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A Model for High Performing Finance National Association of State Auditors, Comptrollers, and Treasurers August 2010 Copyright © 2010 Accenture All Rights.

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Presentation on theme: "A Model for High Performing Finance National Association of State Auditors, Comptrollers, and Treasurers August 2010 Copyright © 2010 Accenture All Rights."— Presentation transcript:

1 A Model for High Performing Finance National Association of State Auditors, Comptrollers, and Treasurers August 2010 Copyright © 2010 Accenture All Rights Reserved.

2 Speakers Bill Kilmartin, Accenture Director State and Local Government Finance and Administration Marty Benison, Massachusetts State Comptroller Clark Partridge, Arizona State Comptroller Copyright © 2010 Accenture All Rights Reserved. 2

3 Agenda Description of the High Performance Finance Model Why is it useful? How could it be applied? Reactions and comments by two State Comptrollers Reactions and comments from the audience Copyright © 2010 Accenture All Rights Reserved. 3

4 Developing A High Performance Finance Model for Government Operating Models provide the big picture of what an organization does. –examine the functions and defines the people, process, organizational structure and technology to fulfil its strategy. Governments operate in constantly evolving environments. –In order to continue to shape citizen-centric and efficient services, public sector organizations need to regularly reassess the suitability of their operating models. Accenture understands that there is no one size fits all approach for shaping operating models. –Based on a wealth of client experience, we are sharing a model to support governments in assessing, developing or fine tuning their operating model for the Finance function. Copyright © 2010 Accenture All Rights Reserved. 4

5 High Performance Finance Model: Three Components Copyright © 2010 Accenture All Rights Reserved. 5 Public Finance on a page Capability Assessment Matrix Process Catalogue The model is built in excel, with tabs and links for scoring and summarizing.

6 Public Finance on a Page Copyright © 2010 Accenture All Rights Reserved. 6 Enabling Operations Core Operations Planning and Budgeting Political and Strategic Planning Budget Development Budget Execution Outcome Planning Treasury Cash Investment and Debt Continuous Improvement Productivity and Efficiency Governance Cross-Agency Initiatives Finance Organization Risk Management Asset Control Fixed Assets, Facilities, and Land Public Enterprises Non-Fixed Assets and Inventory Pension Capital Assets and Innovative Funding Customer Interactions Business PartnersEmployeesCitizens Accounting Payroll Revenue Expenses General Ledger Cost Accounting Closing Operations Grants Management Intergovernmental Performance Management Performance and Analytics Compliance and Trust Fraud and Abuse Audit External Reporting Internal Controls Organization Change Management Process Transformation IT Management People and Talent External Partner Interactions Financial Institutions Accounting Professionals Technology and Consultants General

7 Description of the Model: Drilldown on Accounting Copyright © 2010 Accenture All Rights Reserved. 7 Enabling Operations Core Operations Planning and Budgeting Political and Strategic Planning Budget Development Budget Execution Outcome Planning Treasury Cash Investment and Debt Continuous Improvement Productivity and Efficiency Governance Cross-Agency Initiatives Finance Organization Risk Management Asset Control Fixed Assets, Facilities, and Land Public Enterprises Non-Fixed Assets and Inventory Pension Capital Assets and Innovative Funding Customer Interactions Business PartnersEmployeesCitizens Accounting Payroll Revenue Expenses General Ledger Cost Accounting Closing Operations Grants Management Intergovernmental Performance Management Performance and Analytics Compliance and Trust Fraud and Abuse Audit External Reporting Internal Controls Organization Change Management Process Transformation IT Management People and Talent External Partner Interactions Financial Institutions Accounting Professionals Technology and Consultants General

8 TopicsBasic (1)Intermediate (3)Advanced (5)ScoreWeight Basis of Accounting Cash-based accounting onlyPartial accrual-based accounting and partial cash-based accounting areused. Accrual-based and cash- based accounting are not always reconciled. Full accrual-based accounting, cash-based accounting can also be used. accrual-based and cash- based accounting must easily be reconciled. 210% GAAPNoneOther comprehensive basis of accounting Full GAAP 230% AutomationManual accounting entries. Some data may need to be entered several times in different systems. Accounting entries are largely automated, almost no data needs to be entered several times in different systems Accounting entries are as automated as possible, no data have to be entered several times in different systems 320% AccuracyMany errors requiring correction in accounting entries due to non-automated processes. Fewer number of errors requiring correction in accounting entries due to largely automated processes. No error requiring correction in accounting entries due to fully automated processes. 210% Master DataAccounting master data (ie chart of accounts, code block, journal entry templates, etc) are not harmonized accross the Organization Accounting master data (chart of accounts, code block, journal entry templates, etc) are partially harmonized across the Organization Accounting master data (chart of accounts, code block, journal entry templates, etc) are fully harmonized across the Organization 420% Fixed AssetsFixed asset accounting activities fragmented across businesses and/or geographies. Selected use of shared services for fixed asset processes, journey to shared services underway. Maximum leverage of shared services. 310% Weighted Average Score2.7100% Description of the Model: Drilldown on General Ledger Copyright © 2010 Accenture All Rights Reserved. 8 Home Process Hierarchy General Ledger

9 Description of the Model: Drilldown on Compliance and Trust Copyright © 2010 Accenture All Rights Reserved. 9 Enabling Operations Core Operations Planning and Budgeting Political and Strategic Planning Budget Development Budget Execution Outcome Planning Treasury Cash Investment and Debt Continuous Improvement Productivity and Efficiency Governance Cross-Agency Initiatives Finance Organization Risk Management Asset Control Fixed Assets, Facilities, and Land Public Enterprises Non-Fixed Assets and Inventory Pension Capital Assets and Innovative Funding Customer Interactions Business PartnersEmployeesCitizens Accounting Payroll Revenue Expenses General Ledger Cost Accounting Closing Operations Grants Management Intergovernmental Performance Management Performance and Analytics Compliance and Trust Fraud and Abuse Audit External Reporting Internal Controls Organization Change Management Process Transformation IT Management People and Talent External Partner Interactions Financial Institutions Accounting Professionals Technology and Consultants General

10 Description of the Model: Drilldown on Internal Controls Copyright © 2010 Accenture All Rights Reserved. 10 TopicsBasic (1)Intermediate (3)Advanced (5)ScoreWeight MissionThe focus is limited to compliance with procedures and availability of financial information. No risk-based approach. Controls over non financial information rarely made. Internal controls system covers compliance and availability of financial and non-financial information. Risk assessments on ad hoc basis. Internal controls system encompasses: compliance, availability of financial and non financial information, and effectiveness and efficiency with a risk based approach. 210% CultureInternal controls seen as a set of procedures. The outcomes and benefits are not known, understood, or communicated. Top management is aware of the necessity for an IC system, but the system is limited to finance and finance people rather than wider data/information systems. Top management sponsors the internal control system and promotes an internal control culture, which includes communication, training, and target setting. Staff are aware of their roles and responsibilities. 310% PolicyInternal controls focus only on accounting processes. Documentation exists, but no defined process for reviewing. Formulation and documentation of a comprehensive set of internal control policies is underway. Comprehensive internal control policies in place. The IC policies are clearly defined and rely on accepted (COSO) standards. Policies (i.e., data protection requirements, security controls, etc) are available and reviewed on an on-going basis. 320% Organizati on Interal control activities are decentralized, stand-alone, and sometimes redundant. An entity is in charge of coordinating the IC initiatives across the organization. This entity formulates and documents the IC system and ensures the control environment is effective without being too burdensom / bureacratic. The conception, maintenance and monitoring of the IC system is done by a single entity (reports to CFO), relying on liaisons in each department. The IC system involves all levels of personnel. There is a good understanding of the need for the IC system and individual roles and responsibilities are known and understood. 210% Home Process Hierarchy General Ledger

11 Description of the Model: Drilldown on Internal Controls (continued) Copyright © 2010 Accenture All Rights Reserved. 11 TopicsBasic (1)Intermediate (3)Advanced (5)ScoreWeight Risk Based No risk criticality is defined. Some control activities are known to be disproportionate relative to the respective organisational risks. Risk criticality is not clearly defined. Nevertheless, the level and intensity of control procedures is regularly questionned to ensure they are effective and proportionate relative to the organisational risks and business challenges. Definition of individual process risk criticality enables the organisation to assess the effectiveness of controls and whether they are proportionate to the associated risks and criticality of a given process. 420% ProcessThe scope of internal controls is limited to accounting procedures and reconciliation of accounts. No specific process is in place for detecting defiencies. Consideration of the effectiveness of controls is limited, resulting in multiple controls and inefficient processes or gaps in the control environment. Internal controls expanded to include management information. Deficiencies are reported on an ad hoc basis. Processes are occasionally reviewed to improve efficiency and relative effectiveness, but on an ad hoc basis. Internal controls address accounting and management information. Processes are in place to detect weaknesses and report in a culture of transparency. Processes are reviewed periodically by internal audit, External Audit, Management, or due to changes of circumstances. Part of this process includes assessment of which controls add value. Use of tools (i.e., Lean Six Sigma) are used. 310% ReportingLimited reports on accounting activities are produced, but only distributed to accounting managers. IC reporting is in place, content is mainly financial information and relates mainly to financial processes. Ad hoc information is produced to support decision-making processes. Clear reporting and communication is in place. Specific reports that reflect goals and material risks inherent in the business are produced. Routine reporting to top management for decision making purposes. Reports and key findings are submitted to the Audit Committee to ensure appropriate action is being taken. 210% ToolsLimited or no specialized tools Individual spreadsheets are used. Different versions of internal control processes exist accross the entity. No central repository for tools to track document versions. Standard process mapping tools ensure a single standard format so that all documents are consistent. Documents are managed by the central entity using an on-line repository and all users who need access to the documentation can do so. 110% Weighted Average Score2.7100%

12 Why is it Useful? Stimulate strategic thinking Promote cross functional and/or cross boundary awareness and cooperation Reveal insights for prioritization, setting the stage for action Provide context for educational and transitional processes Provide a common language (lingua franca) for the Finance community to exchange ideas around leading practices Copyright © 2010 Accenture All Rights Reserved. 12

13 How Can it be Applied? Scope –The entire domain of finance…takes a full day –Carve out a subset of the domain, i.e. a grouping of business processes…takes a few hours –Engage the participants appropriate to the scope, i.e. Comptroller, Treasurer, Auditor, Budget Director, Secretary Administration and Finance, Governor Chief of Staff Process –In a face to face workshop –In a series of workshops Copyright © 2010 Accenture All Rights Reserved. 13

14 How Can it be Applied? (continued) Cost for a copy of the model…provided by Accenture at no charge Cost for Accenture on site assistance and facilitation for a workshop…provided by Accenture at no charge Cost for Accenture off-site assistance and facilitation…provided by Accenture at no charge Cost for state participation…State contributes the time for state employees and space to hold the workshop Copyright © 2010 Accenture All Rights Reserved. 14

15 Reactions Marty Benison, Massachusetts State Comptroller Clark Partridge, Arizona State Comptroller The Audience Copyright © 2010 Accenture All Rights Reserved. 15

16 Contact Information Copyright © 2010 Accenture All Rights Reserved. 16 Bill Kilmartin accenture.com Pallavi Verma accenture.com Dave Andrews accenture.com Mark Howard accenture.com Matt Cole accenture.com Scot Armstrong accenture.com David Wilson accenture.com

17 Contact Information Copyright © 2010 Accenture All Rights Reserved. 17


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