Restoring financial rigor in a subsidiary after an audit
Background
WITH ALMOST NONEXISTENT FINANCIAL OVERSIGHT, THE AUDITOR OF A LARGE GROUP DEMANDED THAT THE ACCOUNTS OF ONE OF ITS SUBSIDIARIES BE PUT IN ORDER.
The auditor of a large group raised concerns about the financial statements of a subsidiary. The financial oversight of one of the group's subsidiaries was insufficient or even nonexistent.
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Despite the small size of the subsidiary, it was essential to avoid a qualified auditor's report for the subsidiary. The subsidiary operated on a project basis, but each project manager worked somewhat blindly, with little visibility on costs, profits, and needs. This led to provisioning for nonexistent charges, failing to close completed projects, and other issues. The auditor therefore demanded that the accounts for the 15 most important projects of the subsidiary be put in order for the closure of the current financial year.
The parent company called on Altesia to assess the financial maturity of its subsidiary and restore budgetary orthodoxy.
Approach
Chiara Roelens, the financial controller assigned by Altesia arrived at the subsidiary on December 1, 2023. With the year's accounts needing to be validated by March 31, 2024, she defined an action plan focusing on the 15 largest projects, in agreement with the group and the auditor.
To establish her diagnosis, she first interviewed each project manager and delved into the project budgets and timesheets, comparing them to actuals. Chiara discovered that there was no budgetary methodology: some projects ended with negative margins, Excel files lacked formulas or had incorrect ones, and so on. She therefore created a file compiling the initial budgets for each project, the actuals (after verifying them), the forecasts, and the final budgets. It was a true cleanup task!
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In parallel with this essential work, she had to tackle the core problem:
- instilling a culture of finance within the subsidiary
- standardizing financial practices among the different project managers. With managers who had never been required to seriously control finances, Chiara Roelens’ soft skills were crucial in this mission.
Demonstrations were necessary to convince the subsidiary's various leaders, including the CEO and CFO, of the value of regular financial planning and control of the different budgets.
Results
Chiara Roelens, Financial Controller, managed to get the accounts in order and to install a financial culture and discipline within the organization.
By March 31, 2024, Chiara was able to close the group's 2023 accounts. Not only did she manage to make the accounts of the 15 largest projects of the design office coherent, but also those of all other projects.
She also ensured the handover of the procedure documentation to the incoming controller, whether mandated by Altesia or found within the group, to ensure continuity of service.
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Chiara succeeded in convincing the CEO, CFO, and project managers of the necessity of maintaining financial discipline. She developed a methodology so that project managers could track their budgets and update them according to project progress and encountered challenges. From now on, they must report monthly and revise their forecasts if necessary. Chiara has established financial follow-up meetings for projects, as well as a procedure for closing projects.
