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Process Excellence Series Record-to-ReportRT&Co. Advisory Process and Quality ManagementPROCESS EXCELLENCE SERIESTHE RECORD TO REPORTFUNCTION:Advisory Process and Quality Management2020AugustReyes Tacandong & Co. is a member of the RSM network. Each member of the RSM network is an independent accounting and consulting firm, and practices in its own right. The RSM network isnot itself a separate legal entity of any description in any jurisdiction.Process and Quality Management1
Process Excellence Series Record-to-ReportRT&Co. Advisory Process and Quality ManagementINTRODUCTIONWhile companies can leverage on the data generated by theirfinancial and management reports to gain insights, create valueand improve their strategies, the problems arising from the recordto report process have become major challenges that block thecompany to undergo financial transformation.Moreover, the focus of the organizations has shifted to businesscontinuity and resilience, and the need for accurate and timelyreporting to support business decisions has also become urgent.Failed coordination across accounting and finance operations,upstream and downstream teams, can create a ripple effect ofdelays when processing transactions.These challenges have brought R2R solutions that target speed,accuracy, appropriateness, and at the same time conveniencemore relevant. This can be observed in organizations that havealready adopted global R2R delivery models dealing with remotework arrangements.Designing a future-proof and scalable finance and accountingoperations is the best way to prepare your organization towithstand unforeseeable pandemic, at worst, or exponentialgrowth, at best.The objective of this Advisory is to help organizations - to start toaddress the ‘how’ and help build a roadmap to transformation todeliver costs savings, reduce risks, improve visibility, promote afaster close and improve overall financial and managementreporting.1Process and Quality Management
Process Excellence Series Record-to-ReportRT&Co. Advisory Process and Quality Management1Process and Quality Management
Process Excellence Series Record-to-ReportRT&Co. Advisory Process and Quality ManagementUP CLOSE IN THE R2R FUNCTIONR2RR2RPROCESSFunctionINinAa NUTSHELLNutshellThe Record-to-Report is a function connected to other several processes where data areprocessed and analysed before it becomes a value-adding information for the stakeholders.While this is an important conversion from raw data to a meaningful report, often times painpoints from other business processes manifest in this function and can be seen from anorganization-wide perspective.DATA CAPTUREData from business operations needed to create financial and operatingreports, including journal entries is collected, generated, classified, andorganized ProceduresEnd-of-dayData ConsolidationTransaction PostingRECONCILIATION & ADJUSTMENTSFor a smooth flow, at a specified window time frame, necessarypostings are validated to ensure transactions are booked, reconciled,adjusted and/or reversed in a timely mannerBank ReconciliationInventory ReconciliationAsset DepreciationAsset RevaluationSettlement of Intercompany TransactionsCLOSINGBooks of accounts and reconciled balances are closed for the periodbefore financial reports are generated to ensure that data includes onlyfor the identified report dateClosing of BooksGeneration of Financial ReportsREPORTING & ANALYSISA verified and analyzed data is now used to generate a wide array ofreports that includes exhaustive details regarding the company’sperformance, profitability, process and project managementFinancial Statements ReportingFinancial Ratio Analysis and Data Analytics1Process and Quality Management
Process Excellence Series Record-to-ReportRT&Co. Advisory Process and Quality ManagementUP CLOSE IN THE R2R FUNCTIONElements of an Effective and Efficient R2R FunctionAn effective and efficient R2R function enables fast decision making based on insightsderived from huge piles of data and focus on value-adding activities and strategicinitiatives. This requires careful consideration of all relevant elements that affect financialdata. Leveraging on these elements helps the organization achieve an optimized R2Rfti thhlltifPeopleRight structure and management of people direct properexecution in the process. Sourcing for people with the right skillsfor the right roles is one of the most important componentsProcessDefined end-to-end processes that integrates finance andbusiness strategy help organizations optimize the use of itsassets. Properly designed processes facilitate innovation andTechnologyInvesting in appropriate and scalable technology solutions helporganizations drive value creation and long-term cost savingsthrough accurate and efficient reporting.DataProper data management and governance enable delivery ofaccurate and timely business information and generate deepinsights that are relevant to the various needs of stakeholders.GovernanceClear guidance (i.e., accountability, transparency, comparabilityof results) on the four other elements create synergy betweeninitiatives and continuous improvement of the financial reporting1Process and Quality Management
Process Excellence Series Record-to-ReportRT&Co. Advisory Process and Quality ManagementR2R FUNCTION IN CONTROLOne differentiating element of an optimized R2R function is having an embeddedcontrolling process. This includes validation of actual performance against establishedplans, standards, and metrics to identify any deviation. Any incident in carrying out R2Rfunctions is documented and used for continuous improvements.Key PointsBenefits of a Controlled R2R Functio A good accounting system enableskey financial control processes of aCompany to be properly set upwithin the Record to Report Function‒ Operational planning andbudgeting‒ Cost accounting‒ Project and investmentcontrolling‒ Function controlling Controlling processes need to becarefully designed according to theCompany’s organization andreporting structure as well as itsbusiness cycle requirements to1 Make Informed and StrategicHelps top management and stakeholders developDecisionsstrategic plans based on the available informationand enables management to effectively analyzebusiness operations to keep them ahead of thegame2 Enable Effective & EfficientMakes preparation of reports for compliance,Operationsinternal and external stakeholders systematic,accurate3 Facilitate Systematic and AccurateFinancial ReportingHelps the organization to efficiently deployresources to address pain points of other businessprocesses that flows through and are discovered inthe R2R processAs companies strive for agility in a digitalage, the importance of old-fashionedfinancial control cannot be overlooked.Caesar ParladePartner, Digital Transformation Services1Process and Quality Management
Process Excellence Series Record-to-ReportRT&Co. Advisory Process and Quality ManagementWHERE TO START TODAY?Bridging the gap between where your organization is currently at and where you want it to beis no easy task. It is important that your organization’s current state in the process excellencejourney is properly acknowledged to ensure that challenges are anticipated, pain points areunderstood, and improvement opportunities are captured. The key to achieving the dream ofdoing more with less is to focus on people, process, technology and data improvements thatminimizes costs, reduce risks and continue to improve efficiencies.Common pain points in a R2RPeople Non-segregation of incompatibleduties for recording and reviewfunctions Lack of role clarity and performancemeasurement system Skills gap and unfit assignments oftasks and responsibilitiesData Absence of golden source of data Presence of duplicate, dirty anderroneous data in the master file Presence of data silosProcess Data posting and allocation errors Long processing time in reconciliation andclosing of books Voluminous recording or processing ofmanual transactionsTechnology Use of multiple non-integrated systems Limited system functionalities (e.g.,reconciliations, intercompany transactions,consolidation) System controls and workflows notoptimized (e.g. input validation, mandatoryfields) Over-engineered systemsProcess Excellence Maturity Model1 Ad HocThe process is undocumented and/or in a state of dynamic change. It is driven inan ad hoc, uncontrolled and reactive manner by users or events.2 RepeatableThere is inherent variation among people doing tasks in the process anddiscipline is unlikely to be rigorous.3 DefinedKey performance indicators are monitored. The process is documented andsubject to some degree of improvement over time.4 ManagedProcess metrics and control methods are used to identify ways to continuallyadjust the process to customer requirements. Process capability is monitored.5 OptimizedProcesses at this level focus on continually improving process performancethrough both incremental and innovative changes and improvements.Advisory Process and Quality Management Team of RT&Co. employs a modified and more detailed matrix for identifyingthe maturity level of an organization’s processes and defining approaches to systematically and efficiently implementimprovements.1Process and Quality Management
Process Excellence Series Record-to-ReportRT&Co. Advisory Process and Quality Management1Process and Quality Management
Process Excellence Series Record-to-Report RT&Co. Advisory Process and Quality Management 1 P r o c e s s a n d Q u a l i t y M a n a g e m e n t Reyes Tacandong & Co. is a member of the RSM network. Each member of the RSM network is an independent accounting and consulting firm, and practices in its own right. The RSM network is
