition/1 Software 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 Impact Company 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?

5. Transition/1 Software Transition/1 Software All Financial Reporting Standards are using the COSO Framework

6. Transition/1 Software Transition/1 Software 5 Easy Steps to Compliance\ and Beyond!! Layout your Control Environment Framework Identify your Key Business Processes Identify Significant Control Objectives Assess the Financial Reporting Risks Identify and Test Key Controls that Mitigate Significant Risk

7. Transition/1 Software Transition/1 Software 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

8. Transition/1 Software Transition/1 Software 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

9. Transition/1 Software Transition/1 Software 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 Timeliness Completeness Accuracy Authorization Consistency Reliability Financial Predictability Quality Etc.

10. Transition/1 Software Transition/1 Software 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

11. Transition/1 Software Transition/1 Software 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

12. Transition/1 Software Transition/1 Software Automated Sign-offs: Risks, Controls and Testing

13. Transition/1 Software Transition/1 Software 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?

14. Transition/1 Software Transition/1 Software ePM Web Web Version – Add-on

15. Transition/1 Software Transition/1 Software Leading Material Weaknesses Companies - Revenue < $100 Mil. Information technology Competency and training of accounting personnel Design of controls/lack of compensating controls Revenue recogniti on 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

16. Transition/1 Software Transition/1 Software 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

17. Transition/1 Software Transition/1 Software Status At Your Fingertips

18. Transition/1 Software Transition/1 Software Use Wizards to create Consistent Documentation

19. Transition/1 Software Transition/1 Software Manage Methodology Plan Methodology Implementations Software ImplementationsChange Management Business AssessmentsImprovement Initiatives AuditsSarbanes-Oxley ISOCOSO

20. Transition/1 Software Transition/1 Software 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?

21. Transition/1 Software Transition/1 Software What Does Financial Reporting Compliance and Business Improvement have in Common? In an effective control environment over 80% of the financial reporting controls are implemented within the operations. Departments impacted by SOx work

22. Transition/1 Software Transition/1 Software …and Beyond! Process Improvement Establish Operational Objectives and Strategic Objectives Identify Risks/Issues/Opportunities Identify and Implement operational and Performance Controls Identify Key Performance Indicators (KPI’s) Monitor and React

23. Transition/1 Software Transition/1 Software Helping Owners, Shareholders and Managers Gain control of the operation 3 ePM3 Building Blocks Continuous Improvement Monitoring and Reacting Performance Management (Align People & Processes, using Technology, to the Corporate Strategy) Key Processes (Control Objectives, Risks and Activities) Strategic Goals & Objectives Goals & Objectives Identify Entity Risks VisionMissionCulture The Business Management Framework

24. Transition/1 Software Transition/1 Software 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

25. Transition/1 Software Transition/1 Software Compliance Performance Scorecards KPI’s Key Performance Indicators

26. Transition/1 Software Transition/1 Software Automate Controls and Workflow Financial Reporting Month end adjustment to key accounts Revenue – cut-off WIP Reconciliation Inter-Co Reconciliation Budget to Actual Fixed Asset auto Reconciliation Missing vendor Fed ID No’s Checks > 500 to same address as PR file Operational Inventory Shortages Inventory sales slowdowns Late Shipments Monitor Sub invoices Material Price Changes Estimate turn around time Vendor Address changes – update approval file. Overdue Invoices Compliance OSHA SOx Auditing Standards Hiring Hazardous material notification Sales Tax compliance Training etc Data captured at a step can be passed to the sub-step Update  Add, Modify or Delete

27. Transition/1 Software Transition/1 Software Data Sources & Processes Act/Adjust Transaction Systems Daily Activities OTHER Manage & Monitor Data Mining Performance & Compliance Indicators Automated Email Alerts Compliance & Performance Issues Action Items Scorecards Leading Indicators, Trending COSO Elements Review Strategy, Operational effectiveness, Financial reporting reliability & Gov regulations Non-compliance alerts Efficiency Alerts Automated workflow KPI measurements & scorecards Action Management Compliance and Improvement Framework Assess Risk Internal Controls Financial Reporting Impact Operational Efficiencies Governmental Compliances Strategy Increased Visibility, Alignment & Performance Improvement COMMUNICATION FOUNDATION, DEPARTMENT ACCESS, EARLY MATERIAL EVENT NOTIFICATION, KPI & COMPLIANCE DASHBOARDS Identify, Define & Align Documentation & Alignment Business Units/Business Cycles/Functional Areas Key Processes Position/Roles Objectives//Risk/Performance Business Transparency Visibility LEGACY ePM Compliance & Performance Framework Automate Controls to Improve the Business Feedback Loop Management (Owners) eProcessManager® Framework ERP & CRM SCM, HR eProcessMonitor®

28. Transition/1 Software Templates Make the Process Easy!!

29. Transition/1 Software Transition/1 Software 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.

30. Transition/1 Software Transition/1 Software 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.

31. Transition/1 Software Transition/1 Software 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

32. Transition/1 Software Transition/1 Software Offer Solutions from $5,000 DescriptionEstimated Pricing Documentation Starter Solution Includes Software, Template and MaintenanceFrom 5,000.00 Services ImplementationFrom 5,000.00 Ongoing ServicesOpen Enterprise Solution Includes Software, Template and MaintenanceFrom 18,000.00 Services ImplementationFrom 10,000.00 Ongoing ServicesOpen Ask about: Our Zero Net Cost Partner Program CPA Referral Partner Program

33. Transition/1 Software Transition/1 Software Reseller Promotions: DescriptionPricingWebinar Special Gold Program - - 10 Internal NFR Licenses - 40% & 30% Margins eProcessMonitor $5,995.00 $2,000.00 $1,495.00 Through 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 spots Sep 15 – 17 – 2 Days Training & 1 Day Implementation (2 nd Person $795) 2,195.00995.00 Sage Templates1,495 to 2,495500 COSO Business Template – All cycles and built in risk assessment questionnaire 2,495500 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

34. Transition/1 Software Transition/1 Software 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