Client: Leading Consumer Packaged Goods Company

Client Situation

The AddVantage Group was engaged by the Assistant Controller of a leading CPG company to optimize their payroll accounting function and related procedures.  The company had outsourced human resources (HR) administration concurrent with migrating to SAP HRM and FI.  Payroll processing had also recently been outsourced to another third party service provider, but the accounting-related work streams were maintained internally.

• The liabilities for third-party payments were large, inaccurate, and inadequately supported in the general ledger (GL)
• Integration issues with the payroll outsourcing company’s self-service system
• Filing deadlines with taxing authorities were not being met
• Payroll tax payments to taxing authorities were incorrect, putting the company at risk for penalties and interest
• GL reconciliations for the payroll related accounts included numerous aged unresolved reconciling items

Our Approach

• Performed a risk assessment of all payroll-related GL accounts and the current process
• Developed a framework to prioritize the detailed review of the accounts
• Identified root causes for groups of issues and redesigned reconciliation processes accordingly
• Utilized technical tools to analyze and reconcile complex data structures and transactions
• Recruited, on boarded and managed six contractors at the client’s Shared Services center who were solely focused on resolving historical out of balance issues
• Provided detailed documentation, guidance and training on new processes to client employees and third party contractors
• Managed the company’s relationship with the payroll tax vendor until the optimized processes were implemented
• Recommended and won acceptance for changing the payroll accounting function reporting relationship from HR  to Finance

Outcomes

• Time required to prepare the largest reconciliations was reduced by over 60%
• Accurate payroll tax and benefit payments to taxing authorities and vendors
• Fully supported payroll related GL balances, reducing financial statement and audit risk
• Risk of taxing authority audits, interest and penalty expenses was significantly reduced