Scotts Miracle-Gro knows that well-kept lawns and gardens can do wonders for a neighborhood. And the company knows that compliance with SOX (the Sarbanes-Oxley Act) can go a long way for an organization striving to be a good neighbor among the world’s public companies.
In fact, finding a better way to demonstrate SOX compliance was a key driver in leading Scotts Miracle-Gro to improve its accounting processes. Internal auditors were concerned about the lack of standards and controls in the company’s spreadsheet-based manual reconciliations system.
“A review of our reconciliations found what we considered to be an uncomfortable amount of exceptions and a lack of consistency across the company,” says Laurel Johns, manager of finance consolidation and controls at Scotts Miracle-Gro.
Identifying Process Weak Spots
In some cases, account preparers were signing off on what they thought were reconciliations, but they didn’t meet the needs of the corporate office, which viewed them as little more than a listing of account activity. Accounts might also lack proper authorizations or documentation, or contain variances that were acceptable to preparers but would be flagged by someone else in accounting and finance.
Managing documentation was another weak spot in the company’s manual accounting architecture. All tasks and journal entries attached to an account were stored in spreadsheets, binders, notebooks, and filing cabinets. It was difficult for the finance consolidation and controls team to locate and review all appropriate documentation for a given account.
This was wasting time and adding to the concerns about SOX.
“The manual processes involved a lot of investigative time and emails to hunt down the right documentation,” says Johns. “Historical data was difficult to review and locate. We could have multiple preparers of an account, and no one knew for sure where the necessary files were stored.”
Wasted Time Adds Up
The time wasted added up quickly, considering Scotts finance systems were supporting more than 4,500 accounts, including the cost centers of the company’s various legal entities in the US, UK, Germany, Belgium, and other countries.
Scotts Miracle-Gro decided to automate and standardize its account reconciliation processes by bringing in BlackLine software. The company was running its business on a single instance of an SAP ERP system, so it needed a product that was well integrated with SAP. Scotts Miracle-Gro investigated a variety of SAP partners and chose BlackLine as the best fit.
The company implemented three BlackLine products:
Account Reconciliations automates and simplifies reconciliations by offering account reconciliation templates, supporting clearly defined approval hierarchies, and featuring productivity enhancements such as automatic certification capabilities.
In fact, Scotts Miracle-Gro was able to achieve auto-certification for more than 1,000 accounts. This includes items such as a monthly lease payment, a relatively stable investment account, or any account with static balances, predictable activity, or a zero balance.
Time savings, however, are not limited to accounts that are auto-certified. The account reconciliations solution includes a header tab that shows a preparer, approver, or auditor an account’s history, its procedures, and a brief description of the purpose.
Task Management automates and stores activities attached to monthly, quarterly, or annual audits. The company also uses the application to track tasks related to its monthly close consolidation review, and to automate upcoming account activities such as a ledger transfer or retirement.
In all, Scotts Miracle-Gro uses task management to automate and track 18 monthly tasks, 142 quarterly tasks, and 500 annual tasks, most of which are driven by audit or reporting.
“We use the application to document and store all requests from internal or external auditors,” Johns says. “When we complete the request, now we can easily provide any of the needed documentation.”
The third application, Journal Entry, automates the approval process for all journal activity, and greatly speeds the tracking of needed information. Auditors, for example, can search for a journal using just an SAP document number and immediately have access to everything they need, without having to rely on the finance team.
With the old system, finding a misplaced or misfiled journal could be a challenge. With journal entry, which now automates approximately 1,100 journals, monitoring is simple. Electronic signatures for preparers and approvers make it crystal clear who last worked on a journal—in the past, a finance person might have to decipher a handwritten signature that could belong to any of the company’s 150 team members.
These time savings—and the related improvements in the company’s financial and accounting processes—go a long way in helping Scotts Miracle-Gro make the most of its accounting staff.
“It seems simple, but when thousands of accounts have this validated information all in one place, it saves a lot of time,” Johns says. “And the people who had been performing reconciliations and clerical work are now free to spend that time analyzing the accounts rather than just plugging in numbers.”
Next, read this white paper to learn how to automate your high-volume reconciliations and expedite the month-end close. You’ll hear how a restaurant company automated 99% of their GL detail matching and 96% of cash to GL matching.