Prior to deploying BlackLine, Franklin Templeton’s corporate accounting team was performing its account reconciliations with Microsoft Excel. The firm had established organization-wide standards around its reconciliations process, however there were regional variations around the format of the reconciliations and the determination of the risk rating of the general ledger (GL) accounts across the various regions.
Further, there was a lack of transparency on the corporate accounting team’s progress during the close, even though there was no issue with respect to the timeliness of the close as well as the accuracy of the financial information. The lack of transparency resulted in the accounting team’s inability to demonstrate the timeliness of the performance of month-end related controls for Sarbanes-Oxley (SOX) purposes, resulting in manual workarounds for signoffs.
Lastly, all GL accounts were reconciled monthly and there was no consistent framework that could be utilized in order to identify the high-risk accounts, which should be the focus of the team early in the close process. As a result, a high number of accounts were determined as being high risk, resulting in a time-intensive process that frequently required personnel to work overtime. Matching of transactions between multiple separate systems was also performed in Microsoft Excel and due to the manual nature was completed after month end, at which time exceptions would be identified and followed up.
In 2017, the accounting team’s leadership conducted a global accounting survey to find pain points, gaps, and areas for improvement. Franklin Templeton accountants weighed in, and two large initiatives arose: a risk assessment framework and new technology.
The firm reviewed two solutions that would help with its reconciliations. BlackLine was selected for several reasons, including:
The ability to address several of the challenges in the accounting process while providing accounting leadership transparency into the close process
The flexibility of the solution to incorporate the accounting rules needed to implement the framework to assess the GL risk rating
Franklin Templeton utilized a phased strategy to its implementation, focusing on the North and South American offices first, then rolling BlackLine out to its international offices in the second phase. This strategy allowed the firm to alter the way in which the software was implemented in the second phase based on the lessons learned from the initial phase. The company was also able to further utilize internal resources in the training component of the second phase, using a train-the-trainer model.
Key benefit areas seen as a result of the BlackLine deployment included: cost savings related to reduced staffing requirements and moving tasks to lower cost geographies, elimination of physical printouts of reconciliations, and increased productivity from an improved risk framework. Additional benefits included the reduction in high-risk accounts, and improved global control and quality assurance.
Reduced staffing requirements. With more efficient and consistent account reconciliation processes across the entire organization, Franklin Templeton was able to reduce the number of accounting personnel it needed and shift much of its month-end reconciliation work to low-cost offices.
Reduced printing and storage. Using BlackLine eliminated the need for accountants to print Excel spreadsheets each month. Instead of building and storing binders of account records, the company could perform its reconciliations and analysis through BlackLine’s cloud platform.
Improved productivity. The refreshed risk framework that Franklin Templeton established allowed accounting staff to reduce the overall number of high-risk accounts by 50%. This allowed for personnel to spend more time analyzing the accounts and adding value through their analysis.
Better visibility and transparency into the close process. BlackLine allows Franklin Templeton accounting leadership to view the progress of the close and allows the team to demonstrate the timeliness and accuracy of its close and reconciliation process for SOX purposes. The visibility gives employees better process control and improved overall quality control efficiency.