PDF File: 

cfo3_3_74_sp_movaris.pdf

Movaris, Inc.

Movaris® transforms the Last Mileof Finance^SM - tasks performedduring account reconciliations,SOX compliance and financialclose - into a repeatable andefficient process.

Movaris helps finance organizations transform their Last Mile of Finance – the series of manual tasks performed during account reconciliations, SOX compliance and financial close – into a repeatable and efficient process.

Today most companies experience disconnected processes between the systems used to collect and consolidate financial results with the qualitative controls, reconciliations and close tasks required to disclose those results. Companies rely on Excel spreadsheets, Word documents and other manual processes to address this problem, but these often lead to material weaknesses and inaccuracies requiring restatement of financial results – both of which have an adverse impact upon the corporation’s credibility and market capitalization. To address this problem, to adopt stronger practices around the financial close process and to improve compliance and regulatory reporting, finance organizations are looking for a better way to close and report.

Material Weaknesses and Restatements Continue to Grow

In 2005, restatements of financial results for companies with U.S.-listed securities almost doubled from 2004, increasing from 619 to 1,195. Likewise, 14.2 percent of public companies disclosed material weaknesses in 2005 (as of May 15, 2006). Although the majority of these companies have only one or two material weaknesses, even a single material weakness in a company with hundreds or even thousands of controls can have significant negative consequences. In addition, all companies – whether they successfully complied in their first year or not – must sustain compliance in subsequent years at considerable effort and cost.

According to data from Audit Analytics, deficiencies associated with tax accounting represented the most prevalent kinds of material weakness, followed by revenue recognition and a list of other GAAP application issues. This is consistent with the guidance provided in the PCAOB’s Accounting Standard #2, which states that “Identification by the auditor of a material misstatement in the financial statements that was not initially identified by the company’s internal control over financial reporting, is a strong indicator of a material weakness.” The issues around the proper application of GAAP are reported to be related to the lack of qualified personnel and complexity of new accounting rules that are riddled with opportunities for error.

A second source of deficiency is operational finance, which includes process problems or breakdowns in the operation of the financial reporting process. This category of issues does not involve the numbers themselves, but rather the processes (finance, IT or others) to ensure that the publicly disclosed financial statements are fairly stated.

New SEC and PCAOB Guidance Likely to Be Evolutionary Rather Than Revolutionary

The general consensus is that Congress is not likely to change the basic SOX requirements anytime soon. Based in part on pressure to streamline controls and reduce workload and costs of financial reporting, the SEC and PCAOB intend to issue new guidance regarding internal controls over financial reporting. The proposed PCAOB standard includes more focus on risk and materiality to drive efficiency and effectiveness; increase the ability to rely on work of others and to consider past experience; and place more judgment in the hands of management and the auditors. The guidance also focuses companies even further on the financial close process and urges a top-down, risk-based approach so that companies and auditors focus their efforts on those areas most likely to have the potential for material misstatements.

A Better Way: The Integrated Close

Analyzing these recent reporting issues reveals that most could have been identified and addressed during the close process, prior to financial statement reporting. An Integrated Close – the integration of data and activities across internal controls and the financial control process – accomplishes the following goals:

• Identifies material weaknesses prior to reporting
• Shortens the close process time frame
• Minimizes the high cost of compliance and financial close processes
• Instills more confidence in the financial disclosures

The financial and control reporting paths weaken in the Last Mile of Finance – the latter phase where the close activities take place. The close activities are less formalized and less iterative. Therefore, close activities require more analytical steps that are usually manual, disconnected and only partially documented. The internal cost of resources to conduct these close tasks, including the testing of insignificant controls, is high. With little documentation and no formal close process, the audit cost is also high. The risk of finding control issues after financial reports are completed can result in material weakness disclosures and even restatements. In a single close the “last mile” is automated. Only with process automation can the close steps be standardized and synchronized to identify and assist in remediation of close issues involving controls and financial transactions. With complete documentation and synchronized processes, the single close provides a single “system of record” for the company.

A single close links financial numbers and close activities with the key internal controls for financial reporting. It facilitates the close to successful completion by automating the activities to enable coordinated and easily managed processes. In addition to helping companies mitigate the risk of material weakness disclosures and financial restatements, a single close reduces the time and cost to close. A single close is only possible with documented, formalized and automated close processes that synchronize the financial close steps with the key internal controls for financial reporting. The system must also provide a clear status of important controls and critical close tasks early enough in the process to allow issue resolution prior to financial close. Over time, companies that perform a single close will reap impressive benefits. With coordinated control management and financial reporting, companies and their auditors will be able to focus most of their time on fewer higher-risk control activities and important value-added analysis.

Movaris® OneClose™

Movaris OneClose is a comprehensive suite of financial compliance and close applications designed to reduce the risk of material errors while driving efficiencies into the Last Mile of Finance. Movaris OneClose is the industry’s only solution that integrates enterprisewide account reconciliations, SOX compliance and financial close tasks, efficiently validating the process behind disclosing financial results. As a result, the office of finance can concentrate on its strategic role of creating value for shareholders.

Movaris® OneClose™ includes:

Financial Statement View: As the financial statements come together, OneClose users quickly drill down by financial statement line item to know the status of key reconciliation and compliance tasks. Internal reviewers and auditors can even check backup documentation online, keeping tabs on the crucial details that drive the business.

Close Status Console: Efficiently manage the close from a single dashboard. An aggregate view of key tasks, late actions and unlocated differences provides insights into high-risk accounts and material breakdowns.

Auditor-Client Collaboration Manager: Provides a collaboration environment for companies and their financial close activities.

OneClose e-Binder: Creates a system of record for all close, reconciliation and compliance activities. Management and auditors can later quickly retrieve all documents necessary to reconstruct a financial period.

OneClose Platform: With powerful work flow, scheduling and action plan capabilities, assigns tasks to performers and reviewers, then integrates account reconciliations with SOX compliance testing and financial close activities.