How to Standardize Accounting Processes and Streamline Month-End Closing in a Global Company

Implementation of one ERP system with standardized processes, settings and functionalities in all subsidiaries brings numerous benefits to international companies. The most noticeable advantages, in my opinion, are those related to finance and accounting, such as standardized posting and reporting in subsidiaries, faster month-end closing as well as improved internal audit.

Poznań, Wielkopolska, Poland., January 20, 2014 - (PressReleasePoint) -

Architecture of the group solution streamlines global

To achieve the above-mentioned benefits, it is necessary to implement one ERP system in all company subsidiaries. As IT.integro, the system we rely on is Microsoft Dynamics NAV. Let’s have a closer look at three basic elements of such global solution architecture:

  • central database – all master data is stored there,
  • local databases – all databases are based on the Global Template for Microsoft Dynamics NAV which incorporates global assumptions for the entire group (e.g. process standardization) and their adjustment to the local requirements,
  • OLAP cube – collects data from local databases, it is used for reporting and analysis.

Exchange of standardized dictionaries between companies

The global solution assumes also the introduction of centralized dictionaries related to: organizational structure, activity, cost dimensions, customers, components, products, vendors etc. Master Data Management System for Microsoft Dynamics NAV, developed by IT.integro, facilitates the exchange of dictionaries between company subsidiaries.

Standardization of posting processes and reporting in international company

According to the presented architecture, the global platform based on Microsoft Dynamics NAV provides complete posting setup, including centralized chart of accounts for the entire group which must be compliant with international accounting standards such as IFRS and GAAP.  A standardized chart of accounts may contain only 3-5 ranges, in which local changes may be implemented (e.g. local costs, VAT accounts, cash registers and bank accounts).  What’s more, the platform contains uniform dimensions for multiple subsidiaries. With Master Data Management System for Microsoft Dynamics NAV it is possible to block modifications in this area for subsidiaries as well as any other changes in posting setup. 

Improved month-end closing, management reporting and consolidation

With the global solution based on Microsoft Dynamics NAV it is possible to use one month-end closing procedure in all subsidiaries. If an accountant employed in a subsidiary receives an appropriate instructions document from the headquarters, he can easily and effortlessly close the month in compliance with standards adopted by the entire group. Such a document should contain a distribution list and a description of the month closing procedure based on global data. As a result, we can speed up the whole process not only at headquarters but also in subsidiaries. By following the established procedure during month closing on a regular basis, the only thing the locations will have to do is simply perform the assigned tasks. With harmonized ERP solution and a list of analytical reports, the process is performed automatically within Business Intelligence solution. As all subsidiaries work on one standardized ERP system, each report is provided in a format requested by the headquarters. The first step, however, is to specify reports the month closing process should apply to.

Streamline internal audit

Adopting the discussed approach will also help to streamline internal audits. Posting settings are similar in all subsidiaries, which can significantly enhance work of the person responsible for conducting the audit. Without the aforementioned procedures, audits as well as group reporting become much more complicated. If multiple subsidiaries send their financial data in Excel worksheets, their checking and interpretation become a time-consuming and challenging task. The auditor working at the headquarters, unable to log into the local system and verify the correctness of data, must trust the data obtained from various company locations. As audits in respective locations are generally conducted by different controllers, standardization of posting setup will not have the same effects as standardization of posting setup in internal audits.

However, standardization of ERP systems does not affect the improvement of external audits.

By using one system in each business unit and ensuring a centralized access to databases, it is possible to log into any local database from the headquarters. A financial analyst is able to generate a report on a given subsidiary at any time. Preparing complex files by the subsidiaries is no longer necessary.

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