A family-owned grower and producer of organic consumer packaged food products brought in a new CFO following the departure of a predecessor with 10 years of company experience. The new CFO encountered several deficiencies in current accounting processes including lack of inventory reconciliations and inadequate accruals for trade promotion spend, sales commissions, and utility expense. His concern about what other issues might exist led him to recommend to the CEO and the Board Audit Committee the hiring of an outside resource to evaluate the entire accounting organization and processes and develop recommendations to correct the problems.
A team of three E78 executives (two CFO’s and one CIO) conducted more than 20 interviews and performed an extensive review of financial, information technology, and ERP reports and process documents. Their recommendations centered around four key areas:
- Revising the Finance organization structure to add a Finance Director and several positions with Sales and Operations focus and matrix reporting to internal operations leaders, while eliminating other non-essential positions to ensure a neutral overall cost impact on the Operating Expense structure
- Transitioning from an inefficient hybrid product costing system using average material, standard labor and overhead to a full standard cost approach
- Preparing Information Technology architecture for a move to the Cloud
- Revising numerous finance and accounting practices and policies to provide better management controls, improved financial reporting, and fewer month-end surprises
These recommendations were documented in a systematic framework of key initiatives—a roadmap—to take the company forward into stronger financial and information technology capabilities.
The E78 team presented its findings to the Company’s leadership team and, separately, to the Board Audit Committee. Subsequently, the CEO wrote that he really appreciated the detail of the study and the specific high priority actions that address improvement. He also indicated the report was exactly what he and the company’s CFO were looking for and considered it a path to Financial and IT excellence. Subsequently, the company engaged the E78 CIO executive to guide IT leadership through the implementation phase of the recommendations.