Finance Data supply

chain and Daily

Accounting Period
EY Point of View

January 2021

The better the question. The better the answer.

The better the world works.
 Agenda

Business Simplification 2
Citi Current State Finance Architecture 2
Use Case - Integrated Finance Data Supply Chain 4
o Guiding Principles 5
o Reference Business Architecture 6
o Integration Patterns for Journal Entry Generation 7
Daily Accounting Period 8
Finance Program Office 11

1
 Citibank Current State
Key Challenges
2 Adjustments
3 1 2 3
1 Accountability & Ownership Source Source System Product
REF DATA Consumers
Systems SDRs Processors
(260)
❑ Limited effectiveness of Issue Management & S2

Remediation POS FO
OPTIMA

Markets
❑ Inability to meet service level agreements for Finance OCEAN 2 3 GENESIS (Daily & Month end)
& Risk reporting; break in handoffs from/to ICG, GCB,

IFW
XRS

(EMEA/LATAM)
RSK
Risk and within Finance. AQUA Indicative &
Associations

DAP
GLRS
(Daily)

FAEM
Sec. Svcs.
Common
2 Daily Accounting & Process Standardization RSK FO Balance
Non-Consume

Comp.
RRAI

Bal
HOPI
❑ Large number of manual touchpoints and adjustments Common
(Month end)

to address operational processing and control issues Balance

FLEXCUBE (Bank in a box) Contract/ Consume

Data Bridge
❑ Inconsistent data quality, adjustment and Positions
reconciliation processes in/across Full Suite & LRR

TTS
Non-Core (Daily)
GENESIS RSK FO

❑ Reconciliation issues across key Regulatory Reports VANGUARD

Tactical Scripts/RH
(e.g. Y14, Y9C, CCAR, IRR) 2 S2
❑ Key gaps in supporting Daily & Intra-month Adjustments
Retail -
(Daily & Month end)

Accounting; end of day definition for batch processing

CPB
RSK FO BigData
2 3

Balances
❑ Lack of definition for logical end of day SDP
FULL
Ruby/IRR
SUITE (Month end)
GCB

Month end
FO

Recon
Operating GL
NextGen
Architecture
(Eg. FLEX, TGL)

3
SAS Others
(e.g. Reginsight)
❑ Lack of transparency and lineage for Financial,
Management & Reg Reporting 3 PEARL
2
❑ Lack of instrument level granularity within GENESIS
❑ Inconsistent processes and application of rules to 1 Governance 1 Governance 1 Governance 1 Governance
create the journals (260 product processors)
2
 Legend

Next Wave Finance and Risk Reference Architecture

Source Data Services

Virtually Integrated Store

Features Sourcing Enterprise Data Fabric Consume& Act Benefits

Data Fabric Decisioning Services

Common sourcing for Business driven analytics
enterprise data Product Finance and Accounting Risk & Compliance Finance Decision Reporting Reduced time for financial
Data is managed at a systems Credit Risk support and management key
Accounting Services General Ledger
granular level from source Mortgage & EAD/LGD/PD RWA FP&A Finance metrics (capital, liquidity,
to report Lending Calculation
Summarization Asset Liability Risk income). Drillable balance
Deposits Market Risk
Events Store GL Postings & Management Cognitive sheet and income statement
DRC / RRC / SBC Regulatory
Finance Services Credit/Debit Accounting Position Control with ability to explore results
VaR/SVaR ES RWA Treasury
Centralized control and Cards Orchestration Management at a lower level of
management of Allocation/ Liquidity granularity
Securities Subledger Services Consolidation Liquidity Risk
accounting calculation, B/S Forecast LCR / NSFR
Posting Engine Allocations
posting rules and account Derivatives Consolidations FR2052a Liquidity

Business Data Services

treatment Multi-Basis Ledgers Measures Buffer
Inter Company Capital Use Analytics Speed to market
Cash Payments Validation
Error/Suspense Tax Counterparty Risk Capital Management All data is readily available
Business Data Layer CFO dashboard
Online to respond quickly to any
Drill down from GL with changes and cater to
Controllers
finance process Master/Reference Dashboard internal and external
Ingest, Capture, Persist
capabilities such as Data stakeholders
balance reclass, multi- Business Data Layer Predictive
currency, etc. to support Detailed Accounting Data Forecast Planning & Budget Risk
Unstructured
Financial, Management Data Quality of information
Treasury Portfolio Instrument Other
and Regulatory Reporting Data as a Ability to reconcile reports
Self Service Service
back to books of the bank
External data Data Catalog
Data Fabric Source Registry Schema Registry Metadata Catalog Policies Event Store Adhoc (GL) and system of origin
Decisioning Services Pricing & Rates analysis (SOO)
Intelligent decision What-If
services enabling Valuation Data Persistence analysis
workload management Rating agencies Scenario Standardized Services
for hybrid/ multi-cloud Data analysis Availability of standardized
environments and common data, with
On-Prem Public Cloud Private Cloud SAAS Vendor Cloud Mobile
common finance and control
Streamlines
Monitor, Secure, Govern, processes
consumption Curate & Audit
Reports and dashboards
driven from certified Data Management Services Monitoring Services Operational Services Foundational Services
source driving greater Data Definition Data Protection Data Lineage Data Mapping Infrastructure Workload Checks & Balances Error Handling Adjustments Content Logging Caching Tokenization
confidence in reported Data Quality Data Governance Data Security Data Provisioning Policy Log Reconciliation Operational processing Event Cloud Alerts Security Gateway
metrics

3
 Integrated Data Supply Chain Journey
Case study: Implementing Daily Accounting Period at a Top Global Bank

Global Universal Bank

Problem Statement
• Engaged with a global universal bank to develop a finance strategy as well as design and implement a global function to deliver an
effective and responsive finance service at optimal cost employing a common and transparent global model
• Current state consisted of manually intensive, transaction driven finance organization based on non-standardized processes across
regions and business units. Additionally, there were multiple chart of accounts and ledgers and a legacy of fragmented systems.
There was no drill down capability to instrument level details
• The objective was to standardize and centralize finance processes globally enabled by an integrated finance platform with common
data model

Solution Overview
• Implemented a multi-currency, multi-GAAP finance platform globally that produces balance sheet and P&L reports on a daily basis
• Established a consolidated data supply chain to enable a high volume platform for Finance and Risk
• Introduced universal journal for every product posted at a customer contract level with common chart of accounts and standardized
global processes
• Delivered a centralized accounting engine and detailed instrument subledger for all products facilitating transparent drillable
reporting and maintaining a connection to underlying core business events
• Introduced a single source of financial control – working from a common data repository – that produces mandatory, regulatory and
internal management reporting
• Established daily accounting periods for general ledger and instrument subledger
• Built automated daily balance reconciliations between source systems, GL, and instrument subledger
• Managed suspense and rejects daily
• Piloted in selective legal entities followed by a global rollout

4
 Integrated Finance Data Supply Chain
Optimized Capabilities Needed to Solve Business and Regulatory Challenges
The capabilities below improve the five main Finance performance metrics (accuracy, timeliness, transparency, flexibility, efficiency)

Centralized source of certified positions Scalable architecture that can rapidly

and business events confirmed by incorporate new products and policies,
operations, and shared universally by provides greater control on business rules
2 3
Finance, Risk, Tax and Treasury for accounting calculations and postings
(Operational Book of Record – OBOR) Single source Plug and play and reduces reliance on EUCs
of truth Accounting
methods
1
3
Single platform that supports multi- Improved data transparency through
Governance
currency and multi-basis reporting of Multi-basis Atomic level position level accounting provides greater
financial statements and eliminates the accounting & accounting dimensionality than general ledger,
need for multiple parallel platforms thereby Accountability 2 decreases manual adjustments and
reducing TCO increases use of auto-reconciliation tools
Drillable
Electronic financial
audit trails statements
Enhanced data governance and control
Increased multi-dimensional drill down
through transparent data lineage and 1 2
capability, automated rollforwards and
clearly defined finance and tax data rules
statements of cash flow, and real-time flash
support straightforward electronic audit
reporting has provided "true multi-basis
trails and greater substantiation of GL
finance transparency"
balances

Key Challenges: 1 Accountability & Ownership 2 Daily Accounting & Process Standardization 3 Architecture
5
 Integrated Finance Data Supply Chain
Reference Business Architecture
Business Accounting
Events Events

A B C
An integrated finance data supply chain processes events and detailed transactional data to deliver rapid insights and transparency

Operational Book of Record Accounting Book of Record

Transaction Processing Accounting Accounting Accounting General
1 2 3 4 5
Systems (OLTP) Event Calculators Events Journal Subledger Ledger

Subledger Tables Balance

Accounting Event Extraction Sheet
Regulatory Capital
Manual
Positions & Adjustment
Application Business A B Tax
GL
Events
Facility Rollup
GAAP Logic Journal
Income
Entries General Stmt
SL Acct DR CR
Amortization Ledger
Engine 100-05 $100
750-05 $100
Sub ledger GL COA
Application Journal
Analytical
Entries Reports
Impairments/
Positions & Reserve Posting
Business
A Engine C Accounting
Engine
Events
Events Accounting
Store
Events
Application Store
Valuation
Engine

Posting Rules
(GAAP) 6 Finance Data Store (OLAP)
Reference Tax Amort
Data Engine
Possible Dimensions
• Time • Portfolio
(Tax) SL COA • Event • Product
Dimensional • Position • Account
Data Sources Calculator Types Data Model
• Event calculators Table Types (Regulatory)
• Line-of-Business (LOB) applications • Decisioning engines • Core transaction/event Analytical
• Relational databases Reports
• Acctg designations • Master event
• Cloud services • Stand-alone apps / EUCs • Position keeping (Fair Value) Dimensions
• Supporting audit trails Final Results
• Closed Aggregate Facts
• Reconciled
• Balanced Atomic Facts

6
 Integrated Finance Data Supply Chain
Integration Patterns for Journal Entry Generation
Double
Source Systems Accounting Book of Record sided
4 ERP
Manual New
Single sided Adjustment
Integration Facility
Accounting
key
1 2 3 AE 1
Pattern 1 JEG CR
Sub-modules
(AP, FA,
Source Accounting 4
Journal Entry Generation JEG DR
System Events 4 T&E, HCM)
in Accounting Subledger Contractual Calculator/ 4 JEG CR
SOO Positions and
with new Accounting key Store
JEG DR
Business Events
(source sends positions Accounting
Journal
Entries
and business events) Position and GL
Event JE 5
Roll-up
File GL
Single sided Engine
Integration AE 1
Aggregate
1 2 3 journal
Pattern 2 Accounting
Accounting entries
Source Posting Subledger
Journal Entry Generation Event
System Engine
in Accounting Subledger Contractual Calculator / Accounting
Journal
SOO Positions and Position and (Postings GL journal
with new Accounting key Business Events Store Event
Entries
Generated & entries and
Balances
(source sends accounting Balances)
events)
Double
Single sided sided
Integration JEG CR
1 6
Pattern 3 2 3 AE 1 4 JEG DR
Detailed balances
Accounting Finance Data
Journal Entry Generation Source Posting Detailed journal
Event Mart
in Source with old System Engine entries
Contractual Calculator Accounting Journal
Accounting key SOO Positions and Position and (Stage 1) Entries
Business Events / Store Event Generated
(Accounting sub-ledger Rule Sets • GAAP
Old •
maps to new accounting Accounting • Error / Suspense Handling • TAX
key) Accounting period control • IFRS
key •

Operational Book of Record

7 # Linked to finance data supply

chain overview
AE Accounting Event
(single sided)
JEG Journal Entry Generation
(DR/ CR with accounting key assignment)
Financial Balance
Reconciliations
 Daily Accounting Enablers
Accounting, Processing & Reporting Readiness
A Source Transactions Daily from SOR

B Value dated Transactions

C Intra-day batches for adjustments

G H
L Perform Multi-Currency Processes
D
(Currency Conversion, Revaluation, &
A Translation)

E Perform GAAP Re-classification

F Period end close

B
G Expense Sub-ledger
D F J (AP, AR, Fixed Assets...)
D D E
E I K H GL Processing
F I
E
C
K I Build Balances (Daily accounting buckets)

J Reporting daily

K Balance Reconciliations
K J K

L Error and Exception Handling

L

8
 Finance Operational Efficiency
Activity & effort distribution for daily vs monthly accounting period

Revenue accounting
Pre-close

Inter bank Settlement (IBS)

Accounts Payable

Fixed asset accounting

Project accounting (PA)

Accounts Receivable

Other pre-close activities including Expense Management Distribute close activities more Monthly close activities
More efforts during
Account Receivable close
frequently peak reporting
Accounts Payable close
period
Close Period

Effort
Project Accounting close

Inter Bank Settlements close

Non-Inter Bank Settlement close
Daily processing
Inventory close Daily Close activities
Sales revenue close Efforts spread out
Other ledger close and submission activities throughout the month by
Perform data submission to consolidation system posting daily thereby
Perform intercompany reconciliation
flattening the curve
Reporting and Recon

Perform non-intercompany reconciliation

Perform account reconciliation

Generate preliminary financial reports

Review preliminary financial reports

Finalize financial data for reporting

Other consolidation activities

Business unit/segment reporting

BD-7 BD-3 BD+3 BD+7
Generate and finalize external financial stmts

Perform variance analysis

Master data maintenance

Business Days
9 Illustrative list
 Data Supply Chain Journey
Roadmap
The client concentrated first on standardizing those elements that represented ‘generic’ functionality. Operations continued on with OBOR
data consistency efforts in parallel

1. Bus. Event Staging 2. Accounting Calc 3. Accounting Event 4. Subledger 5. General Ledger 6. Finance Data
Engine Journal Warehouse
1C 3 4A
1 UK 1A

Credit Derivatives 2 US

3 APAC

4 UK
Interest Rate
5 US
Derivatives
6 APAC

7 UK
Bonds and Money 2
8 US
Market
9 APAC

10 UK 1B
4B
Foreign Exchange 11 US

12 APAC

13 UK
Commercial Loans
14 US

Needs resolution; no automated workaround available

- Finance Initiatives Product-Specific Functionality Generic Functionality
[In-House Builds] [In-House Build or ERP-based Solutions]
Workaround available, but needs resolution
- Ops Initiatives
Functioning as expected or as per target state

To be evaluated
10
 Finance Program Office
Governance and Funding Considerations
Finance Function Leadership Provides governance
and due diligence input
► Provides final approval on investments and
Executive
prioritization
Committee
► Strategic decisions to address critical risks,
issues and change for the initiative Reports and communicates
program progress and
changes

Finance Transformation
The Finance Transformation Office (FTO)

Enabling functions office capabilities are enabled Integrated portfolio Communication

Design Authority
and supported by guidelines and Management Management
HR Legal policies of organization wide
Continuous Ideation Data Management Business Objectives Centralized decision
functions making body which
Sourcing Finance Investment
Quality Management Business Application increases
Management* transparency of the
stakeholders stakeholders
Business Case and
Program Management
design decision
Benefit Management* Infrastructure process by enforcing
Data
Process Architect Resource and Vendor stakeholders traceability to
Change Management stakeholders
Provide business process and Management prioritized finance
Enterprise Architect technology strategic alignment Technology Constraints portfolio
Manage portfolio execution, recommend budget
for all finance programs
and resource allocation, drive executive decisions,
benefits tracking, realization, dependencies, risks,
actions, issues, decisions and status reporting

Oversees progress of initiatives through regular status reporting,

checkpoints and tollgates

Country/Region 1 Initiative 1 Initiative 2 Initiative 3 Initiative 4

Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj.
Country/Region 2

Country/Region 3 Initiative 1 Initiative 2 Initiative 3 Initiative 4 *Key Funding Elements

11
 Enterprise Data Governance Framework
For pervasive and sustainable Enterprise Data Governance, a multidisciplinary approach, with a fit-for-purpose controlled data
environment builds and fosters data governance initiatives to deliver business value and continuous execution and adoption to evolving
business, regulatory and compliance needs

Guiding Principles
✓
Keep it simple: Data Governance should be kept simple and ✓
action oriented and should not be ‘Governance for
Governance sake
✓
Keep it actionable: Data Governance should include activities
and deliverables, and not just frameworks and methodologies
that are difficult to realize the value
✓ ✓
Keep it achievable: Build keeping the enterprise in mind, and
only bite off what can be realistically accomplished in short
sprints ✓
Keep it pragmatic: Build with efficiency in mind, while
keeping in mind what exists today; proposed
solution/changes should not hamper the day to day
✓
operations ✓ EY recommended priorities for defining Use Cases and enhancements of Frameworks

12
 Key considerations for successful delivery
Daily Accounting Period

ALIGNMENT OF THE ACTIONS TO BE SUCCESSFUL VALUE

Dedicate team members from Controllership, Finance, Operations. Architecture & Technology
1 ➢ Provides executable solution and facilitates buy-in
areas who know and own the business goals, process and architecture
TEAM

Create a common vision, objectives and approach with collective ownership of the interim and ➢ Relaxes traditional boundaries and establishes
2
target states accountability

Establish design authority across Accounting, Finance and Technology to evaluate and approve ➢ Drives consistency and alignment to strategic vision;
3
design and change management drives delivery efficiencies
DECISION MAKING &
GOVERNANCE

➢ Removes siloed processes and a fragmented

4 Enable integrated and enduring architecture with end-to-end traceability
architecture

➢ Enables control into end-to-end process and focuses

5 Enforce data governance and controls
resources on high risk items
➢ Establishes which feeds are part of daily reporting
6 Identify and factor in that not all source feeds will be available daily (e.g. payroll)
and which will be part of periodic reporting

Streamline system layers and data structures (e.g., cost center/ profit center and hierarchies) to ➢ Reduces delays to close process and elongated
DATA

7
reduce systems dependencies and complex data structures maintenance cycles

Leverage NEXTGEN technologies; plan and prepare for high transactional volumes; and introduce
8 ➢ Consistently meets required SLA’s
elastic compute capabilities addressing high transactional volume days

➢ Reduces time consuming activities and creates

Leverage automation of manual processes for data transmission, reconciliations and controls
9 efficiencies in data ecosystem and finance close
processes
OPERATIONAL

Rationalize reporting views (e.g., differences between internal and external reporting views, ➢ Streamlines reporting and analysis with minimal
10
redundant reports with common data elements) maintenance

Establish single end-to-end data production process which enables an activity led organization
11 ➢ Realizes common consumption across functions
structure as opposed to sub-functions (liquidity, capital, risk) independently managing data

13
Appendix
 Daily Accounting Enablers
Accounting, Processing & Reporting Readiness

A E
Source Transactions Daily
from SOR
• Ability to source transactions from
source systems on a daily basis in
order to facilitate daily close activities
• Accelerated SLA to process daily
F
Period end close
Perform GAAP Re-classification
• Determine how close process is going
• Multi basis accounting on a daily basis to work : Daily Interim close, month-
• Step up / step down as applicable (from default end close or year-end Close
GAAP, IFRS, local GAAP)
G H
GL Processing
Expense Sub-ledger (AP, AR, Fixed
• Accounting period is a day instead
Assets...) of a month
• AP/AR/FA can be a daily feed • Consolidations/Eliminations – Daily
(Expenses/Payments/Receivables/FA creation) or monthly
• Depreciation/Retirements/Accruals is normally • Intercompany settlements – Periodic
not a daily feed based on agreements
• Allocations – need not be performed
daily

B
L G H I
Value dated Transactions A
• Value dated Transaction will impact Build Balances Daily
Daily balances if prior period is still • Build daily & average balance
open. • Each month has daily buckets
• A transaction sourced on 2 Dec for each transaction effective
2020, with an effective date of 30 date
Nov 2020 while Nov is open, will be B D E • Cut-off timing by day (post
D F J
processed with a carry forward batch plus daily adjustments)
balance to Dec 2, day by day. D F I • One cut-off for all entities or
E I K
E based on region
K
C
J
C
Reporting
Intra day batches for adjustments
• Produce daily reports (B/S and I/S)
• Intraday batches can be K J K • Establish cut-off period for reporting
scheduled several times during a layers (daily vs intraday)
day for updates. L • Select use cases for Management
• Determine which daily processes reporting requiring daily financials (KPI
D L K
need to run intra-day Daily dashboards)
Perform Multi-Currency Processes Error and Exception Handling Balance Reconciliations • 2052A Liquidity Daily Reporting
(Currency Conversion, Revaluation, & Translation) • Technical/business controls, audit trail reports
• Financial Reconciliation on a daily basis-source
• Cancel and correct features
• Generate Revaluation and Revaluation offset entries daily system/GL/detailed accounting subledger balances
• Manage suspense and rejects
• Generate Translation and Translation Offsets, as applicable • Identify the Balance Sheet accounts to be
• Rerun/replay features
15 substantiated daily/monthly
• Exception Management; error resolution (e.g. via
topside or prior period adjustments)
 Characteristic of mature Controller’s function

Process Data
Close books in
►Group-
►

3-5 days wide data

GL is primary source
model and
►
for financial
reporting governance
► Automated ► High traceability and
adjustments & confidence
controls
► Common data
► Accounts reconciled Organizational hierarchies in place
daily People for accounts to
Operating Model enable reconciliation
►<3% manual
►<140
► Shared services and
► Chart of accounts
journal entries COEs serving
and chart field use
corporate Technology common activities
enables automation
► Standard policies & accounting FTEs/ $5 and processes
B revenue ► Technology of reporting, robust
processes enforced
►20% time spent
integrated, dynamic, controls
by systems & a COE
► Flexible staffing and flexible enough
options in place
► Cycle time:15 ► Leverage
to adapt quickly to
increasing
on transaction
processing and
days for external
reports
technology as an
enabler, not a
complexity and
changing 80% time spent
replacement circumstances on decision support

►1 GL

16