AAA of Northern California, Nevada, and Utah Insurance Exchange, also known as the California State Auto Group, offers automobile, homeowners, and other personal lines of insurance to AAA members through its federation of local AAA clubs in 23 states and the District of Columbia. It is one of the largest providers of personal insurance in the U.S., with 2.7 billion in revenue (2011) and an A+ rating from A.M. Best.
When the Insurance Exchange started preparing for the Model Audit Rule that became effective in January 2010, they knew that they had to incorporate governance standards and elements found in Sarbanes-Oxley (SOX) into internal control practices. They couldn’t continue to work and monitor progress in Microsoft Excel. They required a compliance-friendly process that would give company executives confidence about the quality of internal controls. The Insurance Exchange also needed a system that seamlessly integrated with their ERP system, unlike the multiple platforms for policies and claims that were inherited from acquisitions. And they wanted to increase efficiency by automating as much as possible.
AAA aimed to eliminate financial accounting challenges that are commonplace in most organizations. Their team objective was to rid the department of the use of multiple Microsoft Excel spreadsheets, manual processes, and a variety of independent systems. The ultimate goal was to increase the efficiency of reconciliations, remove delays in posting journal entries to the ERP system, reconcile daily and monthly exceptions, and comply with the Model Audit Rule.
The Insurance Exchange implemented BlackLine Account Reconciliations for balance sheet accounts and uses Task Management to govern the month-end closing checklist. The auto-certification feature in BlackLine Account Reconciliations helped the Insurance Exchange to achieve an exceptional level of efficiency with intercompany accounts and subledger balances; better than 60% auto-certification. “We used to reconcile manually. Nobody has to review these accounts any longer,” says Jennifer Mash, Business Systems Analyst.
Integrated ERP system easily and automated manual processes. Integrating BlackLine with the ERP system was relatively simple and loading subledger balances has been painless. BlackLine Transaction Matching reconciles multiple subledger systems with the ERP system. Exceptions from the matching process can support the general ledger balance. The same data can be used to book a journal entry.
“Our employee only has to log in and confirm that there are no outstanding items,” says Mash. The bulk journals feature of Journal Entry automates posting to the ERP system—no more time lost waiting for a manual post when staff are unavailable.
Reduced time spent on the mechanics of reconciliation. Planning for compliance and efficiency helped the Insurance Exchange to make the best use of BlackLine. “Journal Entry and Transaction Matching take more time to implement but they offer a lot of value,” says Mash. “Spending time up-front to build a process proved to be valuable in the long run. We spend less time on the mechanics of reconciliation. We have more time now to analyze the exceptions.”