I want a 5% reduction in my core audit costs each year, notwithstanding that the business is growing AND I want to make this assignment more profitable for your firm â€“ how can we achieve this?
That's what Peter Homan once demanded of his accounting firm (one of the Big 4) when he was CFO of ASX listed Australian retirement village provider, Aevum Limited.
Peter is now COO at Davidson Trahaire Corpsych, Australia's leading provider of Employee Assistance Programs. When I caught up with him recently, we got chatting about his time at Aevum, and how he was able to reduce his audit fees. Peter told the auditor: I want a 5% reduction in my audit costs. I will give you remote access to all my data. You assign who you want when you want and you do not need to be in our offices.â€
Who doesn't want a reduction in audit fees each year? For some of my clients, 5% off is a $67k saving a year!
So how did Peter make this happen?
- Eliminate â€˜Lead Schedules' (which reconcile the ledgers to the published accounts) by enabling quick (<5 minutes) republishing of detailed financial reports and schedules when â€˜late' journals were posted â€“ saving time on reconciliations and manual updates of detailed reports and schedules. At least 85% of the notes to the accounts and schedules were sourcing data direct from CALUMO.
- Make those Excel reports Web reports. With CALUMO, Peter's Finance Team were able to use CALUMO's clever Excel formula to standardise hundreds of spreadsheets into a few templates. CALUMO's formula enable the Excel spreadsheet templates to get the latest data from the various systems such as ERP, HR etc. Once this is done, the Finance Team hit one button to turn the Excel sheets into Web reports. Easy!
- Enable drill from P&L or Balance sheet to transactions. When you're looking at a report, you want to know what the detail is without having to ask anyone (particularly if you are an auditor). Just click on the number you want more detail on an CALUMO will show you the transactions behind it â€“ and you can export to Excel.
- Drill from transactions to source documents such as invoices and purchase orders. The next step is to access the source documents behind your transactions stored in a Document Management System without getting up from your desk, and with a couple of mouse clicks. It does require for all your paperwork to be scanned of course (who isn't doing this these days?) but once it is, ALL your information is at your fingertips. The documents could then be emailed or copied (subject to security) by authorised people like the auditors. The benefit was in the integration of CALUMO with other systems and software (which was easy given the use of standard Microsoft protocols). Of course it could also be accessed over the internet.
- Document the underlying business processes and business rules, thus allowing you (amongst other things) to automate your data loads from your transactional systems. This reduces key person risk (that's your current Excel report author or compiler) assists the auditors, and automatically load data from your source systems. It saves huge amounts time and money. Report authors become analysts â€“ just like their job title suggests they are.
- Have one place to go to know â€“ using just one interface. It really helps to have one system that does transactional and analytical reporting. Look at a dashboard or report which accesses from a number of underlying systems. Move to the next report or layer of detail at the speed of thought. Do some ad-hoc analysis (in the same system), move that to Excel if you need. Or you might what to drill to transactions and to those PO's to answer â€“ who *$%^ signed that off?â€
Peter's auditor delivered the â€˜required' saving and commented that his costs also reduced â€“ a win/win, and the company reported to the ASX earlier than most of its peers! The auditor did suggest that there were not enough finance people. Peter responded with we reported early, reduced your costs, and if I got hit by a bus the reports would still go out â€“ where is the issue?â€
Interestingly, working overtime for Peter was considered bad form. In fact, his team were paid a bonus for NOT working overtime! That's another blog though.
If this is something you aspire to, or if you'd like more information, please email at email@example.com