When FMC Corp. took a hard look at its internal controls, it saw a big opportunity to improve the visibility of its reconciliation process.

The company was also looking to move to a more centralized, well-defined, standardized process where judgment plays less of a role.

FMC decided to automate the reconciliation process using a commercial “software as a service” package. It identified more than 1,000 reconciliations that could be automated, with 160 of them considered key.

To accomplish that task, FMC began working with a financial transformation team at Deloitte & Touche less than a year ago to determine the smoothest way possible to transition from a manual, spreadsheet-driven reconciliation process to one that is entirely automated. That in itself represented a cultural shift, said Eugene Gallagher, HR controller for FMC, at the recent Compliance Week 2013 conference in Washington, D.C.

Its project leaders couldn't be more pleased with the results: “As a compliance person, this kept me up at night,” said Nadia Ciaravino, finance control compliance director for FMC. “If the balance sheet is not something I can know for sure is prepared the way it is supposed to, how can I sleep at night? Now I can.”

The company chose a software solution that provides automatic certification of low-risk, rules-driving reconciliations and templates that help standardize the reconciliation process across all business units. The package provides an online document repository to store and protect all attachments, eliminating the need for shared drives and binders. It also provides built-in workflow to assure accounts are assigned, prepared, and reviewed by the right people at the right time.

Kyle Cheney, a partner with Deloitte who assisted FMC with its implementation, said organizations generally can gain a 30-percent improvement in efficiency through automating reconciliations. Ciaravino said the gains at FMC have been slower at first, but she believes a 30-percent improvement is likely as the company's process continues to smooth out over time.

Companies often begin automating the close by looking at the reconciliation process, said Cheney, because there's so much potential to improve efficiency and integrity in the balance sheet. It's also been driven in the past few years by a call on highly regulated companies to improve the transparency of the numbers that roll up to their financials, especially in the banking sector. “You can follow the audit trail back,” he said. “There's a lot of peace of mind when you have the ability to sign off on Sarbanes-Oxley and publish financials knowing definitely that all of your accounts are reconciled.”

Nadia Ciaravino, finance control compliance director for FMC, spoke to the crowd at CW 2013 about FMC's work to automate controls and improve the visibility of its reconciliation process. Standing on stage is her co-presenter Eugene Gallagher, HR controller for FMC.

Beyond reconciliations, there's plenty of opportunity to automate other financial close processes as well, Cheney said, by implementing capabilities such as close task management, fluctuation analysis, and journal entry work flow, for example. Automating the close enables companies to streamline a variety of accounting activities that are typically performed using manual, spreadsheet-driven processes. Fluctuation analysis lets a company focus on any variance it wants to manage comparing one set of data to another, such as period-over-period results, budget-to-actual figures, forecast-to-actuals, and others.

Tailoring Controls to Culture

Apart from automating controls, companies are also looking to tailor them to the culture of the organization so they reflect how the company actually behaves. The culture within an organization determines a great deal about its control environment, said Jose Tabuena, chief compliance counsel for Orion Health, who also spoke at the Compliance Week conference. He recently joined Orion, a 20-year-old organization based in New Zealand, and that in itself represented a bit of culture shock. “This is a whole different environment for me,” he said.

Orion Health is a software company that delivers interoperable, connected solutions for healthcare facilities and organizations. The company is focused on helping customers implement software that supports the protection of patient health information while also complying with security and privacy laws in various jurisdictions. It's a bit paradoxical,

Tabuena explained, for a company focused on technology, which is often thought of to improve access to information, to work closely in healthcare, where privacy is paramount. The need for a strong control environment that enables access yet is protective is significant, he said.


Below is an excerpt from FMC's CW 2013 presentation on how it improved controls for increased visibility into the reconciliation process:

Critical Success Factors

What is making this project so successful?

1.The Team and our partner – Small project team with clear and separate duties. Made of senior, experienced, and

well-respected individuals with authority

2. Clear project scope

3. Streamlined but deliberate project management techniques – including frequent communication, training, controls,

adherence to established times

4. Clear and effective deployment method – combining on-site training of key users and knowledge transfer to SMEs

per region to extend expertise locally

5. Adequate funding – assign responsibility for cost tracking and reporting

How do we know we are successful? (Key Success Factors)

1.Visibility of status of key account reconciliations – the status of all accounts is understood and monitored by the

finance manager and controller of each area. All outstanding items are known and resolved within 90 days.

2.Coverage – 70 percent of all FMC entities are using the system

3.User acceptance – 145 out of about 200 total users have been set up, trained and actively using BL with no


4.Adherence to process – the number of outstanding high risk accounts for the last 3 periods is very low and


5.Project status – completed 6 months early of initial timeline

6.Team credibility – Volunteers are stepping up to be part of the next activities in continuous improvement

Our partner

1. Great dynamics, effective team provided by Deloitte – Transformation Practice

2. What makes an effective partner:

Complete alignment on project, scope, timeline, price/value, approach

Technical capability

Attitude, flexibility, and cultural compatibility

Source: FMC.

Bavan Holloway, vice president of corporate audit at Boeing, said the aerospace company focuses on maintaining a culture that supports a strong control environment. “We talk a lot about what it takes to be successful within Boeing,” she said. The company emphasized what it considers to be six critical leadership attributes, including charting a course, setting high expectations, living the Boeing values, and others. “These things are fundamental to how we execute the operating part of our business,” she said.

The company has established a culture where ethics and integrity are driven not just from the top, but in the middle layers of the company as well, she said. “It's a shared responsibility for meeting our goals and objectives,” Holloway explained. “There is accountability for all, irrespective of the title you have. You are leading from where you are.”

During the past few years, the company has increased emphasis on using data analytics to determine where it might have control gaps that need to be addressed, Holloway said. “We go into an area where we know we have challenges in performance and controls,” she said. Working with the area subject matter experts, the company determines where it should have additional controls in place and pursues a plan to make it happen, she said.

Martin Espinosa, chief audit executive and chief compliance officer for Polycom, said his organization is in the midst of retooling its approach to enterprise resource management, and he's learning a great deal through the process about how to build a new control culture through such a change. “One of the most important things I learned is to communicate,” he said. “The first time you communicate something, assume it was lost in e-mail.” Use progressively more proactive methods each time you need to get across an important message, he said, to assure it is heard and absorbed.