Building an Integrated Federal Financial Close and Consolidation Process

Regulations include requiring auditability, providing additional financial information, strengthening oversight, and increasing the reporting frequency within the same window of time. Agency resources are already taxed with closing General Ledger (GL), reconciling Fund Balance with Treasury, resolving differences in inter- and intra-governmental balances, reporting Governmentwide Treasury Account Symbol (GTAS), and publishing accurate financial statements. Any data discrepancies identified in this reporting process force a repeat of this complex process after already completing a top-side adjustment or a correcting entry in the GL or subsidiary system. Reporting departments are already impacted as the close and consolidation process becomes more complex. The audit scope increases while the same aggressive deadlines remain constant, combining the accumulation of work, oversight, and deadlines with a fragmented reporting process. The following risks and issues arise with the year-end closing process:

• Delays and data gathering issues. Multiple data sources within a manual data reporting/capturing process are cumbersome and increasingly unreliable. With each data source, the possibility of data loss and/or corruption is increased, which impedes the reporting departments from compiling and completing the reporting as the data is untrustworthy.

• Data rework and revalidation. Frequent adjustments and changes to data take place at year-end due to audit adjustments, accruals, cost allocations, and other source data adjustments. Each change requires all validations, reconciliations, tie points, and edit checks to be recalculated. As stated above, the manual reporting environment of performing tasks of this nature produces the risk of overworking resources and having time-consuming and unreliable version control.

• Audit trail weakness. In a manual reporting environment, certain adjustments (especially ones made within Microsoft Excel or Word) lack traceability and auditability. This lack of an audit trail prevents auditors and management from identifying an improper separation of duties, which increases the risk of incorrect or misleading data. Adverse audit opinions are formulated in that situation.

• Lack of process flow insight. A convoluted and/or manual reporting process may not only prevent organizations from identifying the status of the reporting process but may also result in goal progress bottlenecks and duplicative processes. Organizations need to be equipped to identify these issues immediately, instead of handling delays with deliverables and reduced time for reviews.

DL has collaborated with our business partners for over 4 years to develop a standard Commercial-Off-The-Shelf (COTS) Corporate Performance Management (CPM) solution that is compliant with both OMB Circular A-136 and the Treasury Financial Manual. Our solutions work in conjunction with any existing Enterprise Resource Planning (ERP) systems and are deployable to either on-premises or Cloud environments in a quick timeframe. DL’s standard solution provides many benefits, with the key advantages highlighted below:

• Integration of multiple data sources. DL’s solutions respond to multi-stream data imports from different GLs by creating a common accounting structure. We incorporate data-calls into a financial reporting workflow to capture all financial and non-financial data, eliminating the need to build separate applications for footnotes and financial statements.

• Incorporation of validations, reconciliations, tie points and edit checks. Our standard solution performs those checks with one click, providing more time for review and analysis.

• Increased auditability of the financial reporting package. DL ensures the solution (specifically tailored for the customer) provides insight into the balances allowing identification of the source, rationale for the adjustment, and the ability to drill down to the transaction. All data points incorporate embedded audit trails and allow for the ability to attach supporting documentation. Data entry audit reports enable visibility into all changes that have been made within given parameters (e.g., user, time, organization, etc.).

• Insight into the reporting process. DL’s ultimate goal is to enable organizations to identify the status of the close process as well as when tasks are behind schedule. Our solutions also integrate review steps within the workflow process, giving management time to review and an avenue to provide reporting process input. We use a bottom-up approach that allows users to see the comments and supporting documentation associated with workflow completion from all users across the organization (based upon the security model). This type of workflow process sheds light on what is driving the amount of time users take to submit each step, which ultimately creates an outlook of what is happening inside the organization.

The incorporation and trustworthy cohesion of data within these solutions provide reassurance and knowledge that the data is complete, accurate, on-time, and is reconciled with all reporting requirements. Task automation decreases the amount of time it takes to conduct reconciliations and produce internal/external reports and affords more time to review and analyze the data. DL’s solution has been deployed to numerous Federal agencies providing a repeatable, effective, and efficient process allowing more time for quality analysis and review. These solutions can radically transform the reporting life cycle and are scalable to generate agency-wide financial reports down to bureau and component level financial reports.

Written by:
Brian Klishis
Lead for Financial Statement at Definitive Logic
and Matt Reeder
OneStream Developer at Definitive Logic

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