The Microsoft Corporate Accounting team is under continued pressure to close the corporation’s books and file regulatory reports ever faster. This team of financial experts used Microsoft SharePoint products and technologies to create a portal for coordinating financial close and reporting activities. They built the portal themselves, with no help from the IT staff, and recently upgraded it to Microsoft SharePoint Server 2010 to take advantage of productivity enhancements. By choreographing all closing and reporting activities in one place, Microsoft Corporate Accounting can close its quarterly books more than 50 percent faster, reduce the time to complete quality checks of its consolidated financial statement, and file quarterly 10-Q regulatory documents along with earnings releases. The staff works far more productively now and has more time to focus on moving the business forward. Situation
For years, closing the books and filing regulatory reports was a time-consuming, nerve-wracking process at Microsoft. Weeks were spent gathering figures, checking and rechecking sums, tracking down support documentation, and getting sign-offs. Mistakes anywhere along the process chain could have had serious repercussions for analyst assessments and the company’s stock price.
As each day during the quarter-end cycle elapsed, the tension mounted. With every refresh of business-unit financials came more questions from managers and auditors: “This account is up by 25 percent; does that make sense?” “Why did this balance change by this amount?” “These two numbers don’t agree; what’s wrong?” Answers and support documentation flew through email messages, were posted on file shares, and accumulated in thick three-ring binders.
||Being able to release earnings and file our financial statements sooner is a huge benefit to the finance community.
Director, Corporate Accounting, Microsoft
All the numbers and paper eventually came to a final rest in Corporate Accounting. There, a small team of financial experts was responsible for aggregating all the numbers and coming up with the final, official earnings. There were a lot of people, paper, and frayed nerves involved. The team wanted to spread the work out to various business owners so that it would not be a bottleneck. But to make the process more collaborative, the team needed better collaboration tools.
A key point of closing the books, of course, is to report financial results, which U.S. companies do by filing the U.S. Securities and Exchange Commission (SEC) Form 10-Q quarterly report and, at year end, the SEC Form 10-K report. Companies want to file these reports as soon as possible after their books are closed to meet SEC requirements, bolster analyst confidence, and provide timely and accurate information for business decisions. However, the 10-Q authoring process at Microsoft was so rife with people, process, and paper that after the closing, the Corporate Accounting staff would spend another two to three weeks authoring, circulating, reviewing, and revising the regulatory document. As a result, it took too long after closing the books to publicly report financial results.
“There is continuing pressure to release earnings faster to Wall Street while providing even more disclosures,” says Alice Jolla, Senior Director of Accounting and Reporting in Microsoft Corporate Accounting. “Our goal was to release earnings as quickly as possible while providing deep insight into our performance but also striving for an error-free, efficient process. During the lapse between books close and earnings release, you also increase the risk of subsequent events affecting your earnings and having to reopen your books to recalculate your financial statements.”
New government requirements also pressure accounting staffs to tighten timelines. In 2009, the SEC instituted a new Extensible Business Reporting Language (XBRL) reporting requirement whereby all 10-Q and 10-K reports had to be tagged with descriptors to enable electronic data mining. The XBRL tagging process added 100 to 200 hours of additional quarterly work to the reporting process. Microsoft outsourced a portion of the XBRL tagging work, and the provider required final financial reports 48 hours prior to filing. “Suddenly, we had to squeeze 48 more hours out of our closing process to meet the filing deadlines while absorbing the extra XBRL work,” Jolla says.Solution
In 2004, Corporate Accounting took steps to reduce the quarterly closing and reporting stress by speeding up the process with electronic efficiencies. The team realized that Microsoft made software to help people coordinate big, multiparty, multidocument efforts and decided to use the company’s own software to simplify the closing process.
Financial Close and Reporting: By Financial Staff, for Financial Staff
The Corporate Accounting team used Microsoft Office SharePoint Portal Server 2003 collaboration and document-sharing software to create a centralized web portal that they called Financial Close. The accountants used the software straight out of the box, with very few customizations, to get the first version of the portal up and running within a couple of days—with no help from the IT staff.
Instead of the financial staff in each separate organization submitting financial analyses as spreadsheets and other documents attached to email messages or posted to departmental file shares, they post them to Financial Close, along with all supporting documentation. The final version of the financial statements and supporting documents are linked to 10-Q or 10-K forms so that anyone questioning a figure need only click the figure to instantly see the documentation behind it. Financial staffers can create task lists for individual stakeholders that require additional information or analysis.
||With reporting times getting ever shorter, co-authoring really helps us fit document reviews into tight review cycles.
Group Manager, External Reporting, Corporate Accounting, Microsoft
The online task lists and calendars make it easier for people to manage their piece of the workflow. “At any given time, every team member is fully aware of where we are in the process and can pull any document they need to review,” Jolla says.
Continues Jolla, “We eliminated just about all the questions we used to get from auditors about the source of a number, due dates, and who to contact about a specific area during the closing and reporting process, because they can find their own answers on the portal. Instead of hunting through several binders, you can instantly see the supporting documentation and find out who signed off on every figure. This closed the time gap between closing and reporting earnings.” Upgrade to Improve Efficiency
In 2007, Corporate Accounting upgraded Financial Close to Microsoft Office SharePoint Server 2007 and, in mid-2010, upgraded to Microsoft SharePoint Server 2010 to keep pace with the product’s latest enhancements. Each upgrade required minimal work for the staff and, again, required no IT assistance. “We used out-of-the-box templates and simply updated our old site,” says Mimi Zhou, Senior Accounting Manager in Microsoft Corporate Accounting.
For Corporate Accounting, the chief benefit of upgrading to SharePoint Server 2010 was the improved integration with Microsoft Office 2010. “The co-authoring feature is huge for us,” says Paige Hamack, Group Manager, External Reporting, in Microsoft Corporate Accounting. Hamack is referring to the Office 2010 co-authoring feature, which enables multiple users to edit the same document simultaneously without intruding on one another’s work or locking one another out. The feature is automatically enabled for any Office 2010 document stored in SharePoint Server 2010.
“With earlier versions of Financial Close, only one person could have a document checked out at a time, but 10 to 12 people needed to review it,” Hamack says. “With reporting times getting ever shorter, co-authoring really helps us fit document reviews into tight review cycles.”
The team is also able to use the presence feature of Microsoft Lync Server 2010 within SharePoint Server. This feature uses colored icons within Office 2010 programs to show the availability of individuals. “If a colleague is working on a document in a SharePoint site, I can see that she is online and contact her for a quick conversation,” Jolla says. “Or, you can see if a person is available and send him or her an email or instant message within SharePoint Server. There’s no need to jump between programs.”
SharePoint Server 2010 also supports improved calendar synchronization between individual calendars in the Microsoft Outlook 2010 messaging and collaboration client and SharePoint group calendars. “It’s very easy to view, compare, and synchronize our individual calendars with SharePoint group calendars,” Zhou adds. “You can work offline and make changes to a SharePoint group calendar in your own Outlook calendar. When you sign back on, the calendars are automatically synced. This helps all of us stay coordinated. ”
On the security front, administrators can assign group, folder, and document-level access rights. Site owners have full access to Financial Close, site members can contribute content, and site visitors have view-only access. For example, auditors are given visitor access and have a full view of shared documents. “As we work on acquisitions and other sensitive accounting matters, we can set security levels accordingly,” Jolla says. “I can assign security at the document level and ask to be alerted when people change those documents.”SEC Reporting Site
Corporate Accounting created a separate site in Financial Close for creating and reviewing the SEC 10-Q and 10-K documents, which it now begins prior to the start of the closing process. Instead of sending the document around as an email attachment and coordinating edits from approximately 20 people, the team posts it to the SEC reporting site, where it is checked out and edited by all stakeholders. Supporting documentation, stored on the Financial Close site, is just a click away.
“This separate site provides an added level of security and access control for highly confidential financial information,” Hamack says. “Reviewers submit their comments on a live version of the document, and all changes and comments are tracked to provide a clear quality-control and problem-resolution trail.”Benefits
By using Financial Close, Microsoft Corporate Accounting has been able to streamline its complex, time-pressured financial closing and reporting activity; achieve significant time savings; and better focus its financial professionals on moving the business forward.
Books Closed More Than 50 Percent Faster
Since using Financial Close, Microsoft Corporate Accounting has shortened the quarterly closing process by eight to 10 days—a more than 50 percent speedup. “Being able to release earnings and file our financial statements sooner is a huge benefit to the finance community,” says David Rulon, Director of Corporate Accounting for Microsoft.
||QC work has been streamlined and has saved a significant amount of time, from approximately 500 hours to 36 hours, a 93 percent improvement.
Senior Director of Accounting and Reporting, Corporate Accounting, Microsoft
The team can move even faster when necessary to respond to unique business drivers. For example, in 2009, the quarterly closing and reporting process coincided with the release of the Windows 7 operating system. This caused many conflicts for key deliverables in the closing and reporting process. “We had an extremely compressed close cycle because of the conflict, but with Financial Close, we were able to complete close activities on schedule,” Jolla says.Quality Control and Review Completed 93 Percent Faster
The quality control (QC) process, which is an integral part of closing and reporting, is also dramatically faster. “We must make sure all information in the regulatory document is correct, and we cannot release our earnings before the auditors have performed all of their review or audit procedures. So speeding both internal and external QC speeds up our overall release,” Jolla says. “QC used to require getting 10 people in a room for five days and attaching pieces of paper to other pieces of paper before we could hand off the book to auditors. Now, auditors work simultaneously with us and only come to us with an occasional question. QC work has been streamlined and has saved a significant amount of time, from approximately 500 hours to 36 hours, a 93 percent improvement.”
The ability to store all supporting documentation in one location is critical to the Corporate Accounting team’s ability to answer audit and regulatory questions. When the SEC or auditors have questions about information in the company’s 10-K or 10-Q reports, Corporate Accounting can instantly access the data and all supporting documentation. There is no need to rifle through notebooks, employee inboxes, and hard drives looking for documentation. Quarterly Filings Completed Simultaneously with Earnings Releases
Early use of the Financial Close site reduced the time to file the 10-Q report by an average of eight working days, a 33 percent speedup. By 2005, Corporate Accounting had achieved its goal of releasing the 10-Q at the same time as the earnings release. In 2009, this included accommodating the XBRL tagging requirements. The team’s next goal is to achieve the same efficiency with the annual 10-K report.
“In FY10, we filed the 10-K in 30 calendar days; in FY11 our target is to file in 28 calendar days,” says Jolla. “Our earnings-release timeframes continue to shrink, and SharePoint Server is a great enabler in meeting them. Every minute that we save by eliminating redundant data entry, automatically synching calendars, locating colleagues for conversations, and reviewing documents helps us cut time out of the process.”
A faster earnings release reduces the risk of subsequent events impacting financial reports and shortens the black-out period during which executives must remain silent about results. Enhanced Productivity, Work-Life Balance
By using the software-assisted efficiencies of Financial Close, Microsoft Corporate Accounting employees are more productive and less stressed during closing and reporting periods. They experience dramatically reduced email volumes and can more quickly and efficiently locate and collaborate on documents in compressed timeframes. For the approximately 20 individuals involved in the 10-Q report contribution or review, each saves about four weeks of productivity loss annually.
“Microsoft has a focus on work-life balance and enabling employees to work remotely and efficiently,” Jolla says. “Being able to check out and work on documents during commutes and from home is a great productivity booster. One team member lives in Blaine [Washington], and between SharePoint Server and Lync Server, it’s as if he’s right here in the office.” More Focus on Moving Forward
A final benefit of faster closing is the ability to focus financial staff on the future rather than the past. “People are looking backward rather than forward,” Rulon says. “Our people now have more time to address current issues and provide business insights—things that move the business forward.”
Instead of spending three weeks a quarter on close activities, Corporate Accounting staff members now spend about one week. When business users ask for help, the team is less likely to say, “I’m in the middle of close; I’ll get back to you.” They are accessible to provide help to the business.
The bottom line for the company’s bottom-line reporters is more time to help Microsoft be successful. “SharePoint Server is so easy to use that we, as finance professionals, can concentrate on our core expertise and work more efficiently than ever,” Jolla says. “We can use our time for what Microsoft hired us to do—be finance professionals and add shareholder value.” Microsoft SharePoint Server 2010
Microsoft SharePoint Server 2010 is the business collaboration platform for the Enterprise and the Internet.
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