ABB, one of the world’s leading technology providers for power grids, electrification products, industrial automation, and robotics motions, was launching new guidelines for the journal entry process. The new regulations were binding to all company’s subsidiaries worldwide, including Hitachi ABB Power Grids Finland Oy. These new guidelines were part of SOX compliance updates and focused on the segregation of duties and approval workflows.

• Products used: Aico Journals
• Amount of software users: 30
• Countries: Finland
• ERP system: SAP

The new guidelines required ABB to put in place dynamic journal entry approval and posting workflows. Journal workflows would have to be designed according to two criteria – globally defined journal value thresholds and type of postings. For example, an ordinary business accrual would trigger a different approval workflow from that of an internal posting. Likewise, the number and job roles of approvers would vary depending on whether the posting value is above or below the defined threshold.

The other challenge was timing – the new guideline conforming workflows had to be up and running within three months. Missing the schedule would mean a lot of manual work to make sure all postings comply with the new regulations.

With these two challenges in mind, Hitachi ABB Power Grids Finland Oyteam set out to accomplish the goal with the help of tried and tested partner – Aico.

SOX or Sarbanes-Oxley Act requirements apply to all publicly traded companies in the United States as well their subsidiaries worldwide. The primary aim of SOX is to protect investors by improving the accuracy and reliability of corporate disclosures.

Substantial effort related to the financial close and ultimately, financial reporting focuses on recording data, correcting errors and making adjustments. These activities are part of a manual journal entry process, where recurring and ad-hoc journals are created and posted to the general ledger. These journals are done throughout the process – before books are closed, during reconciliation and some also during consolidation.

SOX compliance requirements for the journal entry process mainly deal with segregation of duties. When journal entries are processed, user access should be configured so that only authorised members of staff may post journal entries for stipulated amounts, particular divisions, etc.

The system solution came in the form of an upgrade of Aico Journals software, which ABB Finland had been utilising for years. “We knew that Aico is good in project planning and keeping the time window. This was critical for us since implementation had to be done in three months starting from the project definition work” says Mikko Nieminen, General Accounting Manager at ABB’s Global Business Service Finance, Front Office Finland.

An upgrade of Aico Journals solution also ensured that Hitachi ABB Power Grids Finland Oy could easily configure any custom compliance journal workflows and at the same time keep the benefits of Aico’s real-time connectivity to ABB’s ERP system – SAP. “The fact that Aico is live connected to our SAP and the master data is always synced through-out all processes is a huge benefit for us.”

“It was easy to collaborate with Aico team during the project implementation. Once again, Aico has proven to be an agile and flexible partner who can deliver a solution to the ever-changing situation.”

“After the upgrade of Aico Journals, our journal entry process is fully in line with SOX requirements. Overall, Aico makes the process a lot easier; it increases the visibility of the process. Especially during the audit. Auditors might want to see supporting documentation or approval and posting workflow action log of a specific journal. All of this can be instantly lifted from Aico Journals software.”