SHARE Special Project Cash Remediation Phase II Planning and Implementation Certification July 22, 2015 Requesting Agency: Ron Spilman State Controller Department of Finance and Administration SHARE: Cassie Hayne SHARE Deputy Director Department of Information Technology

Current State The State developed many functional customizations and “shadow systems” during SHARE’s original implementation. As a result: External payment systems are not integrated into SHARE SHARE does not contain all of the bank accounts owned by the State Reliance upon “Shadow Systems” has negatively impacted the ability to produce the CAFR The purpose of these customizations and shadow systems were to replicate the processes and systems that were in practice before SHARE, driving an inefficient and error prone environment: Processes are labor intensive and therefore is subject to manual errors General Ledger maintenance process and the process ownership is not clearly defined System rules governing transactional accounting need to be updated and enforced General Ledger entries are inconsistent and controls need to be defined The State’s ability to produce required financial reports that meet accounting standards, to reconcile cash, as well as to prepare for the upgrade to a newer version of PeopleSoft has been adversely impacted as a result as these current conditions. The DFA CAFR Reporting Project and Historical Cash Reconciliation Project are both underway. These projects are not dependent on Cash Remediation Phase II, but will be coordinating with the project team as there are synergies between the three projects.

Cash Control Processing General Ledger Processing Project Objectives Focus on these areas with the associated business process redesign objectives will institute broadly accepted practices and mitigate the adverse effect of customizations and shadow systems on accuracy, controls and timeliness Process Objectives Payment Processing Implementation of leading business processes and practices will validate that there are adequate checks and balances in place for payment related activity Payment information will be in SHARE and will be consistently accurate and in compliance with State requirements Cash Control Processing Modify processes and security related to deposits to provide proper segregation of duties Assign each State owned bank account a unique General Ledger Account in SHARE and verify it is tracked in SHARE Cash Management General Ledger Processing Implement clearly defined controls and processes associated with the Chart of Accounts, and SHARE configuration to increase financial reporting accuracy and compliance with GAAP/GASB Establish clearly defined processes and preventive system controls within SHARE to increase accuracy and efficiency of journal entry processing Redesign the SHARE open/close process for periods and adjust SHARE configuration to facilitate the creation of financial reports

Why now? Four Factors are Driving Urgency Near-term realization of dramatically improved accounting processes for the State: System Process Redesign: Adopting SHARE-delivered functionality thereby mitigating operational risks related to customizations, shadow systems and manual, error prone activities and interfaces Accounting Process Redesign: Adopting industry standard accounting practices thereby mitigating operational risks related to insufficient controls, accuracy and timeliness, and efficient and effective State accounting processes: Performance Enhancement: Realizing higher levels of process performance, controls and accuracy for the State’s accounting practices. Implementation of compliance requirements related to audit findings: Reduce ongoing exposure related to non-compliance with accounting standards as well as financial and system audit findings Implement additional controls related to the Chart of Accounts, Configuration, and Security, which will provide the State increased data reliability Achieve proper division of accounting responsibility between Agencies and DFA Attain consistency in internal and external financial reporting in order to produce a compliant CAFR Achieving these business results within the next 10 months Setting the stage for a successful SHARE upgrade: Implementing the process and system enhancements in the 8.8 environment will reduce upgrade project complexity and risks due to having BPR implemented before the upgrade begins

Cash Control Processing General Ledger Processing Summary of Scope Process Area Scope Payment Processing External Payment Systems Warrant Printing, Processing & Handling Electronic Data Interchange strategy Accounts Payable Vendor Processing Staledating and Escheatment Security and Approval Processing Bank Integration Cash Control Processing Returned Depository Items Returned Electronic Payments Security Bank Accounts General Ledger Processing Control General Ledger Process Close Process Financial Reporting Controls

Project Team Composition Key Project Stakeholder Communications Project Timeline, Resources & Communications Month March - June July August September October November December January February March April Design Build and Test Train and Deploy Support & Project Close Out Project Team Composition Key Project Stakeholder Communications Role Resources Meetings Status Reports Executive Sponsor Ron Spilman Monthly Steering Committee Representatives from DFA, DoIT, DOT, STO, and other identified agencies Project Management Representatives identified by agencies and vendor Bi-Weekly Project Team Technical and Functional representatives from identified agencies and vendor Receive from members

Deliverables Summary Phase Summary of Phase Key Deliverables Project Planning and Organization This phase outlines how the project will be conducted. Scope Definition Project Plan and schedule Resource Requirements Bi-weekly and Monthly Reports templates Risk and Issues Log templates Project Management Procedures document (escalation process, issue resolution process) Design The process, functional, and technical design activities will occur in this phase Requirements Document Fit / Gap Document Configuration Design Reports and Workflow Design Process Flow Documentation

Deliverables Summary (cont’d) Phase Summary of Phase Key Deliverables Build and Test The build activities and testing of the systems and related process, configuration, and other system adjustments will occur in this phase Configure and Build Test Plan Testing Defect Tracking Log Test Scripts for Testing Cycles Unit Testing System and Integration Testing User Acceptance Testing Regression Testing Train and Deploy User training, both support and end-user training take place in this phase as well as the implementation of the project Job Aids Training Materials Training Delivery Knowledge Transfer Implementation Plan and Schedule Implementation Issues Tracking Log Cut-over Support and Project Close- out Support and final project documentation On-site Support Off-site Support Transition Plan Close-out Report

Risks, Dependencies and Assumptions Sufficient state staff resource availability and project performance Delay in funding, procuring, or contracting could push delivery dates Organizational readiness Agency modification of payment source systems Completion of the project within the funding appropriations period Availability of non-production SHARE financial environments for development and testing Agency payment systems will require modification to their processes and interfaces External system integrator services will need to be engaged SHARE delivered processes and functionality will be used Agencies will be able to meet project deadlines including timely executive decisions

Budget and Funding Sources Amount Description Previously Certified $1,054,000 Certification Request $3,946,000 DOT Funding - DOT involvement to accommodate DOT requirements Total $5,000,000 Request based on independent CAFR audit findings and related compliance remedies

Summary Cash Remediation Phase I was successfully delivered in February 2013. It automated the State’s cash reconciliation processes and had a dramatic impact on process efficiency and controls Phase I was a ‘point forward’ solution and Historical Cash Reconciliation efforts are underway for the period between July 2006 and January 2013 Cash Remediation Phase II continues where Phase 1 left off. It will result in the expedient realization of the below project outcomes and benefits. Primary Cash Remediation Phase II Project Outcomes and Benefits Near-term realization of dramatically improved accounting processes for the State in the areas of Payment processes, Cash Control processes and General Ledger processes Implementation of compliance requirements related to audit findings Achieving these business results within the next 10 months Setting the stage for a successful SHARE upgrade