An Accounting ProblemJoin now to read essay An Accounting ProblemThe annuities department was faced with an accounting problem. The current accounting system would be obsolete in a few years and our business customers are currently experiencing resource issues when problems arise and support for this system is required.
Since financial reporting is a complex process, convoluted action was required to resolve this problem. The annuity technology group, along with the annuity business group came up with three possible solutions and conducted a high level requirements analysis and a cost benefit analysis to determine which solution to implement. The solutions analyzed were, do nothing and stay on the existing accounting system, go with a new accounting system designed and built by our Life Insurance partners, or build our own accounting engine.
The requirements and cost benefit analysis took several months to complete and a final decision would not be made until 18 months after the initiation of this project. The end result of the requirements and cost benefit analysis concluded that it was most beneficial to our business partners to build our own accounting engine; however this was not the elected solution.
Our suggestion to do nothing was not feasible; we were already facing resource issues for existing accounting problems. Additionally, through requirements analysis, we discovered that no future enhancements would be made to this old system, as the annuity business unit was the sole user of this system. Early on, we were able to eliminate remaining with our existing accounting system as a reasonable solution.
External pressure from our Life Insurance partners wanted us to commit to using their services. Life Insurance had designed and implemented an accounting system a few years ago that provided wonderful functionality. This system is being used by most of the enterprise although there is no corporate mandate requiring administration areas to use it. While the functionality of this system is quite detailed and impressive, it fails to meet all of the needs of the annuity business customers. Because the annuity business requirements were quite extensive, the life insurance group could not commit to the necessary enhancements that would be required to their system to satisfy annuity users. Because of these business requirements, we then conducted an extensive analysis to determine what Annuities IT could do to satisfy the business requirements. The analysis revealed that we could build our own accounting system for only 25% of the cost of using the life insurance system.
With clearly documented analysis, many on the development team thought that the annuity technology solution was an easy sell. However, this was not the case. Negotiations between life insurance and annuities went on for months to persuade annuities to conform and join most of the enterprise in utilizing this new system. Some of the advantages that this new system could offer included using a centralized repository for accounts, account maintenance would not be needed for administration systems, and accounting would be streamlined and accurate for financial reporting. While the Annuities IT solution would provide the same advantages and meet the same financial reporting requirements, the biggest risk was not utilizing the centralized repository for accounts. After renegotiating the cost, eventually our annuity business partners elected to join the rest of the enterprise and utilize the life insurance solution.
Once the life insurance solution was elected as the alternative to solve the accounting dilemma, an action plan was developed for implementing the solution. The action plan involved the basic steps that are used for implementing technical solutions. The steps were programming, testing, delivery of software to the users, and training the users on the new software.
Six months after the implementation of the life insurance accounting solution, the decision to utilize this system has been deemed a success. Daily MIS reports and weekly status meetings are used to as evaluation tools to monitor the success of the implementation. The daily MIS reports indicate successful transmission and processing of accounting files in addition to accounting errors. The weekly status meetings serve as a communication tool in which action items are assigned for follow up and updates to problems are discussed. While these evaluation tools are indications of a successful implementation, this project was also deemed successful mainly because perceptions were effectively managed throughout the project. McCall and Kaplan (1990) state that there are three types of outcomes that result from decisions: First, decisions form policies and strategies for the organization or the decision
s. Second, the decisions are made by a process-management team. Third, the processes are structured in such a way that the decisions of the program team are fully understood and implemented. These outcomes are: • A detailed analysis of the operations and programs is carried out. • Assessment of the compliance of the programs and the safety and health of the program team. • Policy development and analysis of existing compliance programs and programs. This project also led to the establishment of a management organization where a representative has the responsibility to determine and implement policies that are consistent with their roles as a manager, representative of organization and/or in the administration of agency requirements. This organization is comprised of members of the agency management team that are qualified and equipped to do the job, along with other staff members, at the organization. The company maintains a database of all management data that a single account will automatically include. In 2009, the management organization of a public company had an internal accounting compliance report (EIB) and a quarterly summary, which are two separate statements. In 2009, the EIB came with an additional statement that stated that the company would update its data annually so that they can be reanalyzed. The EIB only included information provided by the organization. The report made recommendations regarding future actions using the data by the management team and required the management organization to keep the information as current as possible, as well as the report in writing. After the report was provided to the organization in February 2010, the auditor found out and the EIB was no longer in existence and was replaced with a more complete list of the steps the company took to ensure its compliance. The company also provided the auditor with all relevant documentation that the EIB provided the auditor, including documentation such as a signed copy of the report or a written confirmation by the management team of the changes in this information that were made by the management team. After the audit, the auditor determined that the EIB failed to provide the requested list of measures to which they were required, or that the auditor could not provide a reasonable estimate of how much of this information could have been retained by them without making changes required in the EIB. This led an agency to issue an audit with a new report entitled “Report an Audit on a Customer’s Management and Security Experience.” The new report also stated that the management organization had made several changes in regards to the implementation of the data in their internal accounts. The manager and the auditor agreed that the EIB in September 2009 was not updated and that they were able to maintain their internal reports. Although the EIB was updated in late 2009, the auditor also determined that additional changes and fixes were necessary in order to ensure that the auditor would have an accurate view of the compliance of the organizations. In February 2010, the auditor announced that the audits had been successfully completed and that the company was in charge of all the management information that could have been retained for future audit. After the audit, the auditor had no further action taken and no further information was provided to the department regarding how to maintain records of the EIB. After the audit and after the government and Department of Revenue were notified about corrective actions to this EIB, the company began to work on the other three EIBs using a number of different techniques that include: the following 5 separate reports that were reviewed by CSA, CMS, OPA or other regulatory bodies throughout the year: • A review and report of all relevant customer experience data used by the organization. • A comprehensive review of a significant number of existing compliance actions for the organization. • A review of information that was received as part of these audits, including an audit report on financial reporting used for this audit. Based upon these evaluations, the