Technology for Sarbanes-Oxley - Hyperion Review
By Michael Burns published in the CAmagazine
December 2003
Every problem for someone is an opportunity for another. Y2K seemed
like a huge problem and Enterprise Resource Planning (ERP) vendors
such as SAP and PeopleSoft cashed in. Their smarter customers also
took the Y2K problem and turned it into an opportunity to improve
their business processes. We are seeing history once again repeating
itself with Sarbanes-Oxley (SOX). As you will read in this month's
magazine, CEO's and CFO's are threatened with civil and criminal
penalties. This time it's the vendors of Business Performance Management
(BPM) systems that have the technology solution and stand to gain
from Sarbanes-Oxley. As well, the smarter BPM customers will use
SOX as a way to improve their processes related to BPM.
According to Hyperion (http://www.hyperion.com), BPM is a category
of software that enables companies to translate strategies into
plans, monitor execution, and provide insight to manage and improve
financial and operational performance. Hyperion's BPM Suite delivers
performance score-carding, modeling, budgeting, planning and forecasting,
consolidation and reporting, and business intelligence applications.
More than 6,000 customers worldwide use Hyperion's BPM system,
including 220 companies of the Fortune 500 using the financial consolidation
and reporting modules. Headquartered in Sunnyvale, California, Hyperion
generated annual revenues of $510 million in fiscal 2003 and employs
more than 2,200 people.
Hyperion is targeted to companies with revenues typically greater
than $100 million. It will probably cost between $200K and $1M to
implement Hyperion and it should take between 3-6 months. Hyperion's
consolidation processor will appeal to companies with multiple ERP
systems - 99% of Hyperion's clients have multiple ERP systems.
SOX
The CEO and CFO of publicly traded US companies must prepare a certification
statement to accompany the audit report. The certification must
state that the financial statements and disclosures fairly present,
in all material respects, the operations and financial condition
of the issuer. The law requires each annual report of an issuer
to contain an "internal control report," affirming the
responsibility of management for establishing and maintaining an
adequate internal control structure and procedures for financial
reporting. The report must contain an assessment of the effectiveness
of the internal control structure and procedures.
Hyperion does provide controls over completeness, accuracy and
integrity. First, Hyperion is fully compliant with US GAAP, Canadian
GAAP, and International Accounting Standards. Hyperion is integrated
with the leading ERP systems and includes validation controls in
the extraction of data from source systems. Invalid accounts and
uncleared intercompany accounts are identified. The Hyperion system
prevents additional processing until these errors are cleared. The
consolidation process automates intercompany eliminations as well
as the most complicated ownership structures. There is no need to
use spreadsheets that can introduce errors that go undetected. The
consolidation process will detect variances that indicate potential
problems. Users are able to add comments to explain variances that
are in turn visible to management.
The consolidation process also includes a work flow system so that
balances are certified before the consolidation process can proceed
to the next level. Management can easily see the status of all the
consolidation processes involved to ensure that the all processing
is completed on a timely basis. (SOX has also reduced the time to
file quarterly statement by 10 days.) There is an audit trail with
date/time stamp for all processes that led to the consolidated financial
statements. Hyperion is a web based system, which allows for access
and update anywhere and anytime leading to a reduction in time to
close a fiscal period.
Bottom line
Although Hyperion can't help eliminate internal control weaknesses
in the source systems, Hyperion can make a big difference in detecting
and preventing control weaknesses once the consolidation process
begins. However, the real benefit to Hyperion is not in compliance
but in improving financial and operational business processes so
that the right information is in the right hands when it's needed
to make the right decisions.
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