Long Lead Times Associated with the Customization of New Financial Reports

 

Facts

User requirements in respect of financial reporting can change over time but getting those adjustments made in a timely manner can be very difficult and involves the scheduling of time with an already busy IT department. As a result this leads to an explosion of ad hoc Excel reports that take data from different systems or which may simply be for a more complex computation.

 

Expectations

The implementation of financial reporting tools that are suitable for end-users is important to avoid preparation of reports manually.

 

Solutions

FlexSystem has developed technologically advanced new financial reporting tools for supporting end-user computing. Financial reporting tools integrated with FlexETL is LamiShow. FlexETL provides standard report function allow users to generate report in X, Z, Y, WX, WY direction, while LamiShow provides the specific needs of Accounting Practice in term of measurement & presentation of information for statutory audit as well as internal management. 

 

Benefits

Upon implementation of the system, inter departmental tensions amongst management, the financial department, the IT department and service vendors are gradually reduced. Management can have access to more timely information to support their decision making when the system allows for end-users to create and run financial reports very quickly and costs associated with this process are reduced significantly.

IAS 1: Presentation of Financial Statements

Facts

Key distinctive features of this accounting standard are its overall requirement governing the minimum allowable presentation of financial statements (rather than specific measurement, recognition and disclosure requirements) and compatibility with released previous period information on what is assumed to be an annual basis.

To ensure compliance in the preparation of financial statements, understanding implementation issues deriving from these overall requirements such as comparative information, materiality and aggregation, reclassification, and offsetting are crucial.

Requirements governing the presentation of financial statements change over time so to achieve continued compliance your accounting system must have a strong capability to adapt to required changes with minimal effort.

 

Expectations

An accounting system must able to meet continuing changing requirements in respect of presentation of financial statements and is critical to maintain timeliness and quality of financial information.

In addition, costs associated with each change can be great if your accounting system cannot offer the required infrastructure to facilitate the transformation of financial data and reports. Any speed improvement through adoption of software technology that reduces system waiting time and improves productivity at the cheapest deployment cost is vital.

 

Solutions

FlexCalc minimizes costs and times associated with implementations offering a dynamic approach supported by a sophisticated rules and query engine. Most importantly the processes of setting up financial reports are separated from data collection, data transformation and data storage. Any change in presentation of financial statements may not necessarily result in a change in all other processes and additionally the system is able to support concurrently different presentation scenarios.

 

Benefits

The system is able to follow continual and incremental changes in presentation requirements through the configuration of new processing rules and query formulas so that the useful life of the system can be greatly improved.

 

Inter-company Reconciliation

Facts

Increased time is being spent on the reconciliation of accounts over different companies within a group as they dynamically evolve across different business sectors and locations.

 

Expectations

A system that allows for the preparation of cross ledger vouchers as if it were a single company would in fact avoid most issues within inter-company accounts.

 

Solutions

FlexCalc supports the user-defined auto-generation of vouchers attributed to individual legal entities as a result of the preparation and posting of cross ledger vouchers.

 

Benefits

Upon implementation of the inter-company automation module of FlexCalc, inputting inter-company vouchers no longer requires the input of relevant account codes and avoids most of the typical discrepancies of inter-company accounts.

Detailed Information of Debtors and Creditors

Facts

Financial management relating to debtors and creditors can involve looking at very detailed information and to achieve this finance staff have to export raw data from their accounting and related systems to spreadsheets in order to compute account settlement and foreign currency revaluations for all relevant accounting transactions; this is necessary as the existing accounting system can only provide debtors and creditors at a macro or highest level.

 

Expectations

Finance staff want an accounting system that can handle business transactions at a micro level so as to support the relevant automation of account settlement and foreign currency revaluations.

 

Solutions

FlexCalc has a built-in a Contra Item module to support the automation of account settlement and foreign currency revaluation at a micro level. This supports management in the review of the relevant detailed information for debtors and creditors directly from the accounting system.

 

Benefits

Relevant information for debtors and creditors can be provided on a more timely and accurate basis. Most importantly finance staff can now focus on providing more insightful management reporting based on various analytical reports generated by the system.

Non-IFRS Requirements of Credit Control

Facts

The recognition criteria for accounts receivable for IFRS is different from that of credit control due to the fact that it also covers unearned income for signed sales agreements. This motivates finance staff to delay the recognition of accounts receivable to avoid doing reversal adjustments of unearned income during each financial close. Most up-to-date accounts receivable positions thus rely on the use of spreadsheets that cannot be deployed effectively over a multi-user effectively.

 

Expectations

Accounting systems that support the posting of accounts receivable to future periods in order to support both IFRS and non-IFRS requirements is crucial to avoid manipulation of data within the accounting system.

 

Solutions

FlexCalc supports an impressive data import capability when used together with the posting of any multi-period contracted income thus avoiding any tedious work.

 

Benefits

The credit control function can be implemented and executed to enhance your short-term liquidity position and most importantly all relevant staff can retrieve the most up-to-date accounts receivable information in both a multi-user and multi-location environment.

Challenges in Handling Complex Rules of Cost Allocation

Facts

The most common cost allocations are related to reallocation of cost from shared service centers to other service centers and business units. There are three main types of cost allocation methods namely direct method, step-down method and reciprocal method.

The results of cost allocation will trigger the preparation of additional vouchers with a lot of accounting entries. Additional problems are that relevant voucher posting will affect inter-company current accounts, inter-company management fees, computation of staff incentive payments, taxation and consolidation adjustments of consolidated financial statements. Any additional adjustment will trigger a series of further adjustments.

  

Expectations

It is highly expected that a system improvement project is able to eliminate most mechanical work in respect of cost allocation.

  

Solutions 

FlexCalc is a rule-based accounting system and not only allows for the configuration of different types of cost allocation rules very efficiently but also allows for them to be stored and reused. It is very useful when users want to avoid massive volume of adjustment vouchers posted to the ledger system during the monthly closing review.

  

Benefits

The mechanical works in respect of cost allocation are eliminated and in addition, the readability of each account ledger is improved significantly as most of the dummy adjustment vouchers are removed by the ledger system.

Shortening Cut-off Date of Financial Close

Facts

For every delay of financial close finance staff always claims that there are a lot of creditor invoices and statement of accounts pending to receive in relation to previous month’s business activities.

  

Expectations

CFO believes that for any good received and service rendered of the company there shall be existence of signed documents such as purchase order, good delivery note etc. So finance department shall be able to complete the financial close within few days immediately after every month-end.

  

Solutions

FlexCalc has built over a lot of specialisation of modules and functions. The bottleneck of the above situation is due to the issue of recognition of liabilities. The CFO can consider implementing the Contra Item in order to capture all relevant liabilities as soon as practical prior receiving invoices and statement of accounts. Most importantly, FlexCalc can implement along with other accounting system as FlexCalc is merely one of implementation options working with Contra Item despite it is the best combination for long term consideration.

 

Benefits

Upon completion of implementation of Contra Item, most of incurred liabilities can be captured by the system within one business day no longer rely on receiving all relevant invoices and statement of accounts in order to complete finance close despite there are triggering minor adjustments upon settlement as resulting of close book much earlier than before.

Frequent Amendment of Computational Rules

Facts

Changes in the speed of business often with proportionately less resource together with legislative change causes major issues in keeping up not only with reporting but keeping users fully appraised of what is happening in their business.

 

Expectations

One can adapt fast to changing environments but this can be greatly enhanced by technology that facilitates the tasks to be undertaken by users.

 

Solutions

FlexCalc is supported by the latest in-memory and compression technologies that allow users to be very productive and also uses a visualization interface that gives you fast results even to mobile devices.

 

Benefits

An incremental return on investment as changes can be done iteratively and in a timely manner.

Maintenance Issues of Chart of Accounts

Facts

Every business day involves chart of account maintenance especially when there are new combinations of analysis dimensions or whenever a new segment of account code has to implemented causing a time consuming exercise to re-do data migration.

 

Expectations

Users expect that a new accounting system can provide a flexible design of dimension code setting so as to motivate them to input most of the analysis data directly into the accounting system.

This is an example of why finance staff usually escape from the input of data into the accounting system when an alternative use of a spreadsheet allows them to design a lot of independent dimensions across different columns which in the long run is a more expensive option.

  

Solutions

In addition to a long account code, FlexCalc also supports users to configure user-defined dimensions so that there is no rigid dependency between the chart of accounts and differing dimensions. Most importantly users can configure validation rules for each account code and dimensional code so as to avoid invalid combinations of relevant codes that may exist in vouchers.

 

Benefits

Upon implementation of the new system, there can be a substantial reduction in the number of account codes which supports reduced administrative work in respect of adding new dimensions to the accounting system.

Comprehensive Related Party Disclosures

Facts

Existing modular designed accounting systems struggle in respect of related party transactions when prevailing accounting standards demand for disclosure of a related-party transaction of a balance sheet type account as well as including a profit and loss type account.

 

Expectations

Users expects the voucher preparation process to support the posting of all relevant associated dimensional codes that cover both balance sheet type accounts, and profit and loss type account.

 

Solutions

FlexCalc can be implemented on a modular design basis to support the operation of multiple modules including payable and receivable ledgers without losing any dimensional codes whilst recording related party transactions. In addition, FlexCalc is integrated with an impressive query engine that can support both fast and comprehensive aggregation of financial information across different modules for a group of companies.

 

Benefits

The lead time for completion of statutory audits is greatly reduced as well as supporting for more frequent monitoring of related party exposures.

 

Localization Issues of Global Standardisation

Facts

As each economic region has differing sets of regulatory and business requirements, unifying the accounting practices of a company throughout the world will motivate regional finance offices to maintain two separate accounting systems meaning that accounting costs increase for every business transaction.

 

Expectations

Regional finance staff have the expectation that their headquarters will understand their individual needs for localization and are willing to work together to reach an implementation model that supports both fast consolidation as well as maintaining compliance for local requirements.

 

Solutions

The ability to support the implementation of multiple homogenous sub-company groups is a basic function of FlexCalc. In addition, the headquarters’ finance staff can configure the ledger consolidation module of FlexCalc to run the standardization process automatically for different charts of account and currencies across different companies that may be located in different economic regions.

 

Benefits

Regional finance teams no longer suffer from the duplication of work and are able to easily meet local and global regulatory requirements plus any underlying financial information for consolidated financial statements will becomes more reliable when regional finance staff can concentrate on local requirements.

Project Level Trial Balance Not Balance

Facts

Managing construction and engineering businesses usually involves focusing on project level financial statements but existing implementations of an ERP suffer from non-balancing trial balances for every project. Extensive reconciliation work has to be done to rectify these trial balance reports in order to support the preparation of project based financial statements.

 

Expectations

The expectation is that when a system can support voucher validation and double entry recording for every business transaction then a project based trial balance should be easy to achieve in practise.

 

Solutions

FlexCalc is capable of interfacing with third-party ERP systems thereby ensuring the successful implementation of a double entry recording methodology for every business transaction.

 

Benefits

The management of construction and engineering businesses can obtain a full set of financial statements for every project and every group of homogenous projects without suffering from the issue of a non-balancing trial balance.

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