Case Study

In early 2023, Lupin Analytics worked with a Northern Ireland-based car dealership franchise on their financial reporting information. Similar to many medium-sized companies, the financial reporting had developed in an ad hoc manner as the company has grown, resulting in a number of infrastructural weaknesses. For example, nominal ledger structure and reporting documentation were not standardised across sites, management accounting was manual and error-prone, and the documentation provided to auditors was piecemeal and likely to result in unnecessary and time-consuming queries.  

Initial scoping involved reviewing the existing documentation used by the franchisee, understanding the complexity and any additional information needs, and developing proof-of-concept customised templates for the client. This helped us ensure that the franchisee was getting information in the form and substance that they would find most useful. Drawing on our experience in audit and data science means that we have a better understanding of what financial information is relevant to business owners right from the start of the engagement.

We also worked with the client to design any custom reporting requirements that might sit separately from the core finance function. In this case, this included the franchise's composite return which, again, needed to be standardised across all reporting sites. As the client also wanted to bring the accounts preparation process in-house, we obtained and assessed the existing accounts mapping from their external accountants to address year-on-year comparability.

Following initial scoping and planning work, we provided a tailored three step response to the franchisee:

1) Standardisation of financial reporting across all entities to make financial information comparable and accessible.

2) Creation of customised reporting templates which automate, as much as possible, the creation of management accounts and year-end financial statements.

3) Training staff to use the templates and supporting the business through the deployment

The key metric for financial information is comparability. It was clear that the business owners were not getting good quality information from month to month as the management accounts preparation was a highly manual process. This meant the same information was not mapped to the same balances each month and there was a persistence of errors. Additionally, the mapping of nominal ledger information was not consistent across the various dealerships meaning that, for example, an account deemed Cost of Sales in one part of the business was classified as Administration Costs in another.

Addressing these issues was the core analytical aspect of this engagement. Lupin Analytics compared the nominal ledger structures from all the franchise sites, created a central standardised hierarchy, and from this we created a series of derived mappings for each site. The franchisee could now be confident that they were comparing like with like each month when reviewing the business.

Once comparability was assured, the benefits of standardisation and optimisation could be delivered. Lupin Analytics created a customised financial reporting template for each site in the franchise, taking the monthly nominal ledger data and re-interpreting it a consistent and usable format for management. Both the finance team and senior management would be familiar with the format of the data as it would be presented the same way (where appropriate) across all sites. However, the template also makes use of common functionality to automate the processing of nominal ledger data as much as possible. This minimises the risk of manual errors but also reduces the need for human intervention in data processing which could result in a loss of comparability.

In this case, the client did not typically perform a large number of manual adjustments for month end, so the nominal ledger data could be processed cleanly, with the responsibility for period end adjustments remaining with the client and their month end procedures. Lupin Analytics designed the templates around the client's existing control environment and governance structures so that the deployment could be as seamless as possible.

Within the template, the financial information is organised in a way that means any future information requirements can be mapped easily and custom reports added to the template as required. The templates are designed so that, as the needs of the business change, they can be easily adapted to include these changes in a convenient and error-free way.

The templates also feature a number of automated checks to help the finance team identify if any financial data has been missed (such as a new nominal ledger code). The automation of these checks mean the finance staff can know, within a couple of minutes review, if any amendments are required or if the reports are ready for use.