Obtaining Efficiencies in Business Processes

Business processes, by definition, cut across organizational and functional boundaries. Effective and ongoing business process analysis and improvement is vital to operating your company or organization at optimal levels.

Illustrated in this client success story, a Business Process Controls & Performance Analysis, and Information Systems Gap Analysis allows an AAFCPAs client to reclaim 10 hours per week of employee time, and reduce risks.

Background

In a post audit conversation, AAFCPAs’ client, a commercial & industrial construction/services company, expressed concerns that their business processes appeared to take too long to complete. Management acknowledged that their existing systems capabilities were not being fully optimized, and there were substantial concerns related to the effectiveness of their current internal controls.

AAFCPAs’ Audit Partner suggested that the client consult the expertise of AAFCPAs’ Business & IT Advisory practice to evaluate solutions.

The Challenge: Inefficient Processes and Manual Work

System capabilities were not fully utilized. The client selected an integrated construction management software solution five years ago which included their accounting information system. At the time of implementation, they opted for a basic application of features, and did not plan for further utilization or adoption from the user community.

Users did not embrace the new system. Users did not feel that the system was intuitive, and as a result, did not fully embrace the new system. Ultimately, users were not provided with the necessary training and tools, which are key to user adoption.

Processes were inefficient. Many business processes were completed manually, and outside of the software. For example, time entry was tracked daily on paper, with subsequent manual entries into the accounting system for costing, into excel for reporting, into ADP for payroll, and later into a summary sheet for monthly reporting.

The processes consumed valuable finance department resources, delayed access to meaningful information required for management decision-making, and made the month-close difficult, cumbersome, and slow.

Multiple manual entries increased risks. Many work-around processes involved manual entries outside the system to capture the needed information. These entries were then re-entered in multiple systems & applications to generate the reports and journal entries needed. Manual manipulation of data creates risks in the form of mistakes, and, in some cases, decreased effectiveness of internal controls.

The Solution: Business Process Analysis and System Improvements

Objectives and Scope

AAFCPAs’ Business & IT Advisory practice was engaged to perform a Business Process Controls & Performance Analysis and Information Systems Gap Analysis to identify and remediate systems and process limitations in meeting our client’s strategic goals and improvement objectives.

The scope of AAFCPAs’ involvement was to document the current processes, identify efficiency improvements that could be made in processes and through the effective use of technology, and recommend opportunities to strengthen internal controls relating to financial management, financial reporting and safeguarding assets.

Timeline

The engagement took only 4 weeks to complete from the opening meeting to the delivery of findings and recommendations. The complete objective occurred in three phases:

Phase 1: Business Process Discovery

Interviews were conducted by AAFCPAs’ team of highly-experienced senior level business process advisors with the finance office team, as well as cross-functional teams as needed. All major processes were evaluated through step by step walk-throughs together with the individuals who work with the systems and know them first-hand. A comprehensive understanding was obtained of how information is received, processed & utilized, and in which systems or format.

AAFCPAs assessed the current accounting information system, related processes, and control environment, including:

• General Ledger
• Accounts Receivable
• Accounts Payable
• Job Cost
• Project Management
• Service Management
• Equipment Management
• Reporting (Job, Financial, Scheduling)
• Document Management
• Mobile Functionality

Phase 2: Process Documentation and Improvement Opportunities

Business processes were documented, and 18 improvement opportunities were identified that would increase the client’s business process efficiency and effectiveness, including areas where technology could make a difference. The improvement recommendations also included timely and cost-effective corrective actions to mitigate any identified weaknesses.

Examples of improvement opportunities included:

• Utilization of technology to automate specific, manual elements of the payroll process to reclaim 10 hours of work per week, or one quarter of a Full Time Employee (FTE).
• Job-tracking through system tools for greater efficiencies, and reporting & analysis capabilities.
• Initiate auto-invoicing electronically through the system, saving input times and decreasing risks of inaccuracies, as well as saving time and money by emailing invoices instead of traditional mail.
• Use a digital job information template to allow for auto-import of job information, so information only has to be entered once in a digital format.

Improvements were ranked by risks that they posed, ease of completion, and those with the greatest return on investment (ROI) and energy (ROE).

Phase 3: Implementation and Vendor Coordination

The client utilized analysis & insights provided by AAFCPAs’ Business & IT Advisory practice to prioritize improvements and control objectives, and to determine a corrective course of action. They then determined which improvements they felt they could handle internally, and which they wanted to further engage AAFCPAs to help them complete.

AAFCPAs was engaged to improve the client’s time tracking and payroll reporting process, which was highly manual, and painfully redundant. Our team developed an efficient system that changed this process from one that took about 10 hours of work a week, to one that takes less than 2 hours, reclaiming the time equivalent to one quarter of a Full Time Employee! Additionally, AAFCPAs implemented effective internal controls, such as verification of information imports, which is critical in a process such as this that deals with employee payroll.

For elements of the engagement, AAFCPAs served as an intermediary between the client and their software solution provider to identify if the system had the capacity to support process design changes, and to initiate the appropriate changes in the system.

The Results: Greater Efficiency and Reduced Risk

The real, tangible benefits of this Business Process Controls & Performance Analysis, and Information Systems Gap Analyses include:

• Reduced process costs
• More versatile financial reporting and forecasting
• Increased quality
• Reduced number of errors
• Reduced process throughput times
• Reduced training time / expenses
• Reduced number of (internal) support requests
• Enhanced data analysis to monitor company performance
• Reduced risks of fraud

Improve Business Processes and Reduce Risk

AAFCPAs has a distinct, but integrated Business Performance, Internal Controls & IT Advisory practice. We strengthen the link between IT and finance, which reduces risk significantly for our clients and eases the technology burden.

Business processes, by definition, cut across organizational and functional boundaries. Effective business process analysis and improvement is best accomplished through the involvement of cross-functional teams of individuals who work in the system and know it first-hand. AAFCPAs keeps client teams focused, documents the processes, asks the right questions, and enlightens the team to improvement opportunities, control points, and where technology could make a difference.

We have a comprehensive understanding of how all the pieces of infrastructure, development, data processing, security and regulatory compliance should best fit together. Our impact has been known to raise the return on investment of technology, expand IT’s impact on the performance of your business,
and add efficiency to processes while maintaining a focus on the effectiveness of internal controls.