Summary: The CFO and Controller at a mid-market telecom company saw that their accountants began every year with a huge backlog of work. The backlog took months to resolve and created the need for several manual controls, raising a risk for auditors. Grant Thornton tax, control and advisory teams collaborated to refine controls and implement a solution that resolved risks and paid for itself in just over a year.
For an innovation to succeed across a company, it must be driven by sponsor support.
But what happens when those sponsors leave the company?
The CFO and Controller at a mid-market telecom company saw that their accountants began every year buried in a backlog of projects to close out and assets to log as in-service. The accountants relied on manual processes and needed months to catch up on the backlog – causing a lag that raised a risk for auditors.
The manual processing grew out of a lack of coordination across various teams and systems. For instance, when the company built a telecom tower, its engineers created a list of assets to order. But they didn’t have a system to efficiently share that list with the procurement team, the operations accounting team and, ultimately, the corporate accounting team.
Engineers had to manually enter the materials they wanted to order because there was no consistent list of products to select in their enterprise resource planning (ERP) system. Across the various teams, one item had different product numbers, or even generic product numbers on some requests. “They had no primary source of records,” said Grant Thornton Business Consulting Director Duke Steamer. “The process was just brutally broken.”
The people who purchased, processed and reconciled assets had developed their own Excel spreadsheets, which they emailed to the next team in the project flow. “Multiple groups were involved in the process, but they were never really talking. There were great barriers between them. When they ultimately sent a project to corporate accounting, accounting already had hundreds of projects still sitting in their inbox – they hadn’t had time to manually key them into the fixed asset register. They were literally keying in assets, figuring out how to group them and how to validate them,” Steamer said.
“They don’t want to have people up on towers in the dead of winter. They can’t be digging trenches for fiber cable when the ground is frozen rock-solid. So, at the end of the year and in Q1, they were suddenly forced to process over a thousand projects… It caused a lot of estimation and frustration on their external auditors’ side. That raised an alarm.”
-- Grant Thornton Business
“The biggest problem for them was trying to close out a lot of capital projects in a very short period of time,” Steamer explained. Winter weather meant that outdoor work had to be completed in the warmer months. “They don’t want to have people up on towers in the dead of winter. They can’t be digging trenches for fiber cable when the ground is frozen rock-solid. So, at the end of the year and in Q1, they were suddenly forced to process over a thousand projects, close them out and actually book the fixed assets,” Steamer recalled. “They had major backlogs of projects going into every single year that would take four months to close out. It caused a lot of estimation and frustration on their external auditors’ side. That raised an alarm.”
The CFO and Controller sought outside expertise to help the company find a resolution. But the problem had many nuances, and the disparate processes had many moving parts. Initial conversations with consultants failed to uncover a clear solution.
After working with a range of financial advisory firms, the company selected Grant Thornton – asking the firm to focus on improving accounting policies and procedures, internal controls, processes and financial reporting. The first priority was to bridge gaps in the company’s risk controls.
Targeted robotic process automation (RPA)
External auditors had found 17 control risk areas that the company needed to address. Initially, the company hoped to improve controls while implementing a new ERP. But further evaluation revealed that replacing the current ERP would require more time and investment than was wise amidst a potential contract buy-back that was a third of the client’s revenue and profits.
So, Grant Thornton shifted from software implementation to targeted problem solutions, developing a strategic roadmap for enhancing the organization’s finance and accounting efficiency. The roadmap would require consistency and collaboration across the enterprise, and across teams from the firm.
“The CFO asked us to come in and act as one team. He didn’t want to deal with the tax people, the control people and the advisor people separately,” Steamer said. Grant Thornton collaborated to share whatever the tax, control or advisor teams learned – and each team gathered important institutional knowledge. “We had towers of knowledge that we could tap into across service lines. So, that was a huge benefit for us as a program, and for the client overall,” Steamer said. “You weren’t seeing things three times. You were seeing them once, because we had representation of all groups, at one time, in the room. We collapsed the walls between teams. We knew every component of the business, based on what we touched. We did everything but climb a cell phone tower, really, and could solve things from beginning to end. That’s what made the project so successful.”
“We collapsed the walls between teams. We knew every component of the business, based on what we touched. We did everything but climb a cell phone tower, really, and could solve things from beginning to end. That’s what made the project so successful.”
-- Grant Thornton Business
Using this breadth of knowledge, the team helped the company implement the roadmap for improving efficiency. “The original frustrations were a matter of getting the right information,” Steamer said, recalling the core issue of inconsistent product names and product numbers. “That’s where the product master helped. That was much more consistent and that flowed all the way through the process to the point of the fixed asset team.”
Then, the team implemented automated data entries and uploads that shored up control deficiencies. By streamlining manual work, the automation made resource hours available for other work. It also had the benefit of making the company examine its processes. “It forced them to clean up and fix their processes – if they wanted to automate it, they had to make it consistent. They had to make sure the way they ordered things was always the same,” Steamer said.
The Grant Thornton finance team guided the process assessment and redesign work, with the digital team completing the automation work. The effort also tapped into Grant Thornton expertise from advisory accounting, audit and tax, to help ensure that the company could complete work and meet regulatory requirements more efficiently.
“The new processes put a focus on ensuring accuracy, because they removed so much duplicate, triplicate data entry,” Steamer said. New automation, combined with new controls, reduced risk. And the company’s total number of risk controls did not increase because the project reduced controls in other places. “We actually eliminated some controls as part of this project,” Steamer said. While reducing risk and achieving efficiency, project leaders also continued to build relationships in the organization.
New sponsors, consistent success
“Over the course of this project, we lost our key sponsor – who was the Controller – and our other key sponsor, who was the CFO,” Steamer explained. “Even the CIO changed during that time. We had to establish new relationships, with the new Controller basically becoming our new sponsor. He realized the value that we brought to the table and the knowledge we could provide him.” Throughout the project, sponsorship remained important to help steward the efficiency goals. “A lot of people feel like ‘just grow the business.’ Yet, the Controller knew he had to resolve the control risks, which meant improving systems and processes,” Steamer said.
“We were definitely impacted by the change in leadership, especially on the operations side.”
-- Grant Thornton Business
Even the company’s COO changed during the initiative. “The COO was new when we were presenting our findings for the finance transformation project to the board, and he was a part of that meeting. We were definitely impacted by the change in leadership, especially on the operations side,” Steamer said.
Amidst all of these transitions, the project achieved its goals for the company – saving cost, improving efficiency, boosting accuracy and lowering risk.
This project constituted the first phase of a larger RPA initiative. So, the team not only delivered immediate returns, it developed a series of recommendations for further improvements. Overall, the project helped the company understand the potential returns and value of internal efficiency. “It helped them think about the processes, think about what was wrong and forced them to clean them up. RPA was the catalyst for that,” Steamer said.
The telecom company collaborated with Grant Thornton to redesign processes and implement automations that achieved:
- Saved cost: The project work returned 100 percent payback within 1.2 years, and 160 percent payback over three years.
- Saved time: Between 3,200 to 3,500 hours per year were reallocated to more value-added activities.
- Improved accuracy: The accuracy of asset processing improved for the overall fixed assets process.
- Lower compliance risk: The automation served as an effective internal control that addressed an identified material weakness.
- Identified adjustments: Project work identified $1.5 million in balance sheet adjustments and $89,000 in income statement adjustments.
- Updated controls: Analysis of 238 Sarbanes Oxley controls resulted in 67 control updates recommended, 65 new controls created, 108 controls enhanced and 65 key controls removed, to achieve better compliance without additional controls beyond the initial 238.
- New recommendations: Analysts developed more than 150 observations for management’s consideration, to improve operations, technology, organizational structure and internal controls.
Managed projects: The team created, managed and plotted 23 unique projects on a roadmap to enhance the efficiency and effectiveness of the organization, processes and technology.
“The bot did the work of five full-time equivalents in the first two weeks of go-live.”
— Director overseeing the project at the client
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Director, Business Consulting
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