Closing and consolidation processes improvement
The Issue
Our client, the second largest steel producer in the world, has offices in 60 countries.
With more than 450 subsidiaries to consolidate worldwide, the reporting and consolidation process is very complex and required more than 60 days to complete.
As a result, the Executive and Audit Committees had very little time to review the group’s consolidated results before they are actually published. The committees wanted to change this situation and asked PricewaterhouseCoopers to help them accelerate the group’s reporting and consolidation processes.
Our Approach
The PwC engagement team formulated their response with a multidisciplinary team composed of Advisory, Assurance and Tax experts. A full review of closing and consolidation processes was conducted for all the major countries the client is involved in. Those involved in the closing process - financial, operational and systems professionals - evaluated and reviewed the reporting tools and processes used by financial management.
The team identified weaknesses in the process and made various kinds of improvement recommendations so as to optimize the process, enhance the systems and tools, set-up materiality levels, etc. PwC then designed and implemented system/process enhancements and short-term improvements so as to progressively enhance the timeliness and quality of quarterly financial reports. The engagement team supported the continuous improvement of the closing and consolidation activities through the setting up of Key Performance Indicators (KPIs), automated quality checklist, etc.
In addition, PwC provided organisational support for international training sessions. These were intended to train individuals on the new processes, policies and procedures as well as provide additional training related to the use of the financial reporting application and to understand IFRS standards.
The Outcome
The time required for producing the quarterly consolidated financial report was shortened by 30 calendar days, which represents a 50% reduction in the overall closing and consolidation period. The financial information reported from the subsidiaries to corporate headquarters is now more reliable and accurate.
The Executive and Audit Committee members now have time to analyse and comment on the consolidated results and prepare their communication messages accordingly, which ultimately allows the group itself to publish its financial results quicker.
