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ROBOTIC PROCESS AUTOMATION (RPA) - The Impact on Internal Audit
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Agenda Introduce RGP and Presenters Objectives of the Session
Understand Robotic Process Automation (RPA) Summarize the Opportunity Areas & Value Drivers of RPA Identify Current RPA Solution Providers Understand the Criteria for Scoping & Prioritization of RPA Opportunities Provide an Example of RPA Utilization Understand How RPA Applies to Internal Control Understand the Risks of RPA Understand the Impact of RPA to Internal Audit
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Our Company Founded in 1996 as part of Deloitte
Management buy-out (1999) and initial public offering (2000). NASDAQ: RECN Program Management ▪ Project Management ▪ Change Management Finance & Accounting Governance, Risk & Compliance Information Management Human Capital Procurement & Supply Chain Legal & Regulatory 3,000+ Consultants Globally 87 of the Fortune 100 Have Been Clients 70+ locations worldwide 48 NAM 12 EUR 12 APAC
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What is RPA ? RPA is not a physical “robot” but a configurable software, that sits on top of a company’s existing IT infrastructure, pulling data, performing algorithms, and creating reports. The “robot” is configured to complete the same process steps, follow the business rules, and use the same systems that a human does today. RPA makes the most significant impact on manual work processes, that are repetitive and recurring, and often have high human error rates. A single “robot” can be configured to performed a variety of processes enabling multi-use robots, and variability as your business needs change. The initial implementation of RPA can happen in weeks and typically delivers an ROI of greater than 5:1, often recouping the investment in the first year.
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RPA Insights 1. Current State 2. Predictions (2018 – 2020)
The automation journey is prevalent across all industries and functions A classic candidate for RPA would be one where three characteristics are present: The tasks or actions are consistent, with the same steps being performed repeatedly The process is template driven, with data being entered into specific fields in a repetitive manner The process is rules-based, to allow decision flows to alter dynamically By 2019, process automation will have limited impact on top-line growth for 50% of organizations that will erroneously focus on labor reduction, not on improving business outcomes By 2020, automation and artificial intelligence will reduce employee requirements in business shared-service centers by 65% During the next three years, more than 50% of service automation projects will be abandoned or will fail to deliver anticipated benefits million FTEs could be replaced by automation tools and software by 2020 Kaush There are basic tenets for RPA to be achievable. It is somewhat nascent area, but is rapidly evolving. What we want to walk you through today is not only the basic framework of RPA i.e., the what, how and why, but also to provide you some tips or CSFs that are essential regardless of whether you are embarking on the journey, have begun the process of automation, or completed your automation process. Sources: Gartner, IRPAAI, RGP Research
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What are the Key RPA Value Drivers?
“Reduce operating costs and processing costs while increasing security” “Deliver value by increasing margins, reducing costs and operating more competitively” CXOs: “We Need to…” COO CFO CHRO CIO CEO Michael “Increase productivity / deliver better services faster” “Provision a compliant, scalable, resilient and flexible digital workforce to the operation” “Hire, train and deploy workforce that is agile and flexes to business needs”
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IT Resourced & Delivered
What Do We Automate? IT Resourced & Delivered Business Resourced Enterprise IT Operational Ownership Easiest to automate repetitive, high-volume, operational processes Back Office Examples: New hire simplification Account Management Off cycle pay ACA validation Garnishment processing Tax processing Pre and post payroll activities Leave / vacation management Training automation & reminders Digital Workforce Powered by Software Robots Volume of work Michael Different class of business problem Sits alongside the problems IT are solving CIO provides a platform COO builds the apps 3rd sourcing option for…. Procedural Automation Previously Uneconomic Projects Short Term Regulatory Requirements Competitive or Rapid Response Business Processes
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Potential Applications of RPA
Sales/Services Order to Cash, Account Setup. 24/7 Customer Service Support, Customer Complaint Tracking Procurement Vendor Setup, Requisition to Purchase Order, Invoice Processing Finance & Audit Accounts Payable, Accounts Receivable, General Ledger, Payments Processing Kaush Tax Sales and Use Reconciliation, Tax Master Data, Monitor / Renewal Processing HR On-boarding / Off-boarding, Payroll, Resume Screening / Matching IT Account Setup and Maintenance, Internet Checks & Processing, Database Checks & Clean-up
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RPA Hard and Soft Potential Benefits
Reduced Costs Improved Quality Increased Security Improved Compliance & Reporting Upgraded Analytics Increased Employee Satisfaction Improved Operational Control
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Sales & Use Tax Reconciliation
RPA Video Demo Sales & Use Tax Reconciliation
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Leading RPA Software Providers
Michael Meet the candidates for your RPA solution. When you’re hiring a digital workforce, it’s important that you understand who the candidates are so you can make an informed decision and hire right. To help you understand the three general types of candidates in the marketplace, we’ve given them each a persona. First, there’s the Intern. Interns are eager to get going quickly, but need to have someone supervise their activities. As such, they’ll be sitting right along side you, helping you to do your work. You can hand off small bits of work to them and they’ll spring into action to get it done. They’re inexpensive to hire, and you’ll be able to get some value out of their work. Next, there’s the Expert. This worker is seasoned, and you’ll pay for that experience. They work on their own schedule, so you may not get what you need when you want it, but when you do get it, you can be sure that the work is done right. They are deeply skilled in one area, which doesn’t make them a great fit for all situations. Finally, there’s the Associate. This worker can learn things quickly, and can learn many different tasks along the way. They work well on their own, so you don’t have to keep checking in on them. They also work well as a team, both with humans as well as other Associates. They keep meticulous records of what they’ve done so that the audit teams can check everything if they need to. So let’s reveal what these candidate look like from an RPA software perspective… First, our Intern is like the Desktop Recorded Automation software that gives quick wins but doesn’t scale very well. Desktop Recorded Automation Aimed at human agent assistance Directed by a human to do a task Often executes on their own desktop (not always) Messaging: Get up and running as fast as you can – tell IT later. Focus on speed of automation [No real consideration for maintenance; reliability of execution; security of operation] Next, our Technical Expert is like the IT Developed SDK’s that offer system integration solutions. IT Enablement and SDKs Aimed at helping IT teams be more efficient Point-solution intended to be wrapped in as part of an IT project Messaging: Don’t trust the business with automation [Doesn’t solve the problem – the business is still reliant on IT for all changes no matter how small; this is not an IT project – this is a capability] Finally, the Associate is like the Digital Workforce Platform that Blue Prism offers. It’s designed to be: Secure Enterprise Strength Hosted in a Data Center or Cloud as a lights-out operation Autonomous – working on it’s own processes without human intervention * Source: The Forrester Wave Robotic Process Automation, Q1, 17
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Opportunities Mapping by Process
Business Benefit / Value Process # Process # Process # Process # Potential to Automate KEY: Green indicates those processes that have low risk associated with moving them into an automated state. Amber indicates those processes that have some risk associated with moving them into an automated state. Red indicates those processes that have high risk associated with moving them into an automated state. PURPOSE OF DOCUMENT: This will be the output document following the Process Maturity and Impact Assessment. It will highlight, in a clear way, the processes most suitable for automation, as well as those with the highest risk associated. For example – A process may have high value to automate, but will cause significant impact and has high risk associated with the transition. It might be better to consider moving lower risk processes across first to win trust and demonstrate potential value. This document is the proprietary and confidential property of RGP
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RPA Common Capabilities
Opening and attachments Logging into web/enterprise applications Moving files and folders Copying and pasting Filling in forms Reading and writing to databases Scraping data from the web Making calculations Connecting to system API’s Extracting structured data Collecting social media statistics Following “if/then” decisions/rule
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Example of RPA Utilization In Bank Reconciliation
Save monthly Bank Statement to G:\ START Treasury Searches folder for new statement Opens previous months “Recap file” Date the mode of receiving statement Follow-up with treasury / online RPA Bot Opens and reads statement data Yes Check for any bank activity for previous month Mark & date as “No Activity” Statement received? No No Extracts statements data online from the banks website Any activity? Yes Look-up a/c# electronic statement with a/c# on recap sheet Input region #, district# & district name on electronic statement Mark and place statements in respective files by regions (30) STOP Lookup date range for the month Reconcile statement with FIN Does it reconcile? Yes Change status to ‘finalize’, date and initial “RPA” STOP No Call office to gather missing inputs Determine reason for missing entry Change status to ‘finalize’, date and initial “Person” Entry found? FIN Team Zero balance transfer Journal entry Verify deposit Bank activity
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How Can RPA Be Applied to Internal Control?
RPA can be applied where there is a high volume of routine, labor intensive and mundane activities performed on a day to day basis by the 3 lines of defense: Operate a control based on a predefined frequency, acting as a Control Operator, and evaluate a control’s operating effectiveness by performing periodic control self-evaluations, acting as a Control Owner (1st line of defense). Evaluate a control’s operating effectiveness by performing periodic management testing of control effectiveness, acting as an Internal Control Tester (2nd line of defense). Evaluate a control’s operating effectiveness by performing periodic independent testing of control effectiveness, acting as an Internal Audit Tester (3rd line of defense).
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This All Sounds Good But What About the Risks?
We can’t just ask “how can we utilize RPA?”, we must also ask “how does RPA impact our risk profile?” Data Governance and Controls Standards Privacy and Data Protection Regulatory Considerations What Could Go Wrong
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What are the Data Governance and Control Standards?
RPA needs a digitization strategy; prioritize the right processes, governance approvals, and development, testing & deployment protocols. It also needs an infrastructure to manage the new robotic workforce, and support future RPA changes. Overarching governance framework for adoption of RPA and alignment to risk, compliance and IT/data frameworks Have we selected the right processes? Have we optimized processes before we automated? Are all upstream & downstream linkages known? Management and ongoing support and maintenance of robots Who will oversee robot operations? How do we manage changes? Have we developed a recovery plan?
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What about Privacy and Data Protection?
Privacy and Data Protection need to be considered for RPA, especially if the task involves the processing of personal information Heightened risk of privacy breaches that occur through technology innovations Currently, no specific guidance on RPA companies Take reasonable steps to implement practices, procedures and systems that will ensure privacy compliance What vendor management provisions will you establish and maintain to verify how data might be accessed?
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What are the Regulatory Considerations?
Given that RPA is an emerging technology, there are no standards or formally agreed upon industry controls specific to RPA RPA adoption is business driven but control functions must ensure control standards Critical to ensure that control standards are deployed for the rollout & management of RPA Does this automation affect financial reporting processes and Sarbanes-Oxley controls? Understand cross border rules governed by regulatory bodies like FINRA and the SEC
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What Could Go Wrong? Need a post-deployment review to ensure the processing and decisions made by the robot align with expectations Risk of missing rules Basic RPA can only do what it’s been told to do. Often humans follow innate rules that are without conscious thought applied, decisions just make natural sense to the human operator and aren’t documented. Processes are not mapped correctly Automated activities may be incorrectly performed or incomplete. Automating an inefficient or poorly controlled process only amplifies the issue. Natural human safeguards removed Where there are many transactions and many users, errors may often not be widespread across the business process. With automation, if you get it wrong, you consistently get it wrong.
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What Are the Impacts to Internal Audit?
Need to understand the technology Opportunity to influence control design Potential to increase audit efficiency Free up capacity to focus on higher priorities Enhance ability to add valuable insight Need to develop new testing approaches Consider need for changes to IA staffing model
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THANK YOU QUESTIONS?
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Contact Information Lester Sussman VP, Governance Risk & Compliance Phone: David Matthews Regional VP, Advisory Services & Global RPA Lead Phone: Terence Hogan Director, Advisory Services & Legal Phone: LES
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