Newsletter Content
• Business Process Improvement
• Bill 198 C-SOX – SyncBASE CERTRACK
• IFRS – SyncBASE IFRSTRACK
Business Process Improvement
During 2010, Canadian companies appear to be emerging from “survival mode” from the worst recession in a lifetime. Top line growth seems to be happening from a combination of organic growth, launching of new products / services, and business acquisitions. At the same time, growth in the bottom line is being supported by ongoing and continuous improvement in productivity occurring in some cases through investments, and in other cases through “good old” fashion cost containment. The latter is a discipline that is often the least exciting and often times the most tedious of functions within organizations. However, without this ongoing discipline, costs can quickly spiral out of control.
In the current economic environment, it is has been very challenging for companies to increase prices to customers, in fact most customers expect prices to remain the same, or decrease. For survival’s sake therefore, it has never been more important for companies to monitor costs, and seek ways to “stretch the dollar” – getting more value for each dollar spent, and saving money whenever possible.
Ongoing cost savings don’t have to be gargantuan. Smaller incremental improvements, if done continuously, can be equally effective. In both cases, they will avoid the need for draconian measures when things come to a head, due to lack of controls.
Excel spreadsheet applications are a good way to implement smaller incremental improvements. Excel spreadsheet applications are prevalent throughout industry, but most employees only have a basic knowledge of its use. They know enough to perform the routines of their particular jobs, but not enough to significantly enhance their productivity. For most companies, employees are at the same time the greatest asset, and the greatest cost. Therefore, ensuring that staff are sufficiently trained and have the requisite skills to perform their tasks efficiently is one way to improve operational efficiencies.
Reviewing business processes within an organization is a time consuming and often “politically” charged process – employees are usually reluctant to adopt change. Furthermore, during their very busy days, operational staff lack the time (and energy), expertise and objectivity required to critically review the way work is being managed, to determine if best practices are being followed.
That’s where external resources can assist. For instance, over the years working as a consultant and financial professional, I have reviewed hundreds of operational functions. More often than not, Excel based solutions have been implemented, which have really improved efficiencies (and accuracies for that matter). Please contact Edelkoort Smethurst Schein CPA’s LLP and go after the “low hanging fruit” with Excel applications to improve your business operations.
I discussed Excel training recently with Mr. Kevin Moloney, of DKM and Associates. Kevin’s company provides Excel training services to companies and has become very adept over the years in pinpointing and implementing solutions. His advice to companies looking to upgrade Excel skills is this…”don’t hesitate with this investment…it is probably the least costly and quickest way to improve employee and organizational productivity”.
Many times business improvements can only be achieved with the use of specialized software applications, which may be linked to, but are generally beyond the capabilities of Excel spreadsheets. It is often a question of debate – should the software application be tailored to the business process or vice versa? At first glance, it would be obvious that the business processes should be understood in their current state, and then a plan for improvement to follow. Mapping the processes using Microsoft Visio or other flowcharting is useful, because for most people “a picture is worth a thousand words”. It also ensures that all salient points of the process are documented and understood. However, unless the business process is very basic, it may be necessary to “customize the software application”, to align with the optimal business process. This can be very expensive. For very large organizations having the resources and scale to cost justify this, it may be possible to do so. Realistically, for most companies however, there comes a point where the business process will more or less need to fit within the software application. Take heart – this in of itself will usually be a huge improvement over the manual, or less than ideal process, that it replaced. Once again, external consultants can provide the requisite time and expertise to assist with these changes. Yes, consultants charge fees for these services, but it’s important to look at the end result, and determine if the ongoing cost savings justify the investment. As businesses continue to expand, even if companies can hold the line on head count with these productivity improvements, it will be money well spent and earned many times over.
Business Process Improvement – “Case Study”
ASL Distribution Services
ASL is a full service 3rd party logistics company, providing outsourced warehousing, storage and transportation services to companies in Canada and USA. A privately held company, it has been in business for 51 years, and on numerous occasions been recognized as one of Canada’s 50 best managed companies, most recently in 2009.
The strategic goal of ASL is to be the foremost Canadian provider of total logistics systems for time critical product. ASL achieves this goal by leading the industry in customer service, with a pro-active and continuous focus on customers’ needs and expectations, and by providing “World Class” quality. ASL maintains this goal through continuous business improvement, initiated by their employees in a challenging and responsive environment.
Recently I had the opportunity to provide interim controlling consulting services to ASL, and I was very impressed with the company’s commitment to continuous process improvement. During the recent economic downturn, ASL has been able to grow their business, through a combination of shrewd acquisitions and some very impressive organic growth. However, as great as that sounds, there are challenges to support and sustain this type of growth. In response, ASL conducts ongoing reviews to its infrastructure and business processes, to ensure that they are as efficient as possible. Led by the company’s CFO, Mr. Robert Kheir MBA, CMA the daily mantra of improvement is very evident. The status quo is not acceptable. What is interesting is the manner in which Rob has been able to deliver the message – with an open dialogue that invites suggestions and engages staff. Mr. Cole Dolny, President sums it up best…”in a competitive industry such as 3rd party logistics we owe it to our customers and stakeholders, to closely manage costs and improve productivity. Our customers expect U.S. to hold the line on pricing. Ongoing productivity improvement is one of the most challenging things to do, but if we didn’t, we would quickly see our margins erode”.
Does your organization require 3rd party logistics? Based on 51 years of success, and my involvement with this company, I would highly recommend ASL Distribution Services. For more information, please contact Cole Dolny at (289) 291-4040.
Business Process – Key Controls
A further benefit of business process improvements is the review of internal controls. When I refer to internal controls, I am referring to the various controls that organizations have in place, such as proper segregation of duties, authorizing transactions etc, all of which are generally designed to prevent or detect errors or fraud, and ensure financial statements are produced accurately and timely.
Publicly traded companies in Canada are acutely aware of the work (and sometimes pain) that is required in this area as part of the ongoing CEO / CFO certifications (Bill 198 aka C-SOX). Many public companies are using this to their advantage – identifying business improvement opportunities as an adjunct to the review of key internal controls – creating a “win-win” situation. For privately held companies and other organizations, the review of key controls is every bit as relevant. Key controls can ensure that business processes are designed in such a way that transactions are processed within the prescribed limits of authorization. As part of business process reviews, it’s also a good time to review internal controls.
Bill 198 C-SOX update
Featured Software application – SyncBASE – CERTRACK
SyncBASE is a software development company that’s been doing business for about 10 years, and has 3 primary software applications; OPTRACK (Stock Option Valuation), IFRSTRACK, and CERTRACK. Mr. Ramy Taraboulsi, MBA, M.Sc, CFA is the founder of SyncBASE and I had the pleasure of meeting Ramy and several members of the SyncBASE team during May 2010 at their Toronto Head Office.
CERTRACK is a workflow and reporting tool that companies can use to comply with SOX 404 (United States), NI 52-109 and Bill 198 (Canada), and has some very impressive functionality. Please see below for key features of CERTRACK.
I am pleased to announce that Edelkoort Smethurst Schein CPA’s LLP has now entered into a strategic partnership with SyncBASE, and we are working together to support companies on CERTRACK and other Bill 198 projects. Please contact Edelkoort Smethurst Schein CPA’s LLP if you want to learn more.
CERTRACK – Complete Tracking of Internal Control Certification
CERTRACK is a workflow and reporting tool that companies can use to comply with SOX 404 (United States), NI 52-109 and Bill 198 (Canada). It is a web-based solution for companies to efficiently manage their internal control certification process by providing a secure platform for the documentation, walkthrough, testing and reporting of internal controls, presented in a structured and auditable manner.
CERTRACK streamlines the control documentation process by retaining the documents and evidences to each key control in an online repository. It organizes control testing by informing the relevant personnel of their schedules and deadlines, allowing them to collect and review evidences, conduct tests and sign off on-site. It facilitates the reporting process with pre-populated Management Assessment templates highlighting the key performance charting and statistics for each audit period, downloadable in Word, Excel or PDF format.
CERTRACK allows a firm to move quickly from establishing audit parameters to actual monitoring of Financial and IT processes throughout the enterprise by decentralizing the control management and evidence collection down to employees in different areas of operation.
CERTRACK introduces a unique framework and methodology that allows a firm to complete their internal control audit through a top-down risk based approach that involves different members (process owners, management, external auditors, etc.) from different operations (accounting, sales, human resource, IT, etc.) from various locations (head office, overseas locations, etc.) within a single online platform.
Risk Assessment: By looking at the financial statements of the recent period, based on the account balances, CERTRACK calculates the materiality of the accounts based on the COSO guidance from both quantitative and qualitative perspective.
Process Narrative and Walkthrough: Based on the user profile, CERTRACK provides a simple and easy template to fill in Walkthrough and/or Narrative information, which are date stamped. At a click of a mouse, users may generate a sophisticated Walkthrough and Narrative report or choose to do a comparison between the two. In addition, any walkthrough exhibits can be directly stored in CERTRACK.
Flow Chart: CERTRACK utilizes an online flowchart creation tool to allow users to draw and store their process activity flow, which can be connected to key controls and risks to give a visual representation of a well maintained process.
Control Documentation: In every new audit period, the control documentation is rolled forward. However should it change over time, users may choose to change the control attributes and descriptions. CERTRACK provides a complete audit trail on any updates happened to a control at a click of a mouse. Moreover, because all the data is maintained in a single database on CERTRACK, any changes made to a control will be automatically applied to all instances where the control is used in.
Control Testing: Testing information is provided by control owners/ process leaders/ compliance department, including test procedure and method, sample size, and sampling source. Test responsibilities are passed to internal testers or external auditors, who will conduct tests independently through a separate log-on and upload evidences for management review. Similar to the walkthrough exhibits, all testing papers can be directly stored within CERTRACK.
Remediation: Should any deficiencies be discovered, CERTRACK keeps track of the remediation process by allowing the remediation delegates to log-on separately, and provide updates on the progress of the remediation plan implementation.
Progress Charting, Monitoring, and Statistics: During the testing periods, tester performances are constantly monitored. At any time, users can see statistics for tests that are outstanding, completed or behind schedule. Furthermore, users may choose to generate reminder letters or allow CERTRACK to generate automatic alerts to remind testers any uncompleted tasks.
Conclusion and Reporting: Control conclusions are done at the end of the testing process, where the reviewer of each process retrieves the information provided by the testers and signs off on each control. During that process, reviewers will be presented with the statistics on test results by business units/ accounting processes, testing evidences collected, and any additional comments/ remediation/ suggestion provided by testers. Reviewers then make a final assertion on the control effectiveness. At this point, CERTRACK can pull out summary and detailed reports to automate C-SOX (SOX 404) reporting, which will save users a lot of time and effort to prepare and organize the information.
There is a vast array of C-SOX software available, and it would be very difficult for organizations to thoroughly research all of the alternatives. Therefore, I hope this overview of SyncBASE and CERTRACK software is helpful. I definitely think organizations should consider CERTRACK if they require software support for their SOX projects. To register for a free 30 minute online demonstration of CERTRACK, highlighting key features and functionality please visit: https://certrack.net/demo.html
Mention Edelkoort Smethurst Schein CPA’s LLP, and receive a 5% discount off the purchase price.
IFRS update
By the way, still working on completing your IFRS conversion? SyncBASE also has an IFRS project management tool known as IFRSTRACK, a web based application which manages all aspects of migration from GAAP to IFRS. To register for a free 30 minute online demonstration of IFRSTRACK please visit: https://ifrstrack.net/demo.html
For further information about CERTRACK, IFRSTRACK and SyncBASE, you can also contact:
Ms. Lilian Hanna, Marketing Manager, SyncBASE
Tel: (647) 284-2244
Email: lilian@optrack.net
Web-site: https://syncbase.net/
I hope this helps. Thank you for taking the time to read this. Please don’t hesitate to contact Edelkoort Smethurst Schein CPA’s LLP If you have any questions or require assistance. Best wishes to you.
Edelkoort Smethurst Schein CPA’s LLP MBA, CMC, CGA
Edelkoort Smethurst Schein CPA’s LLP
Cell: 905-630-1607
Email: gpjschein@sympatico.ca
Web: gfsconsulting.ca
The views and opinions expressed in the Edelkoort Smethurst Schein CPA’s LLP E-Newsletter are those of Edelkoort Smethurst Schein CPA’s LLP, and include excerpts from other authors and web-sites as identified in the Newsletter. Readers should discuss details with their accounting and tax professionals. Edelkoort Smethurst Schein CPA’s LLP disclaims any responsibility whatsoever in regards to interpretation and use of any of this information.