Digital in Specialist Financial accounting advisory services (FAAS)

Digital audit readiness

The complexity of financial reporting is increasing with onerous disclosure requirements (the Securities and Exchange Board of India (SEBI), the Companies Act, etc.). Stakeholder expectations regarding non-financial reporting are also increasing. The number of reviews and audits is growing (the Goods and Services Tax (GST), tax audits, information technology (IT), group audits, etc.) and so is the scrutiny by various regulators such as National Financial Reporting Authority (NFRA), the Reserve Bank of India (RBI), the Ministry of Corporate Affairs (MCA), etc.

Due to this, both auditors and audit committees are making more stringent demands from the finance function. These include:

• A range of questions that auditees must answer are becoming more comprehensive and time consuming.
  
  
• Comprehensive examination of internal controls affecting financial services (FS) preparation.
  
  
• Testing the entire population rather than collecting their samples.
  
  
• Auditees to reliably substantiate accounting judgements based on the analysis of data collected in the past.

These demands are hampering finance function’s ability to address the challenges pertaining to people, processes and technology. As a result, organizations’ finance teams are now focused on collection of data rather than their analysis. There is a lack of awareness regarding regulatory changes. The Financial Systems Closing Process (FSCP) practices have also weakened. There is a low adoption of technology and the finance functions of organizations are also facing issues in extracting similar data multiple times. Further, there is also an inability to identify transactions that may have deviated from the designated process.

Our Digital Audit Readiness solution helps clients address these issues. It offers the following capabilities:

• Optimizing processes: using data–driven audit information to draw better business insights to optimize processes and controls.
  
  
• Streamlining audits: transforming and streamlining audit and compliance processes.
  
  
• Improving data reliability: ensuring that internal controls of clients’ organization fully support our efforts to capture and extract data quickly and more reliably.
  
  
• Anticipating audit issues: helping management anticipate audit issues that are likely to arise through a data–driven audit.
  
  
• Transforming internal audit: transforming our internal audit into a data–driven, risk–based function.

The following are the components of the solution:

• Common audit model: it is a one-stop data repository for fulfilling multiple audit requirements. It improves tracking and reduces time spent on sharing data repeatedly.
  
  
• DigiFAAS: it is an automated preparation of standalone and consolidated financial statements with notes on accounts and disclosures.
  
  
• EY Policy Sphere: it understands the actual process of each financial caption and frames a suitable accounting policy for the company that is easy to comprehend.
  
  
• EY Process Miner: it analyzes details of transactions that have deviated from a specified path by considering the entire population.
  
  
• Data analytics and data visualization: it provides powerful dashboards for visualization and analysis of data and ensures timely decision-making.
  
  
• Robotics Process Automation: this technology helps in automation of routine and repetitive processes that are performed on a frequent basis. It saves time as well as cost.
  
  
• EY Virtual Academy: this tool prepares professionals to use digital tools in a better way. It provides users with requisite technical knowledge so that they can become future ready.

Financial services

• Banking and non-banking finance companies (NBFCs)
  • Digitization has become an integral part of our society and culture. Financial reporting for banks/NBFCs is no exception to it.
    
    
  • Evolving market conditions and rigorous regulatory oversights are driving rapid and extensive changes across financial reporting practices for banks and NBFCs.
    
    
  • An effective and efficient financial reporting that provides valuable insights helps in measuring business performance, capital adequacy, and risk and corporate governance requirements. Due to the pandemic, work from home has become the new normal. This has increased the pace of digitization.

Our DigiFAAS Comprehensive Financial Reporting (CFR) tool for banks and NBFCs adds significant value to the process of financial reporting. It reduces the production time, efforts and costs involved, while enhancing the flexibility, integrity and quality of the financial statements.

What EY can do

• Provide remote close assistance
  
  
• Compile consolidated accounts by integrating with multiple source systems
  
  
• Implement a consolidation process, a closing calendar and documentation with regards to periodic accounts closing
  
  
• Develop a process flow chart and/or implementing a master plan with methodology and key processes
  
  
• Provide technical support on consolidation issues, including deferred tax, change in equity and consolidated cash flow
  
  
• MIS and budgeting process
  
  
• Report under various GAAPs (IFRS, USGAAP, UK GAAP, Ind AS (Indian Accounting Standard) and Local GAAP reporting)
  
  
• Provide an interface with multiple ERP systems based on service-oriented architecture

Insurance

Digital transformation is redefining the insurance industry. The financial reporting process of insurance industry must be future ready to embrace accounting changes such as IFRS 17 Insurance Contracts.

Our DigiFAAS Comprehensive Financial Reporting (CFR) tool for insurance adds significant value to the financial reporting process by reducing the cycle time, efforts and costs involved while enhancing the flexibility, integrity and quality of the financial statements.

What EY can do

EY helps organizations in the following ways:

• Preparation of entire financial statements for life and general insurance in line with Insurance Regulatory and Development Authority of India’s (IRDA’s) regulations.
  
  
• Preparation of public disclosures as required by IRDA guidelines.
  
  
• Preparation of segmental financial statements as per IRDA guidelines and accounting standards.
  
  
• Helps in saving time in collation of the details for disclosures and notes to accounts by defining the role-based user access.
  
  
• Reporting under various GAAPs (IFRS, USGAAP, UK GAAP, IndAS and Local GAAP Reporting)
  
  
• MIS and budgeting process
  
  
• Helps provide an interface with multiple ERP systems based on service-oriented architecture.

Treasury

The demand for a corporate treasury is increasing. Its role has evolved from a cash performer to a strategic value creator and COVID-19 has further accelerated this trend.

Disruptive technologies are changing what treasurers do and how they do it. As treasurers become the stewards of enterprise cash flow, they can leverage central data repositories for better insights in product pricing and can help in reducing financial risk and structuring operations for improving the liquidity. EY’s treasury solutions leverage digital tools and techniques to provide superior treasury analytics including:

• Real-time dashboards that provide visibility on borrowing limits/exposure to various currieries/borrowing costs and hedging costs
  
  
• Compliance with financial covenants, which can also monitor compliances across the world
  
  
• Automated submissions to bankers directly from the books of accounts
  
  
• Real time analysis of bank books and fund flows, mapped to budgeted cashflows
  
  
• Stress tests
  
  
• Expedited invoicing cycles 

Loan Covenants Analyzer (LCA):

EY’s Loan Covenants Analyzer (LCA) solution serves as an automated process from sourcing data to computing covenants and managing the lender submissions. The solution offers minimal human intervention resulting in a substantial reduction in time and costs incurred in preparation and submission of such returns to the lenders. Our interactive and highly customizable LCA solution uses data visualization and analytics tool that seamlessly integrates with the company’s Enterprise Resource Planning (ERP) system.

Further, the LCA solution assists in automated preparation of monthly, quarterly, half-yearly and annual statements along with reports like NPA (non-performing assets) certificate, Capital to Risk Weighted Asset Ratio (CRAR), debt equity ratio, debtors ageing, stock statement, drawing power statement and others to be submitted to the lenders along with adherence to financial covenants.

Benefits:

1. Digital, interactive dashboards tailored for you
   
   
2. Submission ready lender reports
   
   
3. Reduces cycle time in computation of financial covenants and prepares the lender submission in a click of a button. According to EY’s analysis, this tool results in potentially 50% - 70% savings of loan management related time and cost
   
   
4. Eliminates inadvertent errors/formula errors in computation of drawing power and financial covenants
   
   
5. Serves as a proactive early warning indicator for firms to check compliance with loan covenants

Training solutions

EY Virtual Academy, our flagship training solution, leverages digital capabilities for helping individuals improve their skills with high-quality, insights-driven and well-researched content. It offers a bouquet of business-driven training programs to enhance workforce skills delivered by EY and industry experts. The programs are offered in the domains of finance and accounting, modelling and valuation, business tools, analytics, quality and digital transformation. They are offered through a flexible, on-the-go learning platform.