Business Case SABIC
Runbook increases efficiency and transparency of the closing process
SABIC Europe - a subsidiary of SABIC, one of the largest petrochemical companies in the East - uses Runbook to increase efficiency, speed and transparency in the month-end closing process.
The Runbook solution was implemented in 2007 and is generating significant value for SABIC. The monthly closing process is smoother and more efficient. There has also been a reduction in audit costs over the past two years. Will Bleser, Manager Accounting at SABIC, indicates employees now spend less time collecting information for the auditor.
SABIC's auditor can obtain the information he needs through direct access to the company's systems, such as SAP and Runbook. Stacks of paper files are a thing of the past. According to Bleser, this collaboration was a gradual process. "Auditors are not satisfied with just a spreadsheet. They want to see the file behind it and have proof that everything is correct. Auditors work with a Client Assistance Package which is a checklist they follow in order to ensure that the balance sheet and the income statement as presented give a fair view at the end of the period.
In order to properly align the company's closing process and the auditor's auditing process, the auditor's process steps are included in our departmental checklist. We see process improvement here across two processes (closing and audit), embedded in a supportive tool, i.e. Runbook."
Direct link to source information
"Just like the consolidation group, the auditor can use the stored documents of every individual step in the closing process. He is authorized to examine all documents stored of every submitting department," says Wil Aaldijk, Consolidation Manager at SABIC. "The advantage of Runbook is that you can see who performed what step, so that you can contact that person directly if you need additional information. In the future, it will be possible to use this direct link to the department even more in order to speed up the closing process."
According to Bleser, the auditor can work far more effectively if the data required for the audit are supplied in a structured and digital manner. "The figures are received in a standard format, so the auditor can now focus on any deviations he might find, or perform a selective, in-depth audit, rather than spend much of his time collecting information.
Before Runbook was implemented, the auditor needed two weeks to audit the books at the end of the quarter; now, the review takes a week, which means a time gain of approximately 1 week. That week is the result of several developments in the past seven years, to which Runbook also made its contribution. Our people can do other work in the time gained. We have observed that the audit costs decreased in the past two years thanks to Runbook. By taking 'process thinking' as the guideline in our own organization for the organization of quarterly and annual closing, both SABIC and the auditor have access to the right and transparent information, as well as a checklist that helps to safeguard this and a faster audit process. We ourselves see to faster, enhanced and more transparent accessibility of information. As we do that ourselves, we also gain a better understanding in-house of what is happening. We intend to take additional steps in the field of internal control."
High quality of quarterly closing
Key business objectives are being met using Runbook. SABIC is experiencing improvements in efficiency, transparency and documentation. According to Bleser, the process has already been reduced by two days and is expected to be reduced further in the future due to new features in Runbook which include functionality to provide the auditor with an electronic file directly.
The quality of the close on a quarterly basis is very high, mirroring that of the monthly close. "In the past three years, we have not had any notable comments from the auditor about this process in respect of the closing itself, which is a sign that we are in control of the process."
Bleser believes that the closing could even go more rapidly in the future. "For example, you can perform three audits per year instead of four and rely on the underlying process. Runbook could be a very good supportive tool in this respect."
SABIC wants to engage Runbook for several other processes in the future such as internal governance, or the process of ISO certification. By combining these two subjects, Bleser believes that he can achieve two objectives: "You make processes clear and efficient and you know where you are at every point. We currently have no tool for that, but Runbook could be suitable for this purpose."
SABIC, Europe is a business unit of SABIC which is currently using Runbook and global expansion within SABIC may be possible in the future: "At the corporate level, Runbook has already attracted attention...," says Bleser.
Auditor confident about processes
Patrick Gabriëls of Ernst & Young is the auditor performing the external audit at SABIC. He is very happy with Runbook and the options the tool offers him as an auditor. "As an auditor at a major company such as SABIC, it is always a challenge to keep the organization under control and to work as efficiently as possible. By using Runbook, you can find the information at a central location instead of having to ask everyone for it. This tool is a good addition in the closing process and the internal audit." Gabriëls believes that proper cooperation between the parties is paramount throughout the process.
"SABIC's top management decides what the minimum amount of activities is that must be performed in order to achieve good results. This is necessary for the company, but it is also good for us, as the auditors. If all steps have been performed, we also feel comfortable. The key in this process is the discipline of individuals to perform their duties in good time and with the requisite quality. You can monitor this in Runbook on the basis of green bullets in the process. We assume that employees do this in good faith."
In order to be able to guarantee this, SABIC itself performs random tests to check whether the information that is supposed to underlie the process steps is actually there and whether that information is indeed accurate, says Bleser. "That is important. You can no longer add anything after closing and, if someone thinks: "I'll do that later", it's already too late," says Bleser. "Key in the implementation is not only the tool itself, but particularly the process behind it, the discipline of the employees and the quality and reliability of the content."
Optimization is a continuous process
Ernst & Young and SABIC are still working on the further optimization of the processes. "Optimization has increased, but it's never complete; it is a continuous process," says Gabriëls. "The organization itself decides what it considers important. We don't need all the information that is available, while sometimes we require additional information. We give feedback and discuss matters. You never have a 100% process right away. The organization is changing, and so are the process and the method of working in and with Runbook. However, we share the same interest and that is why we usually reach consensus. The audit process is important to us and Will knows the organization," says Gabriëls. "Most important is that both parties are open to criticism and improvement," adds Bleser.
SABIC was Gabriëls' first client with a computerized closing system from Runbook. "I have heard more clients that also started computerizing the closing process. Various tools can be used for that purpose and Runbook is a good example: it is accessible, it looks smart and is easy to work with. We have access to all data via SABIC's computer. We only need 25% of the information compared to the information the organization records. It would be useful if you can determine and indicate in advance which steps you want to display."
"Runbook could possibly add an auditor button," Bleser suggests. "The auditor tool could also function as a management tool. We do not forward our figures until all process steps have been given a green light. Management could also use this process by introducing certain key controls for a number of processes behind the closing steps."
Following procedures feels good
The advantages are evident to Gabriëls. "As auditors, we can only rely on what we did ourselves. We can now follow the procedures and once you see that all procedures have been performed, it gives a better feeling. By performing random tests, you get an even better feeling that it has been done properly."
Safeguarding the processes, discipline and quality of data is crucial, says Bleser. "Assuming that everything goes well is very difficult for an organization. Runbook is a good tool to ensure that you have faith in a proper, correct, timely and complete closing. At the end of the day, it's all about the human factor."
